INTERVIEW TRANSCRIPT

C-SPAN’S “NEWSMAKERS”

Guest: Marion Blakey, FAA

Reporters: Alan Levin, USA Today & Leslie Miller, Associated Press

Moderator: C-SPAN

TAPE DATE: Friday, March 2, 2007

AIR DATE/TIME: SUNDAY, March 4, 2007 at 10 a.m. and 6 p.m. ET

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BEN O'CONNELL, HOST: This week on Newsmakers, our guest is Marion Blakey, the head of the Federal Aviation Administration. It's a position she's held since September of 2002. And, questioning her today we have Leslie Miller from The Associated Press and Alan Levin from USA Today.

O'CONNEL: Ms. Blakey, airline delays have been in the news a lot lately. What can the FAA do to fix the problem? And further, what are your thoughts on a federally mandated passenger bill of rights?

MARION BLAKEY, FEDERAL AVIATION ADMINISTRATION: Well I'll tell you. In terms of fixing the problem, I wish I did have the silver bullet, the answer on this because a lot of the delays of course certainly are weather related, more than 70 percent in the system and we've had some rough weather lately.

But, 2006 was the worst year for delays ever in the airline industry. And, a lot of it goes to the fact that we have a system that can't handle the volume we have. We need to move to a next generation very different system that will be satellite based, much more automated, and can handle a lot more traffic. So, that's the long-term answer, and then there's some short-term things that the FAA has been doing as well that I'd be happy to tell you about.

On the passenger bill of rights, I think we do recognize that the airlines need to be more responsive to their passengers, particularly in circumstance where you have these very long holds on the tarmac. The passenger bill of rights is not something the FAA governs, but we certainly believe that the question of responsive - being responsive and also, you know, having certain basics that when things begin to go south with the weather and all that, that everyone is required to do to take care of passengers - it's pretty clear, no question about it.

O'CONNELL: So, do you think this should happen then at a federal level? Or are you thinking more at an industry level?

BLAKEY: I think what we need to do is understand right now what the industry is doing. The Secretary of Transportation, Mary Peters has just asked the Inspector General to look specifically at the recent cases with American Airlines, JetBlue to see what happened there. And, I think then we have to look at what makes sense in terms of next steps. But, as you know, the industry has also been not only apologizing for the kind of problems that happen, but stepping up themselves, and let's see how this all develops first.

O'CONNELL: Ms. Miller.

LESLIE MILLER, ASSOCIATED PRESS: If I could just sort of follow-up on that, one of the things that, as you know has gotten a lot of attention in this, this business of passengers being stranded on the tarmac for seven, eight, nine hours, one guy said it was like being in the Hanoi Hilton. And, the reason - I'm told that the reason that happens is because pilots are really reluctant to get out of line, once you go back to the gate, you lose your place in line for take off.

And so, they're afraid, you know, it'll be forever before they get to take off. And, someone suggested something to me, which I'm going to throw at you, why not have - and I know the FAA doesn't govern this, it's up to the airports that, you know, manage the operations. But, couldn't they do like a NASCAR type approach where once there is a bad weather event if a plane gets out of - the yellow flag gets waved and everybody stays in line. I mean is that a feasible solution? Might that be something that could be done?

BLAKEY: You're worrying me Leslie, if going to that end (ph), that they're all waiting for the flag and then they all race to the starting position. I'm not sure that's what we want with our air carriers these days.

You know, the problem you have is that there is very limited real estate on an airport. You don't have big holding areas where aircraft can go, you have a limited number of gates. And, once they get in line, their hope of course is that as soon as the weather breaks and conditions warrant, you can begin to move them efficiently. That really doesn't go to the concept of folks getting out of line and then trying somehow to get back in line and get to the position they had. It is really not feasible or practical.

And, when you think about the configuration of airports, you don't even have taxi space, you don't even have in many airports, the ability to actually do that kind of configuration and reconfiguration. So, a lot of this is inherent in the system we have right now. And, it's not easily solved, I wish it were.

