- OVERSIGHT OF THE METROPOLITAN WASHINGTON AIRPORTS AUTHORITY, REAGAN WASHINGTON NATIONAL AIRPORT, AND THE PERIMETER RULE

[Senate Hearing 111-1072]
[From the U.S. Government Publishing Office]

S. Hrg. 111-1072

OVERSIGHT OF THE METROPOLITAN
WASHINGTON AIRPORTS AUTHORITY,
REAGAN WASHINGTON NATIONAL AIRPORT,
AND THE PERIMETER RULE

=======================================================================

HEARING

before the

SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY, AND SECURITY

of the

COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

__________

SEPTEMBER 16, 2010

__________

Printed for the use of the Committee on Commerce, Science, and
Transportation

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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED ELEVENTH CONGRESS

SECOND SESSION

JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii KAY BAILEY HUTCHISON, Texas,
JOHN F. KERRY, Massachusetts Ranking
BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine
BARBARA BOXER, California JOHN ENSIGN, Nevada
BILL NELSON, Florida JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas GEORGE S. LeMIEUX, Florida
CLAIRE McCASKILL, Missouri JOHNNY ISAKSON, Georgia
AMY KLOBUCHAR, Minnesota DAVID VITTER, Louisiana
TOM UDALL, New Mexico SAM BROWNBACK, Kansas
MARK WARNER, Virginia MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska
Ellen L. Doneski, Staff Director
James Reid, Deputy Staff Director
Bruce H. Andrews, General Counsel
Ann Begeman, Republican Staff Director
Brian M. Hendricks, Republican General Counsel
Nick Rossi, Republican Chief Counsel
------

SUBCOMMITTEE ON AVIATION OPERATIONS, SAFETY, AND SECURITY

BYRON L. DORGAN, North Dakota, JIM DeMINT, South Carolina,
Chairman Ranking Member
DANIEL K. INOUYE, Hawaii OLYMPIA J. SNOWE, Maine
JOHN F. KERRY, Massachusetts JOHN ENSIGN, Nevada
BARBARA BOXER, California JOHN THUNE, South Dakota
BILL NELSON, Florida ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington GEORGE S. LeMIEUX, Florida
FRANK R. LAUTENBERG, New Jersey JOHNNY ISAKSON, Georgia
MARK PRYOR, Arkansas DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri SAM BROWNBACK, Kansas
AMY KLOBUCHAR, Minnesota MIKE JOHANNS, Nebraska
MARK WARNER, Virginia
MARK BEGICH, Alaska

C O N T E N T S

----------
Page
Hearing held on September 16, 2010............................... 1
Statement of Senator Dorgan...................................... 1
Prepared statement of Hon. Kay Bailey Hutchison submitted by
Hon. Byron L. Dorgan....................................... 16
Statement of Senator Rockefeller................................. 3
Prepared statement........................................... 5
Statement of Senator Warner...................................... 6
Letter, dated July 19, 2010 to Hon. John D. Rockefeller IV,
Hon. Byron L. Dorgan, Hon. Kay Bailey Hutchison and Hon.
Jim DeMint from Senators Cantwell, Murray, Wyden, Merkley,
Begich, Murkowski, Warner, Nelson, Webb, Cardin and
Lautenberg................................................. 46
Statement of Senator Cantwell.................................... 6
Prepared statement........................................... 7
Statement of Senator Ensign...................................... 29

Witnesses

E. Lynn Hampton, President and CEO, Metropolitan Washington
Airports Authority............................................. 21
Prepared statement........................................... 23
Lee R. Kair, Assistant Administrator for Security Operations,
Transportation Security Administration, U.S. Department of
Homeland Security.............................................. 13
Prepared statement........................................... 14
Hon. Susan L. Kurland, Assistant Secretary for Aviation and
International Affairs, U.S. Department of Transportation;
accompanied by Michael J. Sammartino, Director of System
Operations, Federal Aviation Administration, U.S. Department Of
Transportation................................................. 9
Prepared statement........................................... 10
Hon. Charles Darwin Snelling, Chairman, Metropolitan Washington
Airports Authority............................................. 17
Prepared statement........................................... 19

Appendix

U.S. Senators Benjamin L. Cardin and Barbara A. Mikulski of
Maryland, prepared joint statement............................. 53
Hon. Jim Webb, U.S. Senator from Virginia, prepared statement.... 54
Response to written questions submitted to Hon. Susan L. Kurland
by:
Hon. John D. Rockefeller IV.................................. 55
Hon. Maria Cantwell.......................................... 56
Hon. Mark Warner............................................. 57
Response to written questions submitted by Hon. Maria Cantwell
to:
Lee R. Kair.................................................. 58
Response to written questions submitted to Hon. Charles Darwin
Snelling by:
Hon. John D. Rockefeller IV.................................. 59
Hon. Maria Cantwell.......................................... 60
Hon. Mark Warner............................................. 63
Response to written question submitted to Michael J. Sammartino
by:
Hon. John D. Rockefeller IV.................................. 64
Hon. Maria Cantwell.......................................... 64

OVERSIGHT OF THE METROPOLITAN
WASHINGTON AIRPORTS AUTHORITY,
REAGAN WASHINGTON NATIONAL AIRPORT,
AND THE PERIMETER RULE

----------

THURSDAY, SEPTEMBER 16, 2010

U.S. Senate,
Subcommittee on Aviation Operations, Safety, and
Security,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:30 p.m. in
room SR-253, Russell Senate Office Building, Hon. Byron L.
Dorgan, Chairman of the Subcommittee, presiding.

OPENING STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA

Senator Dorgan. We're going to call the hearing to order.
This is a hearing of the Subcommittee of Aviation of the Senate
Commerce Committee. I appreciate all of you being here and
especially appreciate the effort the witnesses have made to be
here.
Let me explain the interest that we have this afternoon on
this subcommittee with this hearing. We are interested in
trying to understand more about the Metropolitan Washington
Airports Authority that runs the two airports here in the
Nation's capital. Until 1986, the Federal Aviation
Administration managed both the National and the Dulles
airports. In 1986, the Congress passed a law transferring the
operation of the two airports here in the metropolitan area to
a new independent Airports Authority. That transfer in
operating authority was designed to allow the airports here to
grow--National and Dulles to grow--and it was particularly
designed to help Dulles grow because Dulles was considered, at
that point, underutilized and also it was done to facilitate
timely infrastructure improvements at both airports.
Understanding that and the history of that, I began in
recent weeks trying to think through what is the Metropolitan
Washington Airports Authority and what is its accountability
and whom, and so on. I especially began thinking about that in
the context of trying to pass FAA reauthorization bill here
through the U.S. Congress. That bill is necessary, in my
judgment, especially because it contains provisions dealing
with the issue of air traffic control modernization. I've met
with the Europeans, for example, they are going full speed
ahead, modernizing their air traffic control system, that will
move them, and hopefully if we do the same, will move us, from
ground-based radar to GPS navigation. It will allow there to be
much better management of the airplanes in our sky; it will
allow airplanes to fly more direct routes; it will provide
greater safety for passengers; it will provide better
circumstance for our environment with less fuel being used. All
of those things are the benefits of air traffic control
modernization.
The Congress has tried and tried and tried and failed and
failed and failed to pass FAA reauthorization that includes
these important issues of modernization. I thought perhaps this
was going to be the time, but that is not the case at the
moment. Principally, the objections by the Metropolitan
Washington Airports Authority to provisions that have been
described as increasing certain flights beyond the perimeter in
a negotiation that has been back and forth here in the
Congress, additional slots at Washington National, additional
operations beyond what is called the perimeter rule have
persuaded the Metropolitan Washington Airports Authority to
object in attempt to block, to the extent they could, the
movement of the FAA reauthorization bill.
Representations have been made on behalf of the Authority
that to do what has been proposed to be done would mean wait
times through security checkpoints at Washington National would
go from 5 minutes to 1 hour, and there wouldn't be enough
parking, and the whole series of things have been represented.
It finally seemed to me, as I was thinking through this in
recent weeks, we should have those representations firsthand
and direct, and understand the veracity of those--those kinds
of representations.
And so, I've called a hearing. I wanted to try to
understand that which I've just mentioned and a number of other
answers to questions that I will have today. I think it goes
without saying that--that all of us want the Metropolitan
Washington Airports Authority to succeed. We want us to have a
two major airports in this region under your authority,
Washington National and Dulles, to be wonderful airports that
do a great job and are able to handle their passengers well and
productively. All of us want those same things.
In additional to all of that, I want something more. I want
to pass an FAA reauthorization bill in this Congress. I'm not
the only one, I know the Chairman of the full Committee does as
well, and perhaps a few others, but the lack of doing so, I
think, is going to have a profound impact on air traffic, air
service across this country, including an impact, a negative
impact on the two Washington airports. Because there has been
much representation about the--the position of Metropolitan
Washington Airports Authority, I want today to understand
directly from them what their position is, why, and the
veracity of that position.
In addition, my interest has been piqued going forward,
what is the authority and to whom is it accountable? Is it a
sovereignty as has been suggested by some or is there
accountability somewhere and where should that accountability
be and how would one describe that in legislation moving
forward?
Having said all of that, I'm very anxious to hear the
testimony and be able to ask questions, but let me call on the
Chairman of the full Committee and thank him for his
cooperation in our ability of this subcommittee to hold this
hearing.
Senator Rockefeller?

STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA

The Chairman. Thank you, Mr. Chairman. I agree with
everything that you've said and I might point out that I had a
very heavy role back in 1986 in creating the Authority, because
there was a huge amount of dissention between Dulles, D.C., and
Baltimore at that time, BWI. And, because one very prominent
democrat didn't want to see--the Democrats were in control
then--didn't want to see any change in the fact that the BWI,
Najeeb Hallaby, was, as he said, spending 25 percent of his
time worrying about issues that he never should have been
worrying about. And this Senator, who was also on this
committee, Republican Paul Trible, was a very good Senator,
said what we need is an authority, because if we have an
authority they can bond. If they can--if we can bond, we can
grow, everybody can grow. And so, I broke ranks with my party
because it just made so much sense to me. And, it did
eventually pass, and I think that the results have been very,
very good.
I've always supported Dulles, and at the time of its
creation, Dulles was in a sense the region's primary airport
because of its proximity to Washington, D.C. As part of the
effort to promote Dulles, we invoked, instituted rather, the
perimeter rule at National, barring local long-haul flights
from that airport. And the decision drove flights to Dulles.
So, the growth of Dulles has benefited from--it has certainly
helped people from the State I represent because they can get
there very quickly, and that's not the whole picture here, but
it's--it's useful. It's an accessible airport that spans the
world, so to speak.
But on the other hand, over the last 30 years, we've seen
enormous changes in the airline industry, some good, some bad.
Airline travel is dramatically better, it's dramatically safer.
The part of the bill that we were able to pass makes it even
safer, with respect to some of the personnel. People now have
access to affordable travel, they can connect, go anywhere in
the world, but economic stability, instability in the airline
industry has costs many, many--the loss of airline service in
the small airline communities, such as we have in my State,
every State has them. Airline employees have seen their wages
and their benefits slashed, simply because of the economics of,
you know, United and others being in and out of bankruptcy,
it's just, things have been in great turmoil. And the industry
has changed as they have done that, so has the Federal Aviation
policy, it had to.
I firmly believe the U.S. must maintain the safest, most
efficient aviation system in the world. I'm proud to say that
the FAA bill actually passed out of this committee and then
through the Congress, 93 to nothing, not a single dissenting
vote. That's sort of history when that happens in this session
of Congress. Our bill includes a number of things that the
Chairman of the Subcommittee has already mentioned.
We've sought to reach compromise with the House of the FAA
bill. Committee leadership developed what I believe is a fair
compromise that permits a limited number of flights beyond the
perimeter. The compromise sought to address local concerns, and
it really did address local concerns.
So, today's hearing will allow us to look at these matters
and do some of the things that Senator Dorgan has suggested. I
think we have to deal with a couple of things. One, Dulles is
one of the Nation's largest most successful international
airports. Northern Virginia is one of the Nation's most
economically successful regions, generating its own demand for
air traffic and sort of leading the Nation in growth in
general, and there sits Dulles. Aircraft are substantially
quieter, very large airlines are banned in the FAA bill that we
passed out of here and the Senate passed from landing, thus
helping with noise. And there's just the fact that 25 years
that have passed meant that airlines are quieter with much
quieter airlines yet to come.
I live at the end of a runway, we have a--my wife and I
have a house at the end of a runway in Wyoming, the only
airport in a national park, which is rather odd. And every
airplane flies directly over us. And, for the--I think we
noticed this for about 5 days. And, I happened to grow up on
the East River in New York, and tugs--tugs make a lot more
noise than airlines do, I promise you, especially in those
days, and they make it all the way from the bottom of the East
River all the way to the pass at the top and you hear them the
whole time, and you just--you just shut it out, you get used to
it. First, it's a inconvenience, and then, it's something that
you understand happens.
This country--another change, this country's population has
shifted enormously toward the West. There are those who would
sort of maintain that everything is as it was. And the
demographics of our country are very different. The West needs
to be served. The West and the East, the two coastal areas
have--are interdependent and yet in terms of air service,
they're not. And so, the West is struggling to have more than,
you know, one flight, so to speak, into D.C. or wherever, and
that has to be recognized, that the country has changed,
therefore our responsibilities have changed.
I simply want to say that I know that local officials will
argue that this is not fair to change the rules governing the
airports, but I think that's a false argument. This is an
industry whose only constant is change, that's all they've
known is change. Airline deregulation changed the rules in West
Virginia. I'll never forget, when I first moved there in 1964,
Eastern Airlines, United Airlines, and American Airlines all
had big jets rumbling in and out of that place on a runway
which was probably too short. It didn't matter, we were happy.
And then within 3 weeks of the passage of the deregulation, of
course, they were all gone. And that was--that was sad.
Now the fact is that the proposed 16 flight conversions
will not change the dynamic of two airports who serve tens of
millions of people and we will discuss this. I want to say to
our witnesses and the members here, that we must push to
resolve the matter of National Airport's slots. It's--it should
be very, very easy. It is very, very easy if one is willing to
be flexible. Not everybody is.
So, it's unacceptable to me at any time, but especially at
a time when our economy could benefit so much by passing this
bill. Our consumers would benefit so much, safety would benefit
so much, and frankly the economy of the area would benefit so
much.
Thank you, Mr. Chairman.
[The prepared statement of Senator Rockefeller follows:]

Prepared Statement of Hon. John D. Rockefeller IV,
U.S. Senator from West Virginia

The Metropolitan Washington Airports Authority (MWAA) operates two
of the country's most successful airports--Reagan National Airport and
Dulles International Airport. These facilities have been essential to
the development of Northern Virginia as one of this country's high-
technology centers.
I am proud to have played a central role in the development of
Dulles. When some were opposed to providing bonding authority to
support its infrastructure needs my support was helpful to allow this
effort to move forward.
I have always supported Dulles. At the time of its creation,
National was the region's primary airport because of its proximity to
Washington, D.C. As part of the effort to promote Dulles, we instituted
the perimeter rule at National Airport barring long-haul flights from
the airport. This decision drove those flights to Dulles.
The growth of Dulles has benefited my constituents. Four West
Virginia communities have direct access to Dulles and therefore direct
access to the world. Dulles is also the airport of choice for many West
Virginians who live in the Eastern Panhandle.
The last 30 years has brought enormous change to our aviation
industry--some good and some of it bad. Most importantly, airline
travel is dramatically safer. Millions more people now have access to
affordable air travel, low-cost carriers have emerged, and airports
have benefited from Federal infrastructure investment.
But, economic instability in the airline industry has cost many
small and rural communities air service including in my state. Airline
employees have seen their wages and benefits slashed, and air travel--
once very glamorous--is often an ordeal.
As the industry has changed, so has Federal aviation policy. The
U.S. must maintain the safest and most efficient aviation system in the
world. It is critical to our global competitiveness. The FAA bill that
I, Senator Hutchison and Dorgan developed and the Senate passed 93-0,
makes those critical policy adjustments.
Our bill includes a number of vital safety provisions, places a
premium of the development of the Next Generation Air Traffic Control
System, improves access to the air transportation network for small and
rural communities, and improves FAA management.
However, all of this is threatened by proposed small and
incremental changes to the rules that govern flight operations at
National Airport.
No one understands or appreciates these issues better than I do.
For the past decade and three FAA authorization bills, Congress has
struggled with this issue. In each of the last two FAA reauthorizations
enacted into law, Congress relaxed the prohibition on long-haul flights
into National Airport.
As we sought to reach a compromise with the House on the FAA bill,
Committee leadership developed what I believe is a fair compromise that
permits a limited number of flights beyond the perimeter. The
compromise sought to address local concerns. Today's hearing will allow
us to review these matters.
We all have to recognize that the world has changed since the
original agreement the Federal Government signed with MWAA in 1986. We
must deal with this reality--and the reality is:

Dulles is one the Nation's largest and most successful
international airports.

Northern Virginia is one the Nation's most economically
successful region's generating its own demand for air travel.

Aircraft are substantially quieter than they were 25 years
ago greatly mitigating noise issues.

This country's population has shifted to the West and most
people beyond an artificial and arbitrary line have no direct
access to National Airport.

I know that local officials will argue that it is not fair to
change the rules governing the airports--but that it a false argument.
This is an industry whose only constant is change. Airline deregulation
changed the rules on West Virginians and millions of others from rural
states. Airline bankruptcy changed rules for the employees. And,
economic globalization is changing it all over again.
The proposed 16 flight conversations will not change the dynamic at
two airports who serve tens of millions of people. It only continues an
effort to allow greater access at National Airport for the millions of
new people living in the Western United States.
We must push to resolve the matter of National Airport slots or it
will threaten future FAA reauthorizations. That is not acceptable to
me, and I will continue to fight for passage of this important bill.

Senator Dorgan. Senator Rockefeller, thank you.
Let me recognize the other two Senators who are here for 3
minutes each for opening statements, then I want to get to the
witnesses.
Senator Warner?