MILLER: What conversely, the airlines say we can't really - it would be a bad idea to impose a fine on an airline for getting out of line or, you know, unloading the passengers because that would provide an incentive to do something that isn't safe. Do you buy that argument?

BLAKEY: I think everybody operates with a high, high regard for any safety issue and certainly governs everything that we do. Whenever an airline says that they want to get out of line and go back to the gate, the FAA facilitates it, there's no question about it. So, we in no way prevent carriers from doing what they think is best for the passengers and for their own ability to meet the schedules that they have and connecting flights and all of that.

Fines, I'm not a big proponent of fines for things that honestly are usually weather related as long as the carrier is doing the right thing to take care of passenger's needs and being - using good common sense about the obvious trade-offs between a lot of folks who need to make connecting flights and get where they want to go and yet, you know, it can get to be pretty tough if you're sitting there for hours on end. At some point you reach a tipping point, and making the right judgment is the responsibility of the pilot who's in charge of the flight and the airline, that's where the responsibility has to sit.

LEVIN: Not to belabor the point, but the airlines, a week ago called on FAA to change the rules that would allow somebody to step out of line but hold their place for a departure. Would you go along with that narrow shift?

BLAKEY: Well, did you notice that they didn't suggest how that might be done? We are always open to good suggestions about how you could possible streamline things. And, one of the things that the airlines are not taking enough advantage of right now, and we are trying to really urge this is that at the command center that we have governs the entire national airspace, we have an advocate there, a customer service advocate for whatever flights are diverted or delayed, and there are situations that they're getting to be pretty extreme for passengers on board. Before they get to be extreme, they can call and say look, we had to divert because perhaps it was a medical emergency or we had to divert because of particular weather circumstances - but, we really need you to help us move to the front of the queue because there were really unforeseen circumstances. And, as long as it's not massive, you know, for all flights at a given airport or, you know, a huge number of aircraft at the same time, we can usually help to accommodate that.

LEVIN: I had heard that in this - these recent debacles involving American and JetBlue that that service wasn't utilized. Is that correct?

BLAKEY: It's one of the reasons we're trying to make sure that everyone knows it's there because we do want the carriers. All of their dispatch folks, everyone to be aware of the fact that you can contact us and we honestly will do everything we can to alleviate extreme circumstances.

MILLER: If I could change the subject just a little bit to one of my favorite subjects, the very light jets. These are being built right now - small, inexpensive, high performance jets. And, you've said that - how many, 4,000 are likely to be in the air in...

BLAKEY: 5,000 in the next ten years is what our estimate is. And I think that may even be a bit conservative, yes.

MILLER: And, you know, of course, the fear that they'll be blackening the skies and causing congestion. But, when the Yankee's pitcher, Cory Lidell crashed into that skyscraper, that kind of raised the question in my mind, are there safety issues with these new highly sophisticated jets that perhaps less experienced pilots might be flying and thinking that they can do more with? And, are you looking at that issue thinking of any special way to deal with the safety - potential safety problems with these small jets?

BLAKEY: Well, it is a new category of aircraft. And so, we have been working very, very closely with the manufacturers on the issue of training and certification and what has to be required for people to operate these correctly. I'll tell you, I'm very impressed with the manufacturers how they are using really best practices out of the airline industry and very intensive training involving simulators. And, a lot of the best practices that exist for pilots with regard to the fact that these are going to be fast aircraft operating at altitude. And, it's not something you just step into out of a Cessna 172.

MILLER: Especially if you're landing at LaGuardia.

BLAKEY: Yes, exactly - exactly. You know, and there's congested airspace and challenges that go to really working very closely with what kind of experience is warranted. Now, remember that of course Cory Lidell, this was a situation of a private pilot that had an instructor on board, but it was just that.

A lot of the very light jets are going to be operated as air taxis. And, that means that you have a very different set of requirements for the pilots there because you've got paying passengers on board. So, I don't really think that a lot of the early fleet is necessarily just going to go to wealthy individuals who only fly occasionally. That's an area where that doesn't work for this category of aircraft. They're going to have to spend a lot of time in training before anyone will be behind - in the cockpit for these.