STATEMENT OF HON. MARK WARNER,
U.S. SENATOR FROM VIRGINIA

Senator Warner. Thank you, Mr. Chairman. May I thank you
and the Chairman of the full Committee for holding this
hearing. I think it's timely and appropriate. I also want to
echo all the good work you've both done and particularly
Chairman of the Subcommittee on the issues around NextGen. I
think it critically important that we get to a full FAA
reauthorization bill.
I, of course, as one of the local representatives, have
reviewed MWAA's testimony, I know their position has been for
some time that no changes should be made in the rules, changes
that have been changed in the past and candidly, perhaps not
going back as far as the Chairman of the Committee, but as the
former Governor of the State, very familiar with the growth of
both Dulles and National and the effects some of these proposed
changes will have at BWI as well.
And I think in that spirit, the spirit that the Chairman of
the Committee has talked about, we've tried to move forward. I
voted in this mark-up to try to move beyond what the MWAA
position was and actually accede to the House position of five
additional flights coming into National. Subsequent to mark-up
and subsequent to conversations with folks from Western States
when the bill reached the floor, we talked about even
increasing beyond that and have continued those negotiations.
We perhaps have some differences in terms of the exact number,
and I would like work forward to continue these kinds of
negotiations. I have some frustrations at some of the kind of
compromises that were put together didn't fully include, I
think, all the input of all the local representatives, and I've
got, Mr. Chairman, testimony I hope you'll accept from Senator
Webb and also Senator Mikulski and Senator Cardin, because the
effects of this--these decisions will have an effect not only
on the two airports in Virginia, but will also have a very
major effect as well on the activities at BWI, so I submit
those for the record.
I look forward to this conversation, I think it is a--the
Chairman is acting absolutely appropriately to get all this
information on the record, the effects not only in terms of at
National, but the effects at Dulles, the effects at BWI, the
effects long-haul it will have, and I look forward to this
conversation.
Senator Dorgan. Senator Cantwell?

STATEMENT OF HON. MARIA CANTWELL,
U.S. SENATOR FROM WASHINGTON

Senator Cantwell. Thank you, Mr. Chairman, and thank you
for holding this hearing. And I know you and the Chairman of
the full Committee feel very strongly about how important it is
to move FAA legislation through the Congress and get it into
law, and I appreciate that very much.
I am here today really to hear from some of the witnesses
and to have this discussion from the perspective of the Pacific
Northwest, we want access to our Nation's capital and we don't
want to be disadvantaged just because we are regionally in a
different part of the country.
I have to say that the discussions we've had in the past in
this committee, I think have been some of the most hard fought
discussions of this committee. I remember a particular
committee vote that went back and forth for a couple hours in
between votes and final decisions, but to me that was a
transparent process, and I think that's what's most important
here, is that we have a transparent process that members have a
chance to vote on these issues, that those votes take place not
in a back room in a back room discussion, but in the open doors
of these bodies, to make sure that everybody's interests are
heard and that the decisions are well understood.
I have a concern about the notion of slot conversion in
general. The notion of slot conversion, of dividing up the pie
through slot conversion is like saying only people who have
hosted a Super Bowl party before can now host the new Super
Bowl location. That's not the way we want to have fair
competition. The FAA's processes in the past, when this
committee has given them clear indication, this is the number
of slots they expected, have had a good transparent process on
exactly where new access to these airports should go. And I
think that that has--that level of transparency has been good
and good for the public's confidence in this process.
So, I know, Mr. Chairman and the Ranking Chairman, we don't
have a lot of time left, but I remain committed to working with
you to try to get this bill done. It is important. I hope, as
you say, we can reach consensus and figure out a way in that
today's hearing will bring light on how to do that. But I'm
going to make sure that--that it is a transparent process and
that everybody has an ability to have the public see and
dialogue about what the proposal is, and it's not done at the
11th hour between just a few individuals.
This is important economics for lots of different
individuals and we deserve to have that kind of transparency.
So, I thank the Chairman.
[The prepared statement of Senator Cantwell follows:]

Prepared Statement of Hon. Maria Cantwell, U.S. Senator from Washington

Mr. Chairman, thank you for calling this hearing. I appreciate your
efforts, as well as the efforts by the Chairman of the full committee,
in trying to get the FAA authorization bill over the finish line. I
agree with both of you that it is essential Congress pass FAA
reauthorization legislation this year. My understanding is that there
are three major issues that need to be resolved. The first issue is
FedEx/UPS. The second issue is what, if any, increase should there be
for the Passenger Facilities Charge (PFC) program. The third issue is
the number of flights that should be allowed to operate beyond the
1,250-mile perimeter at Reagan National Airport.
The House-passed FAA bill would increase by 10, the number of
beyond the perimeter slots for take-offs and landings at Reagan
National Airport during the busier part of the day. It would accomplish
this by shifting unused slots from the early morning and late evening.
The Senate-passed FAA bill was silent on the issue--but not for a lack
of trying. As you know, there is new proposal for addressing beyond the
perimeter slots that involves both time shifting a limited number of
slots and conversion of thirty-two existing slots from large hubs
within the perimeter to Reagan National to beyond the perimeter
flights. The number of slots an airline operating slots at Reagan
National would be able to convert is based on the number of slots it
already operates. Today, over 80 percent of the slots are controlled by
U.S. Airways, Delta Airlines, and American Airlines. Twenty-five years
ago, these same three airlines only operated 25 percent of the slots.
Under the proposal, the FAA would have to approve or disapprove the
entire package of proposed converted flights. The FAA could not
disapprove of any single proposed converted flight.
It is also important to note that last year, US Airways requested
an FAA waiver to trade some of the takeoff and landing slots it
operates at LaGuardia Airport for some of the takeoff and landings
slots Delta operates at Reagan National Airport. The Department of
Justice weighed in, stating that it considers the availability of slots
as a substantial barrier to entry at Reagan National. It raised
concerns that competition at Reagan National will be reduced if the
airlines' waiver request was agreed to, as proposed. This led to the
FAA making its approval conditional on the divestiture of some slots at
each airport.
These conditions were not acceptable to the airlines. US Airways
and Delta decided not to go ahead with their swap. Instead, they chose
to go to court and challenge the FAA's authority to consider their
proposal's effect on competition at each of the airports.
If the airlines prevail in court, US Airways would control 54
percent of Reagan National's slots, American would control 15 percent
of the slots, Delta Airlines control 13 percent of the slots, the
merged United-Continental would control 10 percent of the slots; with
all other airlines sharing the remaining 8 percent of the slots. The
same three airlines would still operate more than 80 percent of all
slots, only now US Airways would operate over 3.5 times as many slots
as its next closest competitor.
While Reagan National would still not be considered to be a
fortress hub for US Airways if the swap goes through, you can see
things heading in that direction. The airline would have significant
market power and very little direct competition on most routes. As the
FAA noted in its conditional approval of the waiver request, ``If the
slot transaction was to be approved as proposed and US Airways and
Delta were to increase their presence at DCA and LGA respectively, the
competitive environment would become significantly more concentrated.
The carriers would likely rely on their increased dominance to maintain
or enhance their premium fare structure in markets served at both
airports. Furthermore, slot restrictions at both airports substantially
hinder proportional increases in competition by other carriers, and
higher fares will be sustainable due to the carriers' increased market
power at both airports. This tentative conclusion is supported by an
analysis of the carriers' past behavior in similar markets at both
airports.''
Slot conversion at any level is problematic because it will provide
an unfair competitive advantage to select carriers that have a large
presence at Reagan National Airport. It will allow the dominant
incumbent carrier or carriers to unfairly strengthen their competitive
position in the beyond-the-perimeter markets, to the detriment of other
carriers, particularly those that have only a handful of slots. While
consumers served on existing beyond the perimeter routes may benefit in
the near term, they will not benefit in the intermediate term, as the
history of these dominant carriers is to lower the ticket price to
drive out the competition, and once there is no competition, keep on
raising the ticket prices.
Further, I believe because most carriers use a hub and spoke
business model, a significant increase in beyond-the-perimeter flights
at Reagan National will reverberate across the country, impacting
airlines and routes in ways that really have not been thought through.
I believe the combination of a favorable court ruling for the
airlines and this slot conversion proposal would result in an outcome
that is anti-competitive, anti-consumer, and not in the public
interest.
I strongly support a significant increase in beyond the perimeter
slots at Reagan National to allow the citizens of more Western cities
to have direct access to their nation's capitol. These should include
new as well as time-shifted slots. I believe the airport has both the
additional air side and terminal side capacity to accomplish this.
There are several large and medium hub airports that deserve the
opportunity to compete for a direct flight to Reagan National. Our
approach should be pro-competitive, having a transparent process, and
with the FAA playing a central role in determining that each route is
based on the public interest
I look forward to hearing from the witnesses.