LEVIN: The other issue with these small jets is they're going to be flying at the same altitude with the large airline jets. They're - in many cases these are areas of the airspace that are quite congested right now. Can the system handle 5,000 more planes?

BLAKEY: Well, you know, Alan, I mean you're hitting on an interesting question which frankly none of us know the answer to. I know we can safely handle it because our requirements will always ensure that even if we have to govern the use of congested airspace so that there are not too many of different types in that given airspace.

LEVIN: But that - you're basically saying you may have to delay flights to accommodate these in other words?

BLAKEY: We don't know yet because here is the interesting equation in all of this. We have a lot of airports in this country that are very much under-utilized. They're convenient to cities, convenient to communities. Corporations and individuals who want to fly point to point may very much benefit from going in and out of smaller airports. I mean, after all there are congestion problems at LaGuardia and O'Hare on the ground, much less in the air.

So the idea that we can better utilize small airports I think is a great thing, and it's a part of the business premise on which these manufacturers have gone into this flying point to point using the tarmac that we've got and providing a lot more convenience. That works and that certainly does not congest the system.

So we'll see where in fact the passages that are going to begin flying these want to go and how it works.

LEVIN: Now one of the areas you're - one of the things you need to do in order to accommodate these jets is basically a top to bottom reworking of the air traffic system going to satellites, scrapping the radars, et cetera, et cetera.

Now, the question is back in the 1980's, well before you got to FAA, they tried a similar kind of top to bottom redesign of the air traffic system, and by all accounts, it was a disaster. The agency ultimately had to write up a $3 billion loss and my question is, is the agency ready for a big upgrade this time around?

BLAKEY: You know, I'm glad you have to go all the way back to the 1980's to refer to a failure like that because I can point to a lot of evidence right now that we are delivering on the capital investments we're making for the taxpayers in a big way.

The major capital investments that the FAA has right now and one of these is changing out the entire nerve center, if you will, for the air traffic system, they are on schedule, on budget. At the end of the last fiscal year, we ended with 97 percent on time and on budget.

Now I would say that our track record shows that you could absolutely manage the investments and we have a very strong blueprint for where this is going because you're quite right, it's going to an automated system that will be relying on very precise satellite based navigation and surveillance. And the terrific thing is it upgrades safety because it provides a lot more information to pilots in the cockpit that could see the aircraft around them. And when they're on runways, they could see whether there are any obstacles near to them. And the controllers have the benefit of the same thing and it upgrades every second as opposed to the way we operate these days, every six to 12 seconds. It's much more precise.

So there's a lot of safety benefit in it. There's a lot of benefit in terms of energy efficiency. You don't burn nearly as much fuel if you're going to point to point on the basis of GPS. And also when you get nearer to the airports, the early uses of this are finding that 34 percent reduction in emissions, 30 percent reduction in noise below 6,000 feet.

So there are tremendous benefits for those who live around the airports as well as those who fly that we really do need to move on to this kind of change out in the system.

O'CONNELL: So, can I briefly, if we're going to be reducing the amount of fuel that's being used in flying from point to point, can the consumer expect to see a drop in the price of plane tickets?

BLAKEY: You know, we project over time that the price of tickets is going to continue to decline. We think that the economics of this and as we would the national airspace and running the air traffic control system are able to reduce the unit cost, which is a lot of what is behind this, I think that the consumer, the air traveler can expect that. You know, it's not a direct, you know, correlation. I can't tell you exactly how much and when, but absolutely, I think that would be the prognosis longer term.

MILLER: Let met explain something that I find so counterintuitive, which is that you're going to have more planes flying closer together because you have this new satellite base navigation system. Could you explain how that works? How there will be more planes, and they'll be closer together and yet they will be safer?

BLAKEY: Well, remember, of course, that I'm talking sometime out in terms of actually reducing separation standards but there's a lot of safety even with the existing distance that we require between aircraft and having a very precise mileage of where those aircraft are. It's much more precise than we have today even though today's system is safe. And at the same time, giving pilots themselves awareness of aircraft all around us. So, that's a big plus.

But, you know, it also goes just to say, too, things like runway incursions. If I had to point to the toughest problem we have in aviation today is on the ground. And it is the prospect that a baggage cart, another aircraft, a small GA plane gets out there on the live runway when someone is trying to land or take off.

So, the system does afford that, but in the long run, you know, automation is something where you don't have human error to the degree you do and flying it by hand, if you will. So when you talk down the road, can they be closer together? Certainly because again it would not have the kind of potential for human error that we have right now whether it's pilots, controllers, whatever. So all that plays into it.

But remember, I mean, we just made a good change in airspace very recently, reducing the vertical separation above 29,000 feet from 2,000 feet to 1,000 feet apart up there. And we actually had fewer errors and fewer pilot deviations after we did that and it increased the number of (INAUDIBLE) in the sky by six fold.

But it's again flying very precise and everyone knows exactly what the rules are and it's working.

LEVIN: Now the key device that you were talking about using and modernizing the system, is a little GPS receiver on the plane that then in turn allows the plane to transmit its exact position to everybody around. The technology exist right now to put that in planes, but I believe the agency isn't planning to require it until 2014. Do you want to take this opportunity to try to move that timetable up? But seriously, is there a way to move that up? I mean, it has tremendous benefits for safety as well as capacity.

BLAKEY: Well, and you're right about that, and of course, I think we'd all love to see this move forward tomorrow if we could. But these are hundreds of millions of dollars in terms of investment and it's not just on the part of the taxpayer through the FAA. It's also the fact that planes have to equip. And you've got, you know, airlines out there and in general aviation where they've put a lot of money already into the aircraft they've got. And so we have to be I think measured about how quickly we tell everyone that all of you are going to have to have this on board.

But what's great is we are seeing this in Alaska. There's a lot of the Alaska system right now that is taking advantage of this. Now in the Gulf of Mexico, the helicopter industry has come to us and said, you know, we're flying out there without radar to the oil platforms, we want it. We said absolutely, we can work something out and the oil industry stepped up and said, use our platforms to put those receivers on.

So we're going to be seeing points of the country where it's going to be developing and more and more you will see it used on the voluntary basis, you know, even before we absolutely require it.

MILLER: So I guess it's up to me to ask the inevitable question about financing a new system, which as we know is the subject of a big battle right now between the airlines who want to use your system where if you're flying an airplane, you will pay according to the cost of - to the system of flying the airplane as opposed to a fuel tax. This is something as you well know, the airlines are fighting with the private aviation people and the business jet people. Congress is looking at it a little skeptically because you just released this plan. And some congressman are saying, well, we don't get any more money with this plan. So, what's the point?

BLAKEY: Well, you know, what we're talking about here is a cost-based system. You have the revenue coming in that matches the costs involved. And we are looking at the fact that we're going to have to make major capital investments to transform the system and to prevent the kinds of delays that we're already having in so many parts of the country.

The system is pretty much maxed out. And what we are trying to explain to everyone is we need to set this up on the basis that we can cover the cost involved, we can have the kind of financing that allows for making significant capital investments of out years. So, yes, it does raise more money over time and it matches the cost of the revenue, which is the way any business in America would want to run, including the FAA.

Right now our revenue is tied to the price of a ticket and as we were just talking about it, I mean ticket prices have been falling but our workload is going up. That doesn't work and it also does not allow for the margin to be able to make these capital investments.

You know, I think there's a big debate because we proposed a bill that is very different from the current financing, but it actually will reduce the cost to the person flying in the back of the aircraft in 28C. Right now, the airlines is paying a disproportionate share of the cost and what we're trying to do is to get everyone to pay on the basis of the services they receive. We think that's fair.

LEVIN: Who is not paying right now or not paying their share?