Senator Dorgan. Senator Cantwell, thank you very much.
The worst economics I would observe is for Congress not to
do its job and pass an FAA reauthorization bill. Every airport
and every region of this country, in my judgment, loses as a
result of that. So, I don't disagree that we need transparency
and we need to work hard to find the right solution here, but I
think failure is not a victory in any circumstance.
Let me say that the Honorable Susan Kurland is with us,
Assistant Secretary for Aviation and International Affairs at
the Department of Transportation. I would say to all five of
the witnesses that your full statements we made a part of the
permanent record and we would ask that you summarize.
Ms. Kurland, you may proceed.

STATEMENT OF HON. SUSAN L. KURLAND, ASSISTANT

SECRETARY FOR AVIATION AND INTERNATIONAL AFFAIRS,

U.S. DEPARTMENT OF TRANSPORTATION; ACCOMPANIED BY

MICHAEL J. SAMMARTINO, DIRECTOR OF SYSTEM

OPERATIONS, FEDERAL AVIATION ADMINISTRATION,

U.S. DEPARTMENT OF TRANSPORTATION

Ms. Kurland. Thank you Chairman Rockefeller, Senator
Dorgan----
Senator Dorgan. Could you turn your microphone on please?
Ms. Kurland. Thank you so much, Chairman Rockefeller,
Ranking Member Hutchison, Chairman Dorgan, Ranking Member
DeMint, and members of the Subcommittee.
Thank you for the opportunity to appear before you today to
discuss the Department of Transportation's role regarding
operations at the two Metropolitan Washington Airports
Authority airports, National Airport and Washington Dulles
International Airport. Given Congress's unique interest in DCA,
the Department of Transportation has consistently, through many
administrations, deferred to the Congress on how best to
address issues such as capacity and congestion. Accordingly,
the Department has taken no position as to whether the
perimeter rule should be modified or terminated or whether more
flights should be added.
In 2000, and again in 2003, Congress mandated that DOT
grant exemptions to the slot rules to permit expanded
operations at National. Congress also specified the criteria
that DOT was to apply in making those awards, which included
promoting air transportation by new air carriers, protecting
the interests of smaller airports and communities, and for the
within perimeter exemptions, producing maximum competitive
benefits, including low fares. Together, those two statutes
created 24 beyond-perimeter exemptions and 20 within-perimeter
exemptions, effectively adding an average of three commercial
flights per hour or approximately 5 percent to the total flight
operations.
Under the two statutes, DOT has awarded exemptions that
have brought non-stop DCA service to large beyond-perimeter
hubs such as Seattle, Los Angeles, and Las Vegas. Within the
perimeter, awards have improved competition and brought low
fares to hubs such as Atlanta and Fort Lauderdale, while
bringing new non-stop service to smaller communities such as
Jackson, Mississippi, Chattanooga, Tennessee, and Akron/Canton,
Ohio.
Congress also specified, that unlike slots, these
exemptions cannot be bought or sold or leased, but that they
must be used for services to the destinations for which they
were awarded. Because of forfeitures or withdrawals arising
from mergers and acquisitions or the unexpected
underperformance of a particular market, DOT sometimes must
conduct reallocation proceedings.
And, you know, on May 4, Secretary LaHood and FAA
Administrator Babbitt jointly issued a final notice on an
application by Delta and US Airways to exchange certain slot
holdings at National and LaGuardia Airport. That application
was occasioned by the need for a waiver from buy/sell
limitations at LaGuardia before the transaction could proceed.
DOT and FAA approved the carrier's proposal, which in primary
part was to exchange 125 U.S. Airway slot pairs at LaGuardia
for 42 Delta slot pairs at Reagan National, subject to the
condition that the carriers divest themselves of a number of
slot pairs at LaGuardia and DCA to new entrants and limited
incumbent carriers. This would have enabled both airports to
preserve competition and provide greater public benefits. The
carriers opted not to accept the Department's conditions.
In conclusion, let me again emphasize that the Department
has long recognized Congress's strong interest in capacity,
congestion, and operational issues at the MWAA airports,
particularly at National. We look forward to continuing
cooperation with Congress and with the Airports Authority on
issues that involve Reagan National and Dulles airports.
This concludes my prepared remarks. And with me today is
Michael Sammartino, the FAA's Director of System Operations. We
thank the Subcommittee for the opportunity to offer these
comments to you, and on behalf of the Department, we will be
pleased to answer any questions that you may have.
[The prepared statement of Ms. Kurland follows:]

Prepared Statement of Hon. Susan L. Kurland, Assistant Secretary for
Aviation and International Affairs, U.S. Department of Transportation;
accompanied by Michael J. Sammartino, Director of System Operations,
Federal Aviation Administration, U.S. Department Of Transportation
Chairman Rockefeller, Ranking Member Hutchison, Chairman Dorgan,
Ranking Member DeMint, and members of the Subcommittee----

Introduction
Thank you for the opportunity to appear before you today to discuss
the Department of Transportation's role regarding operations at the two
Metropolitan Washington Airports Authority airports, Ronald Reagan
Washington National Airport and Washington Dulles International
Airport. With me today is Mike Sammartino, Director of System
Operations for the Federal Aviation Administration's Air Traffic
Control System Command Center.
For many years, Congress has shown a unique interest in the
metropolitan Washington airports. In 1940, Congress authorized the
Federal Government to acquire a tract of land near the Capitol and
construct what is now Reagan National. As of 1959, the newly-created
Federal Aviation Administration took over the operation of that
airport. Shortly afterwards, Congress determined that a second major
airport, Washington Dulles International Airport, should be established
to serve the Washington, DC region and be owned and operated by the
FAA. Dulles opened in 1962. These are the only two major commercial
airports that have been authorized and established by Congress.
In December 1984, an advisory commission established by then-
Secretary of Transportation Dole found that the two airports were well
managed by the FAA but needed extensive capital improvements, in order
to respond to the growing commercial and air travel needs of the
region, and that those improvements could not be financed by the
Federal Government alone. The Commission recommended that Congress
transfer control of the airports to a Congressionally-approved regional
authority that would have the authority to issue tax-exempt bonds to
finance capital improvements at the airports. In April and December
1985, respectively, Virginia and the District of Columbia each enacted
legislation creating a regional authority to acquire Reagan National
and Dulles airports from the Federal Government.
Also in 1985, the Department of Transportation transmitted a
legislative proposal for transfer of the airports that was consistent
with the advisory commission report, and legislation was enacted in
October, 1986 that authorized the transfer of the airports to the
regional authority, known as the Metropolitan Washington Airports
Authority (MWAA). The transfer was executed by means of a 50-year long-
term lease, which was subsequently amended to extend until 2067. The
Congressional purpose was to ``achieve local control, management,
operation, and development of these important transportation assets.''
Key among Congress's findings was that ``the U.S. Government has a
continuing but limited interest in the operation of the 2 federally-
owned airports,'' and that ``operation of the [two airports] by an
independent local authority will facilitate timely improvements at both
airports to meet the growing demand of interstate air transportation
occasioned by the Airline Deregulation Act.''
The Transfer Act also employed two important and unique operational
constraints at National--the ``slot'' rule and the ``perimeter'' rule.
Congress applied the High Density Slot Rule (HDR) to Reagan National by
prohibiting MWAA from either increasing or decreasing the number of
instrument flight rule take-offs and landings authorized by the HDR as
of October 1986, or imposing a passenger cap there. Second, Congress
prohibited an air carrier from operating nonstop air transportation
from National and another airport more than 1,250 statute miles away.
Reagan National is the only commercial airport in the United States at
which Congress has imposed such constraints.
By incorporating FAA's existing rules into MWAA's operation of
Reagan National, each flight operation must have a slot from the
Federal Aviation Administration, with the total number of take-offs and
landings limited to 48 commercial slots per hour, of which 11 are for
commuter aircraft, during an 18-hour period from 6 am to midnight.
Further, 12 additional slots per hour are available to general aviation
or other aircraft that do not operate on a scheduled basis, such as
military or corporate aircraft.
Given Congress' unique interest in and attention to operations at
Reagan National Airport, the Department of Transportation--consistently
through many administrations--has deferred to the Congress on how best
to address issues such as capacity and congestion. Accordingly, the
Department of Transportation has taken no position as to whether the
perimeter rule should be modified or terminated altogether, or whether
the airport should add more flights.
We can, however, state, as we have in the past, that FAA's traffic
programs and procedures can accommodate some increase in commercial
operations at Reagan National, within the existing cap, with the
precise number of additional flights that can be accommodated dependent
on the fleet mix and the runway use that would be required.
The Department has also focused on its role as steward of the
specific statutory requirements that apply to Reagan National Airport
and the Congressional goals and objectives that underlie them.
Accordingly, we have sought to ensure that there is continuing
compliance with the laws and principles established by Congress, as
well as to implement new statutory requirements. In that role, the
Department, for example, is currently conducting a carrier selection
proceeding for two open slot exemptions, and recently proposed a
limited divestiture of slots in connection with a major proposed
transaction between US Airways and Delta involving a swap of slot
holdings at Reagan National and LaGuardia airports.