BLAKEY: General aviation is paying three percent of the cost of the system and the services they're getting cost about 16 percent.

LEVIN: Are you talking about Joe Blow and his little Cessna or the corporate ...

MILLER: Lear jet.

LEVIN: ... CEO and its jet

BLAKEY: Particularly you have to focus on the kind of services that business aviation is receiving, because they are flying into congested airports. They're flying in the airspace that is the most congested and requires a lot of air traffic control, flying instrument, flight rules, et cetera.

It's not so much the small guy out in Montana that's flying on the weekend, under what we call visual flight rules. It really is those who are imposing significant costs because they require them with very sophisticated aircraft and flying at the optimal times of the day and week. And all of that is where costs come from.

LEVIN: These folks who will have to now pay more have launched a huge campaign to try to prevent this from going into law. And they claim that it's a new tax that, you know, will unfairly target them. Is that a fair charge?

BLAKEY: You know, they've said all along, that they prefer to pay on the basis of paying the price at the pump, if you will, rather than paying on the basis of a fee, where you get an invoice at the end of the month. We said fine. But the fact of the matter is, you are going to have to pay more carry your share of the burden in this. So I don't think it's fair to say it's a new tax. There's a tax right there, all ready on fuel. It's just that they are going to have to pay a greater share of the cost to make the system equitable. And, you know, I have to say, I'm one of those people who stands in the line and gets on board and goes back to coach. And I don't like the fact that right now, that part of the population is paying about 96 percent of the cost of the system, when it really should be like 73 percent. That's a big difference.

LEVIN: Come on, you get a chance to fly the FAA jet, every once in a while, right.

BLAKEY: Every once a while, but most of the time it's back in coach.

O'CONNELL: We only have time for one more question, so Ms. Miller.

MILLER: Sure. The analogy that the business jet people bring is very similar to the one that anti toll people bring against toll ways which is a fuel tax is very, very efficient to collect. I think it costs less than one percent of the total, whereas, a user fee like a toll on a highway, is far more expensive. Isn't that the case, that it's going to cost you guys a lot more money?

BLAKEY: Well I don't. All over the country, most of us not only use but like easy pass, and systems like that with transponders that make for greater efficiency. And what we're talking about here is a lot greater efficiency in the long run. But we also bought the argument that the general aviation population has made and said if it is less cumbersome to pay with a fuel tax, that's how you all will pay.

So in that sense, their desire in this has been met by the bill that the Bush Administration has put forward. And the idea of a fee based system with invoice is for those who do have the corporate apparatus and are used to paying invoices for everything else. And we believe that a hybrid system like that, really can serve the needs of both groups.

O'CONNELL: You know what, we actually have time for one more very quick question, so Mr. Levin.

LEVIN: You had a very difficult time in the labor relations with the air traffic controllers. And they've stated repeatedly that the system safety has been challenged by a decrease in their staffing, is that a fair charge?

BLAKEY: Alan, facts are stubborn things, we are in the safest period in aviation history and the stats all bear it out. And the air traffic controllers are a tremendously skilled professional group that all over the country are doing a great job in this. We are staffing to the traffic. And we believe that we have put in place a very, very fair contract from the standpoint of compensation and the work rules.

Change is sometimes difficult and I think we've gone through a bit of a rough patch from the standpoint of people getting used to the fact that we are looking for productivity and we're looking for a very professional business like environment. And we believe that paying our current controllers, which is the case under the new contract, their wages, their salary, all their compensation, when you roll it up together, it's over $175,000 a year on average.

Now it's pretty hard to believe that there's anything about that that doesn't mean you're not going to be able to continue to have a great veteran workforce. And the new pay scale we put in place, it also - we've got thousands of people in a row lined up. We're going to be recruiting the best and the brightest.

O'CONNELL: Our guest this week has been Marion Blakey, the Head of the Federal Aviation Administration. Thank you very much for joining us.

(break)

O'CONNELL: Alan Levin from USA Today, what did you learn from Marion Blakey today?