Slot Exemptions
In 2000, with enactment of the Wendell H. Ford Aviation Investment
and Reform Act for the 21st Century (``AIR-21''), Congress mandated
that the Department grant exemptions to the slot rules to allow for
expanded operations at Reagan National. At that time, it directed that
the Secretary award 12 slot exemptions for service beyond the
perimeter, and 12 more within the perimeter. It also specified the
criteria that the Department of Transportation was to apply in making
these awards, which included promoting air transportation by new
entrant air carriers, protecting the interests of smaller airports and
communities, and, for the within-perimeter exemptions, producing
maximum competitive benefits, including low fares.
In 2003, Congress expanded the slot exemption program with the
Vision 100--Century of Aviation Reauthorization Act. It added 12 more
beyond-perimeter exemptions, to a total of 24, and 8 more within-
perimeter ones, to a total of 20. Together, the two statutes
effectively added an average of three commercial slots per hour, or
about 5 percent to the total slot operations.
In implementing its authority under the two statutes, DOT awarded
exemptions that brought nonstop DCA service to large beyond-perimeter
hubs such as Seattle, Los Angeles and Las Vegas. Within the perimeter,
the awards have improved competition and brought low fares to hubs like
Atlanta and Fort Lauderdale, while bringing new nonstop service to
smaller communities such as Jackson, MS; Chattanooga, TN; and Akron/
Canton, OH.
Congress also specified that, unlike HDR slots, these exemptions
cannot be bought, sold, or leased, so they must be used by the slot
exemption holder for service to the particular destinations for which
they were awarded. Because of forfeitures or withdrawals arising due to
mergers and acquisitions, or the unexpected underperformance of a
market, DOT sometimes must conduct reallocation proceedings. We have
one such proceeding currently underway, affecting two exemptions
originally awarded to Midwest Airlines for service to Kansas City. That
airline has now ceased to exist as a carrier after its acquisition by
Republic Airways. We have solicited applications for these two
exemptions, with carriers being invited to propose service that they
believe would fit the statutory criteria (which could of course include
service to Kansas City as well as other destinations). Since this is an
ongoing proceeding, it would not be appropriate for me to address the
substance of the matters involved, but I can assure you that we will
consider each application on its merits, and in accordance with the
selection criteria that Congress has set out.

The Proposed U.S. Airways/Delta ``Slot Swap''
On May 4, Secretary LaHood and FAA Administrator Babbitt jointly
issued a final notice on an application by Delta and US Airways to
exchange certain slot holdings at Reagan National and LaGuardia
Airports. That application was occasioned by the need for a waiver from
buy-sell limitations in the LaGuardia Order before the transaction
could proceed. The carriers' proposal in primary part was to exchange
125 U.S. Airways' slot pairs at LaGuardia for 42 Delta slot pairs at
Reagan National. We reviewed the slot swaps as a single, unified
transaction, because we found the LaGuardia slots purchase and sale
would not occur without the Reagan National slots purchase and sale,
and vice versa. We granted the carriers' petition for a waiver from the
limitations in the LaGuardia Order subject to the condition that the
carriers divest themselves of a number of slot pairs at LGA and DCA.
The slot divestitures, to be made to new entrants and limited incumbent
carriers, would have enabled both airports to preserve competition and
provide greater public benefits and increased efficiencies. The
carriers opted not to accept the Department's conditions.
In the course of our analysis of that proposed transaction, we
observed a number of characteristics concerning service at Reagan
National that may be of interest to the Committee. We found that:

Reagan National is a relatively high-fare airport, having
the third highest fare premium of the 121 city markets that
were examined;

For a large portion of passengers, especially time-sensitive
passengers, the three airports in the Baltimore-Washington
metropolitan areas are not effective substitutes for each
other, with price competition from Thurgood Marshall Baltimore-
Washington Airport and Dulles International Airport not
effectively disciplining the fares at Reagan National;

There is a relatively low level of competition afforded by
low cost carriers at Reagan National, with only 3.3 per cent of
the slots held by them; and

Barriers to entry continue to exist at the airport, in
particular as the secondary slot market has not facilitated the
degree of new competition by either new entrants or limited
incumbents as originally envisaged.

On-Time Statistics
As you may know, the Department compiles and publishes data showing
on-time performance at the Nations' major airports, and on this score
Reagan National and Dulles fare reasonably well compared to other large
hub airports. From January through June of 2010, 84.2 percent of the
departures from Reagan were on-time, and 81.4 percent of those from
Dulles. The average on-time performance at large hubs over the same
time period was 79.1 percent.

Conclusion
In conclusion, let me stress again that the Department has long
recognized that Congress has maintained a strong interest in capacity,
congestion, and operational issues at the MWAA airports, particularly
Reagan National.
We look forward to continuing cooperation with the Congress, and
with the Airports Authority, in assuring that Reagan National and
Dulles provide our Nation's capital with gateways that are safe,
modern, convenient, and affordable.
This concludes my prepared remarks. I thank the Subcommittee for
the opportunity to offer these comments to you on behalf of the
Department, and I will be pleased to answer any questions that you may
have.

Senator Dorgan. Secretary Kurland, thank you very much for
your testimony and for being here. And Mr. Sammartino, thank
you for accompanying her, and I understand you will be
available for questions as well.
Next, we'll hear from Mr. Lee Kair, the Assistant
Administrator for Security Operations at the Transportation
Security Administration.
Mr. Kair, you're welcome to begin.

STATEMENT OF LEE R. KAIR,

ASSISTANT ADMINISTRATOR FOR SECURITY OPERATIONS,

TRANSPORTATION SECURITY ADMINISTRATION,

U.S. DEPARTMENT OF HOMELAND SECURITY

Mr. Kair. Good afternoon, Chairman Dorgan, Chairman
Rockefeller, and distinguished members of the Subcommittee.
Thank you for the opportunity to appear before you today to
discuss the Transportation Security Administration's passenger
screening operations at the Washington Metropolitan Area
airports. I appreciate the Subcommittee's leadership in
ensuring the security of our nation's aviation system.
While the security of the traveling public is core--is a
core component of TSA's mission, we are also committed to
maximizing efficiency and convenience to passengers. We
constantly strive to improve the effectiveness and efficiency
of TSA people, process, and equipment in our nation's airports,
including those in the Washington metropolitan area.
TSA has the flexibility to meet the evolving of our airport
and airline partners. When aviation operations change, so does
TSA. Our stacking allocation model guides in determining
staffing and equipment requirements needed to provide efficient
world-class security when circumstances change in the fast-
paced airline and travel environment. As part of that process,
TSA works closely with airport authorities around the country,
including the Metropolitan Washington Airports Authority or
MWAA.
As you know, MWAA includes Ronald Reagan Washington
National Airport or DCA, where TSA processes more than 8
million passengers and 4 million pieces of luggage each year.
TSA has four security checkpoints in three DCA terminals and
more than 580 transportation security officers screen
approximately 22,000 passengers and 11,000 pieces of checked
baggage each day.
With constant improvements to our staffing, the processes,
the wait time to clear security at DCA for many passengers is
very short, and for almost 100 percent of passengers, the wait
time has been less than 20 minutes during the current fiscal
year.
In addition to our people and processes to screen airline
passengers efficiently and effectively, technology is also
critical to the accomplishment of our security mission. DCA was
the first airport where TSA provided intelligence information
to its workforce through TSA's Network Information Officer
Program. DCA was the first airport where TSA employees screened
100 percent of cargo with explosive trace detection screening,
one of several allowable technologies utilized for screening
cargo. DCA is the recipient of American Recovery and
Reinvestment Act funds for the improvement of existing closed
circuit television security systems. And DCA also significantly
improved its passenger screening capabilities in July and
August of this year with the deployment of four advanced
imaging technology or AIT units for primary screening.
TSA has become the world leader in the deployment of
advanced imaging technology, which enables our transportation
security officers to quickly identify both metallic and non-
metallic threat items that could be hidden on a passenger's
body. In addition to DCA, TSA is deploying AIT machines to
airports throughout the country, including future deployment at
Washington Dulles International Airport. Throughout the
deployment process with have strived to maximize threat
detection in customer/passenger throughput while also
addressing concerns regarding safety, and civil rights and
liberties.
TSA's operation at DCA is a solid example of how TSA
constantly operationalizes intelligence to close
vulnerabilities and strengthen our layered security network.
Because our people are our most important and adaptive
resource, TSA ensures that its personnel are on the front lines
of aviation security, have the information, equipment,
training, and skills needed to respond to threats in the most
effective manner. This high-functioning TSA airport workforce,
coupled with our strong ongoing relationships with airport
authorities like MWAA, help us deliver world-class security
efficiently and effectively in the fast-paced U.S. airport
environment.
Thank you for the opportunity to appear before you--before
the Committee today. I appreciate your support in achieving our
shared security goals, and I'm happy to answer any questions
that you may have.
[The prepared statement of Mr. Kair follows:]

Prepared Statement of Lee R. Kair, Assistant Administrator for Security
Operations, Transportation Security Administration, U.S. Department of
Homeland Security

Good afternoon, Chairman Dorgan, Ranking Member DeMint, and
distinguished members of the Subcommittee. Thank you for the
opportunity to appear before you today to discuss the Transportation
Security Administration's (TSA) passenger screening operations at the
Washington Metropolitan Area airports. I appreciate the Subcommittee's
leadership in ensuring the security of our Nation's aviation
operations.
When TSA Administrator John Pistole appeared before the full Senate
Commerce, Science, and Transportation Committee last June for his
confirmation hearing, one of the major topics of discussion was the
importance of TSA maintaining a passenger screening system that fully
secures our Nation's aviation network while maximizing efficiency and
effectiveness and minimizing inconvenience to passengers. This is a
critical component of TSA's mission, and one to which we adhere
rigorously not only at the Washington Metropolitan Area airports, but
at all of the more than 450 airports throughout the United States. We
constantly strive to improve the effectiveness and efficiency of our
systems, as well as the performance of our personnel to ensure the
safety and security of the traveling public in all modes of
transportation, including aviation.
TSA's core mission is protecting the traveling public from the
evolving terrorist threat, and we are constantly working to close
vulnerabilities with new technology and new processes via a complex
layered security network. We are often confronted with suspicious
incidents and potential threats occurring throughout the worldwide
aviation network, and we must be ready to respond to anything we might
encounter. Our overall goals are to enhance human decision-making and
to ensure that our personnel on the front lines of aviation security
have the information, resources and skills needed to respond to any
threat in the most effective manner.

Ninth Anniversary of 9/11 Attack Marked by Strong Workforce, Technology
Advances
Only 5 days ago, we commemorated the ninth anniversary of the
terrorist attacks of September 11. The terrible images of that day are
a constant reminder that we operate in a high-threat environment and
must remain ever vigilant against those who would use our Nation's
transportation system to do us harm.
In the aftermath of the 9/11 attacks, this committee played a
critical role in developing and implementing the framework for a more
secure national transportation system. In creating TSA, a dedicated
workforce was put in place to provide a layered security network that
now includes constant evaluation of intelligence information related to
transportation security, close collaboration with industry and
government partners, Transportation Security Officers (TSOs) at airport
security checkpoints, Behavior Detection Officers assessing passengers
that may pose a threat to aviation security, Federal Air Marshals
traveling on domestic and international flights, canine teams providing
visible deterrence and a reliable explosives detection capability, and
Transportation Security Inspectors monitoring aviation, rail, and mass
transit operations.
Additionally, TSA is constantly deploying the most effective
technology to combat the evolving threat to the transportation sector.
TSA has become a world leader in the deployment of Advanced Imaging
Technology (AIT) that will strongly advance our ability to detect a
wide array of threats in the aviation system. AIT enables TSOs to
quickly identify potential security threats, both metallic and non-
metallic, that could be hidden on a passenger's body. We are deploying
AIT machines to airports throughout the country, and working to
maximize threat detection and customer throughput, while also
addressing concerns regarding safety, civil rights and civil liberties.
AIT is only one of many advanced technologies designed to improve
our threat detection capabilities while minimizing passenger
inconvenience. Through such technologies, TSA is equipping its
workforce of 45,000 TSOs with the resources needed to safely process
nearly 2 million passengers every day.

Security Operations at Washington Metropolitan Area Airports
TSA is an intelligence-driven agency that employs a risk-based
strategy to secure U.S. transportation systems from the evolving
terrorist threat, working closely with stakeholders in all
transportation sectors. As technology advances and our screening
protocols are constantly adjusted to safeguard the traveling public, we
remain dedicated to keeping Americans safe while they fly, while also
protecting the civil rights and civil liberties of passengers,
maintaining quick passenger throughput at security checkpoints, and
providing quality customer service. These issues are extremely
important at all of our Nation's airports, including Washington Dulles
International Airport (IAD) and Ronald Reagan Washington National
Airport (DCA)--two of our country's busiest airports.
IAD averages 423 international departures and over 2,500 domestic
departures per week and is serviced by 31 air carriers. There are 3
concourses, 143 gates, and 4 runways. IAD has 5 security checkpoints
with a total of 34 lanes, and passenger and baggage screening is
performed by nearly 700 TSOs. TSOs at IAD screen approximately 25,000
passengers and 20,000 pieces of checked baggage each day.
IAD will receive significant security and operational enhancements
in the coming years: three terminals will convert to Inline Baggage
Systems from 2011 to 2013, and American Recovery and Reinvestment Act
(ARRA) funding will add an additional 300 closed-circuit television
(CCTV) cameras to IAD in February 2011. AIT units are scheduled for
deployment to IAD beginning this fall.
Since opening two Mezzanine Security Checkpoint areas at IAD in
September 2009, we have made dramatic improvements in wait times. The
wait time for passengers going through security checkpoints at IAD has
been less than 20 minutes for 99 percent of the traveling public during
the current Fiscal Year. The addition of the security mezzanines,
combined with the planned conversion to Inline Baggage Systems and the
deployment of AIT equipment, will enhance both IAD's functionality and
security posture.
DCA processes over 8 million departing passengers and 4 million
pieces of luggage each year and is serviced by 12 airlines operating at
44 gates. DCA has three terminals and four security checkpoints, and
passenger screening is performed by more than 580 TSOs. TSOs at DCA
screen approximately 22,000 passengers and 11,000 pieces of checked
baggage each day. The wait time for passengers going through security
checkpoints has been less than 20 minutes for almost 100 percent of the
traveling public during the current fiscal year.
DCA was the first airport to provide intelligence information to
the workforce through TSA's Network Information Officer Program, and it
was the first airport to screen 100 percent of cargo with Explosives
Trace Detection screening, one of several allowable technologies
utilized for screening cargo. DCA is the recipient of ARRA funds for
the improvement of existing CCTV systems. And DCA also improved its
passenger screening capabilities in July and August of this year with
the installation of four AIT units deployed in the primary screening
position.

Conclusion
Thank you for the opportunity to appear before the Committee today
to speak about TSA's passenger screening operations at our Washington
Metropolitan Area airports. I appreciate your support in achieving our
shared security goals, and I am happy to answer any questions you may
have.

Senator Dorgan. Mr. Kair, thank you very much.
Next, we'll hear from the Honorable Charles Darwin
Snelling, the Chairman of the Board of the Metropolitan
Washington Airports Authority.
While I call on you, Mr. Snelling, let me by consent
include in the record an opening statement by Senator Kay
Bailey Hutchison, who's not able to be with us today.
[The prepared statement of Senator Hutchison follows:]

Prepared Statement of Hon. Kay Bailey Hutchison, U.S. Senator from
Texas

Senator Dorgan, thank you for convening today's hearing on the
Metropolitan Washington Airports Authority and the existing perimeter
rule at Reagan National Airport.
The Senate passed its FAA reauthorization bill on March 22, 2010,
by an overwhelming vote of 93-0. After 5 months of extremely difficult
negotiations with the House and three plus years of short-term
extensions, we are at a crucial point in the process. For the sake of
the air traveling public, this is a time for reason and compromise, not
objection.
The differences between the House and Senate passed FAA bills were
stark and several highly controversial items were contained in the
House bill. We have done our best to address those issues and I commend
Senator Dorgan, and Chairman Rockefeller for their leadership in
helping craft a very reasonable compromise.
Unfortunately, one of the issues we still find ourselves at odds
over is the DCA perimeter rule. I, for one, can certainly appreciate
the nuances and difficulty in dealing with airport perimeter
regulations, as I spent several years dealing with the ``Wright''
Amendment.
However, I cannot fathom the level of objection to a compromise
provision that in essence only adds five ``new'' flights to an airport
that the Government Accountability Office has indicated has the
capacity to handle more traffic in an effort to supposedly protect the
special interest of one of the largest airports in the United States--
and one that already handles far more passengers annually than Reagan
National.
When we started debate on this issue, several members of this
committee and the Senate simply wanted to repeal the DCA perimeter
rule. Through Senate floor discussion and verbal commitment, we agreed
to move forward in an effort to find a reasonable solution, knowing
passage of the underlying FAA reauthorization was extremely important
to improving aviation safety and air traffic control modernization.
Following that process, we crafted a compromise provision, heavily
weighing the wishes of both those who wanted full repeal and those who
wanted the status quo.
The compromise comes down to two concepts: a small number of new
flights and conversion flights.
Based on GAO's clear description that DCA can accommodate
additional capacity we adopted a proposal that would add five ``new''
flights that would be set aside for new and limited incumbent carriers.
These ``new'' beyond the perimeter flights would not only add access,
but also competition.
Then, based on the wishes of those wanting to limit the expansion
of the airport, we crafted a proposal to allow incumbent carriers at
DCA to ``convert'' a total of 16 existing within-the-perimeter flights
to flights beyond the perimeter. By allowing for ``conversions,'' the
proposal negates the need for additional ``new'' flights and allows
carriers to better utilize their networks. To provide additional
comfort with the concept, we also phased the provision in over a 2-year
period.
Knowing the sensitivity to the issue, we also included several
additional criteria on the `conversion' flights, including:

Evaluation and annual reporting by the Secretary of
Transportation ensuring the changes are in the public interest.

Only existing within-the-perimeter flights from large hub
airports could be converted, ensuring small community air
service.

Flights cannot be sold, traded or leased.

Exemptions may not be operated with wide-body aircraft,
limiting aircraft size to address noise concerns.