LEVIN: I can't say I learned anything new. These are messages that she's been putting out for quite some time. I do think one thing is evident, though, that she's got a tough road to hoe, and I'm not sure that came out in the interview. But this massive funding bill she just put up before Congress, one of them Congressman declared it dead on arrival. She's got terrible relations with the air traffic controllers union. That didn't hurt her so badly when republicans were in control of Congress.

But now, with the democrats in control, they have much stronger ties to the union. I think that could be a big issue in the year or two ahead. And one thing we didn't touch on either, is that Marion is a lame duck. Her term ends in about six or eight months, so she won't be here very long.

MILLER: September, I think yes.

O'CONNELL: And Leslie Miller, from Associated Press, did you learn anything?

MILLER: Well I'm pretty much with Alan. I was a little surprised when she was talking about the passenger bill of rights, she seemed to be opening the door to that a little bit, although that's not really the FAA's bailiwick, it's the Department of Transportation administers that sort of thing.

But I totally agree with Alan about this funding bill. It's been promised for more than a year, hasn't it? And now the democrats control Congress and it's finally here, and there isn't much time to pass it. So I think we may be still away with the fuel tax a year from now.

O'CONNELL: And you mentioned your interest in the very light jets, you talked about that for a little while and how they may or may not add to the congestion in the air. You indicated that it would be somewhere in the neighborhood of 5000 new jets by when?

MILLER: Marion said that, did she say 25 years? Five to 10 years. It's unknown. Honda just got into the business. There are three of our companies that are making them. And that is really the $64,000 question with very light jets. Some of the manufacturers say well this will allow a company like Xerox in Rochester, New York, to take a small jet to wherever they have a manufacturing facility out in the hinder lands. Other people say no, that's not what's going to happen. People are going to want to fly where people fly, which is to the major airports. So that will just have to play out, I guess, over the next couple of years. But they really a revolution in engine technology and we may be surprised at how quickly we see these.

LEVIN: And the reason that they're sort of worried about them is that they fly significantly slower than the airline jets. So - and the way the system works now, you know, there's a line of planes going from say Miami, Florida, area of the south, to Chicago and they put them all in a line and them make them go straight. And they all have to go as slow as the slowest plane up there. So does that mean they're going to put these small gets up in that same line with airline flights and delay everybody by a half an hour on their way into Chicago. It's a question they haven't fully answered yet.

MILLER: It's not like a little Cessna that goes, you know, 1000 feet.

LEVIN: Yes, I'm not saying every flight will be a half an hour slower, when these come into play, but there's a lot of complicated things they have to work out before they can bring 5000 new planes into the system.

O'CONNELL: And it sounds like this automated satellite guidance system is going to be part of what they hope to be the solution. So when is this going to be up and running? At least, according to plan?

MILLER: I don't even think there is a plan, right now, is there?

LEVIN: Well they plan to turn on the heart of it, the so called ADSB which allows the plane to tell everybody where it is instead of having this Rue Goldberg (ph) radar system tell everybody where the plane it. That's supposed to be switched on 2014. Then after that, they'll start layering on new systems and procedures. I think we're talking at least 20 years before the whole system is in place, don't you agree?

MILLER: Yes, absolutely. And there's a group, it's an alphabet soup kind of - the JDPO, I believe it's putting together a plan, but we haven't really seen the plan. So who knows.

LEVIN: And there's some very big questions about how they're going to pay for this, and that are completely apart from how they tax the system. You know, NASA is supposed to be one of the big players to help research this new system, but over the past five years, the Bush administration has slashed the spending at NASA on aviation related things because of this moon launch.

FAA has gotten off relatively well in its budget over the past few years, but still has seen cuts in some of the key technologies that is going to be a part of this thing. So, you know, this is not an issue we'll hear much about for five or 10 years, but they could be in a real bind when push comes to shove.

O'CONNELL: We're going to have to leave it there, we're out of time. Alan Levin, from the USA Today, Leslie Miller, from Associated Press, thank both of you very much for joining us today.

MILLER: Thank you.