MWAA is provided the ability to revenue share between DCA
and Dulles, providing financial stability and equal footing
with other airport authorities.

Surprisingly, this compromise proposal is somehow not enough. Quite
frankly, I find this hard to believe and unacceptable, especially since
the entire FAA reauthorization bill hangs in the balance.
We have put forth a modest proposal that increases carrier
flexibility, competition, travel options, protects small communities,
is in a market that has demand, at an airport that has additional
capacity, without significantly impacting other surrounding airports.
If that isn't compromise, then I don't know what is.

Senator Dorgan. Mr. Snelling, you may proceed.

STATEMENT OF HON. CHARLES DARWIN SNELLING,

CHAIRMAN, METROPOLITAN WASHINGTON AIRPORTS

AUTHORITY

Mr. Snelling. Good afternoon, Chairman Dorgan and members
of the Committee, my name is Charles Darwin Snelling, and I am
Chairman of the Metropolitan Washington Airports Authority. I
am pleased to appear today, together with our President and
Chief Executive Officer, Lynn Hampton, to testify on our
stewardship in operating Ronald Reagan National and Washington
Dulles International Airports on behalf of the Nation.
The Airports Authority was created on October 18, 1986, the
date President Reagan signed the Metropolitan Washington
Airports Act, by an Interstate Compact between the Commonwealth
of Virginia and the District of Columbia. In that Act, the
Congress authorized the Secretary of Transportation to lease
National and Dulles Airports to the Airports Authority for 50
years. Up to that time, both Airports had been built and
operated by the Federal Aviation Administration and its
predecessors.
The lease between the United States and the Airports
Authority was executed in March 1987, and the Authority took
over operations in June. The lease has since been extended to
2067. Under the lease, all property of the two Airports,
including the Dulles Access Highway, was transferred to the
Airports Authority, along with the authority and responsibility
to operate, promote, protect, improve and develop the Airports.
The purpose of the Airports Authority's creation and the
transfer to it of the region's two airports--and the clear
direction to the Airports Authority--was to provide the funding
the Federal Government couldn't for the development of these
airports into world class facilities befitting their status as
the airports serving the Nation's capital.
Equally clear was that this purpose and direction were to
be pursued by the Airports Authority at National Airport in a
manner consistent with traditional limitations relating to the
number of flights or slots and a perimeter applicable to non-
stop flights, that Congress established by statute at the time
it authorized the transfer. At the time of the transfer,
Linwood Holton, former Governor of the Commonwealth of
Virginia, at the time serving as the Chairman of the Advisory
Commission on the Reorganization of the Metropolitan Washington
Airports, testified, ``The continuing debates over operating
policy, particularly at National will end. As part of the
transfer, a statutory freeze would be in place on growth in air
traffic at National. This will enable the new authority to plan
on long overdue improvements there without uncertainty about
the future use of the Airport.'' Governor Holton, by the way,
became the first Chairman of the Metropolitan Washington
Airports, serving 6 years, a feat unmatched by his successors.
The Airports Authority now consists of 13 Members,
generally known as the Board of Directors, with 3 Members
appointed by the President of the United States, 5 appointed by
the Governor of Virginia, 3 by the Mayor of the District of
Columbia, and 2 by the Governor of Maryland. I was appointed to
the Authority by the President in 2003, and elected Chairman
for a second annual term by my colleagues just this month.
The Authority today employs more than 1,400 people in an
organizational structure that includes central administration,
airports management and operations, and public safety, and more
recently, the operation of the Dulles Toll Road on the
Authority's right-of-way.
The Airports Authority's operations are not taxpayer-
funded, but are self-supporting, using airline landing fees,
terminal rents, and revenues from concessions to fund operating
expenses at both Airports. Our capital program is funded by
revenue bonds secured by the same revenues, with additional
support from grants from the Airport and Airways Trust Fund and
passenger facility charges, which in turn are fees on aviation
activities and passenger tickets.
In order to ensure modern and efficient ground
transportation service to Dulles International Airport, the
Airports Authority has recently assumed responsibility for the
operation of the Dulles Toll Road from the Commonwealth of
Virginia and the construction of a 23-mile extension of the
Washington Monorail System to Dulles and beyond into Loudoun
County. Most of this rail extension will be located within the
median of the Dulles Airport Access Highway, which is legally a
part of Dulles Airport and therefore covered by our lease.
When Congress authorized the lease with the Airports
Authority and entrusted to us the operation and development of
the region's two federally-owned Airports in accordance with
the direction it provided, it struck a balance among the
sometimes competing interests of the Airports' many
stakeholders, including the Federal Government, the airlines,
Baltimore Washington International Thurgood Marshall Airport,
the region's local governments and business communities, and
the residents living near the airports.
It has been an honor for us to be able to carry out the
extraordinary vision our leaders left for us, particularly that
of President Eisenhower and the Congress, in building Dulles,
with its ten thousand acres, well beyond the developed area in
the region. It is a facility with capacity for growth that is
likely to take us comfortably through the 21st Century. No
other city on the East Coast can match the opportunity for
airport development in Washington.
Over the last quarter of a century, the Airports Authority
has worked diligently to live up to the Congress's expectations
as stewards of the Metropolitan Washington Airports. We believe
we have, in large measure, been successful in developing both
Reagan National and Dulles International Airports into the
world class facilities that the Congress desired, while
remaining true to the balance of interests that the Congress
struck when entrusting the airports to us. We remain fully
committed to continuing to fulfill our role as stewards of
Ronald Reagan Washington National and Washington Dulles
International Airports.
I'm going to digress for 1 second, if I may, to tell you
that I owned and operated my own airplane for 50 years, and I'm
with 100 percent supportive of the need for a reauthorization
bill, and NextGen is dear to my heart. So, I wish you the best
on that.
I would now like Lynn Hampton, the Airports Authority's
President and Chief Executive Officer, to expand on the
performance of the Airports Authority over the years and to
share some of the Airports Authority's financial, management
and operational characteristics with the Subcommittee.
Thank you.
[The prepared statement of Mr. Snelling follows:]

Prepared Statement of Hon. Charles Darwin Snelling, Chairman,
Metropolitan Washington Airports Authority

Good afternoon, Chairman Dorgan and members of the Committee, my
name is Charles Darwin Snelling, and I am Chairman of the Metropolitan
Washington Airports Authority. I am pleased to appear today, together
with our President and Chief Executive Officer, Lynn Hampton, to
testify on our stewardship in operating Ronald Reagan National and
Washington Dulles International on behalf of the Nation.
The Airports Authority was created on October 18, 1986, the date
President Reagan signed the Metropolitan Washington Airports Act, by an
Interstate Compact between the Commonwealth of Virginia and the
District of Columbia.
In that Act, the Congress had authorized the Secretary of
Transportation to lease National and Dulles Airports to the Airports
Authority for 50 years. Up to that time, both Airports had been built
and operated by the Federal Aviation Administration and its
predecessors.
The lease between the United States and the Airports Authority was
executed in March 1987, and the Authority took over operations in June.
The lease has since been extended to 2067. Under the lease, all
property of the two Airports, including the Dulles Access Highway, was
transferred to the Airports Authority, along with the authority and
responsibility to operate, promote, protect, improve and develop the
Airports.
The purpose of the Airports Authority's creation and the transfer
to it of the region's two airports--and the clear direction to the
Airports Authority--was to provide the funding the Federal Government
couldn't for the development of these airports into world class
facilities fitting their status as the airports serving the Nation's
capital. Equally clear was that this purpose and direction were to be
pursued by the Airports Authority at National Airport in a manner
consistent with traditional limitations relating to the number of
flights, or ``slots,'' and a ``perimeter'' applicable to non-stop
flights, that Congress established by statute at the time it authorized
the transfer. At the time of the transfer, Linwood Holton, former
Governor of the Commonwealth of Virginia, at the time serving as the
Chairman of the Advisory Commission on the Reorganization of the
Metropolitan Washington Airports, testified, ``The continuing debates
over operating policy, particularly at National will end. As part of
the transfer, a statutory freeze would be in place on growth in air
traffic at National. This will enable the new authority to plan on long
overdue improvements there without uncertainty about the future use of
the Airport.'' Governor Holton, by the way, became the first Chairman
of the Metropolitan Washington Airports, serving 6 years, a feat
unmatched by his successors.
The Airports Authority now consists of 13 Members, generally known
as the Board of Directors, with three Members appointed by the
President of the United States, five appointed by the Governor of
Virginia, three by the Mayor of the District of Columbia, and two by
the Governor of Maryland. I was appointed to the Authority by the
President in 2003, and elected Chairman for a second annual term by my
colleagues just this month. The Authority today employs more than 1,400
people in an organizational structure that includes central
administration, airports management and operations, and public safety,
and more recently, the operation of the Dulles Toll Road on the
Authority's right-of-way.
The Airports Authority's operations are not taxpayer-funded, but
are self-supporting, using airline landing fees, terminal rents, and
revenues from concessions to fund operating expenses at both Airports.
Our capital program is funded by revenue bonds secured by the same
revenues, with additional support from grants from the Airport and
Airways Trust Fund and passenger facility charges, which in turn are
fees on aviation activities and passenger tickets.
In order to ensure modern and efficient ground transportation
service to Dulles International Airport, the Airports Authority has
recently assumed responsibility for the operation of the Dulles Toll
Road from the Commonwealth of Virginia and the construction of a 23-
mile extension of the Washington Metrorail System to Dulles and beyond
into Loudoun County. Most of this rail extension will be located within
the median of the Dulles Airport Access Highway, which is legally a
part of Dulles Airport and therefore covered by our lease.
When Congress authorized the lease with the Airports Authority and
entrusted to us the operation and development of the region's two
federally-owned Airports in accordance with the direction it provided,
it struck a balance among the sometimes competing interests of the
Airports' many stakeholders, including the Federal Government, the
airlines, Baltimore Washington International Thurgood Marshall Airport,
the region's local governments and business communities, and the
residents living near the airports.
It has been an honor for us to be able to carry out the
extraordinary vision our leaders left for us, particularly that of
President Eisenhower and the Congress in building Dulles, with its ten
thousand acres, well beyond the developed area in the region, a
facility with capacity for growth that is likely to take us comfortably
through the 21st Century. No other city on the East Coast can match the
opportunity for airport development in Washington.
Over the last quarter of a century, the Airports Authority has
worked diligently to live up to the Congress's expectations as stewards
of the Metropolitan Washington Airports. We believe we have, in large
measure, been successful in developing both Reagan National and Dulles
International Airports into the world class facilities that the
Congress desired, while remaining true to the balance of interests that
the Congress struck when entrusting the airports to us.
We remain fully committed to continuing to fulfill our role as
stewards of Ronald Reagan Washington National and Washington Dulles
International Airports.
I would now like Lynn Hampton, the President and Chief Executive
Officer, to expand on the performance of the Airports Authority over
the years and to share some of the Airports Authority's financial,
management and operational characteristics with the Subcommittee.

Senator Dorgan. Mr. Snelling, thank you very much.
Next, we'll hear from E. Lynn Hampton, President and Chief
Executive Officer of the Metropolitan Washington Airports
Authority. Ms. Hampton, thank you very much. You may proceed.

STATEMENT OF E. LYNN HAMPTON, PRESIDENT AND CEO, METROPOLITAN
WASHINGTON AIRPORTS AUTHORITY

Ms. Hampton. Good afternoon, Chairman Dorgan, and Chairman
Rockefeller, and members of the Committee. My name, as you
said, is Lynn Hampton. I am the President and Chief Executive
Officer of the Metropolitan Washington Airports Authority,
serving since May 2010. Previously, I served as the Chief
Financial Officer of the Airports Authority for over 21 years.
We appreciate this opportunity to appear before the
Subcommittee. And as the Chairman said, I ask that my entire
statement be inserted in the record and I will summarize my
remarks.
The Metropolitan Washington Airports Act of 1986, or the
Transfer Act, entrusted the Airports Authority with two
substantial Federal assets, Reagan National and Dulles
International, and directed us to operate, improve, and protect
and develop these airports in a manner befitting their status
as gateways to the Nation's capital. We believe that over the
past 24 years, the Airports Authority has done the job Congress
asked us to do.
The Transfer Act was the result of the need to make sorely
needed investments in the airports that were not being made by
the Federal Government, because we could access the bond
market. In the Transfer Act, Congress effectively delivered
four major guidelines to the Airports Authority. First,
construct needed improvements at both airports. Second, plan
facilities at Reagan National based on a 37 slot-per-hour rule.
Third, plan facilities at Reagan National according to the
1,250 mile perimeter, which Congress placed in the Transfer
Act. And fourth, plan facilities at Dulles to accommodate
future growth.
The Airports Authority has consistently followed these
guidelines. The master plans for both airports are based on the
role of Reagan National as a short, medium, and medium haul
airport, and Dulles International as the growth airport.
Since the transfer, the Airports Authority has financed
approximately $1.2 billion in capital improvements at Reagan
National, including a one million square foot new terminal, new
parking garages, roadway systems, and direct connection to the
Metro rail. These improvements include no significant
improvements to the airfield. And in accordant with the
statutes maintained the airport--we maintained the airport's 44
gates. This was the airport's capacity at the time of transfer.
The Airports Authority has financed approximately $4.7
billion in capital improvements at Dulles, based again on
Congress's transfer guidelines that Dulles be developed for
future growth. Consistent with Congress's direction and the
slot and perimeter limitations, passenger traffic at Reagan
National has remained relatively stable since the transfer.
From 1987 to 2001, traffic ranged between 15 and 16 million
passengers. The events of September 11, 2001 resulted in a
decrease in passenger traffic throughout the entire Nation and
the world, until the recovery of air traffic in 2004. After the
enactment of AIR-21 and Vision 100, passenger totals grew at
Reagan National to a high 18.7 million in 2007. Passenger
levels decreased to 17.6 million in 2009.
Passenger traffic at Dulles more than doubled since the
transfer, from 11 million in 1987 to 23.2 million in 2009.
Domestic travel at Dulles has historically been more affected
by the economy, dropping by a million passengers in 2008 and
another 600,000 in 2009, resulting in 17.2 million passengers
in 2009.
International traffic at Dulles is highly dependent on the
expensive domestic flights that enable passengers to connect to
international flights. Dulles would not have the robust
international traffic it has today without the connecting
domestic service.
The Airports Authority has managed its financial operations
in a responsible and prudent manner. Our credit ratings are
among the highest at any U.S. airport. I should note that
although Fitch and Moody's recently affirmed our Airports
Authority's double-A rating, both agencies had modified their
outlook on our bonds from stable to negative. These negative
outlooks do not stem from concerns over management of the
airport or finances, but reflect concerns over the modest level
of projected growth of the two airports and substantial
increases in debt service that will be added to airline rates
and charges, particularly at Dulles.
When the Airports Authority was originally planned in the
1950s, land was acquired for the right of way to construct
transit to the airport. In 2008, the Airports Authority assumed
the responsibility for the realigned construction and became
the operators of the Dulles Toll Road, which was previously
operated by the Virginia Department of Transportation. This
enables revenues from the toll road to assist in financing the
rail line. When construction is completed, we will turn the
rail line over to WMATA to operate and maintain.
In March 2009, the FTA and the Airports Authority executed
a full funding grant agreement, which provided $900 in Federal
funds for Phase 1 of the rail project. This phase will run from
Interstate 66 near the West Falls Church Metro station to the
Wiehle Avenue station in Reston. The full funding grant
agreement provides Federal funding for only the first phase of
the project. Phase 1 is under construction, providing 1,624
jobs and is approximately 19 percent complete. It is projected
to reach substantial completion in the latter part of 2013. The
second phase of the project will extend the rail line to Dulles
and beyond, is projected to begin construction in 2012.
Your invitation letter requested our perspective on the
recent proposals to modify the slots and perimeter rules. The
changes being discussed in the Senate would bring Reagan
National to 33 beyond perimeter departures today, which would
be more than 50 percent of the current number of beyond the
perimeter departures at Dulles and would equal the current
number of beyond the perimeter departures at BWI. We believe
that a relaxation of the perimeter rule will have an adverse
effect on both airports. We already are preparing for an
increase in passengers at Reagan National later this year.
Delta and JetBlue schedules this fall, while not increasing the
number of flights, will be utilizing larger aircraft and thus
increasing the number of available seat miles by as much as 8
percent. We are anticipating longer lines at some of our
security screening locations as a result.
Additionally, with increased beyond-perimeter activity,
Reagan National is likely to experience an increase in
connecting passengers. Baggage handling facilities at Reagan
National are designed to handle departing and arriving
passengers. Creating more of a hub at Reagan National would
require significant investment in new baggage handling and
facility equipment, and we really are limited in space.
Equally significant is our concern regarding the impact at
Dulles. Our analysis indicates that Dulles could lose
approximately 700,000 passengers a year and BWI-Marshall could
lose 500,000 passengers a year. Decline in Dulles passengers
prompted by the beyond-perimeter flights at Reagan National and
the resulting impact of this passenger loss may have on net
revenues and cost for employment for National would only serve
to worsen the financial difficulties for airlines at Dulles,
thereby putting into question the viability of their continued
presence at the airport.
Prior to the transfer, the Federal Government adopted
policies that assigned different roles and functions to these
airports and represented a conscience balancing of the
competing interests. At transfer, Congress provided a clear
roadmap for the Airports Authority. Over the years, the
Airports Authority has acted in good faith to carry out the
wishes of Congress.
Thank you, Mr. Chairman, and I'd be happy to take any
questions.
[The prepared statement of Ms. Hampton follows:]

Prepared Statement of Lynn Hampton, President and CEO,
Metropolitan Washington Airports Authority

Good afternoon Chairman Dorgan and members of the Committee, my
name is Lynn Hampton, and I am the President and Chief Executive
Officer of the Metropolitan Washington Airports Authority serving in
this capacity since May 2010. By way of background, I previously served
as the Chief Financial Officer of the Airports Authority for over
twenty-one years.
We appreciate the opportunity to appear before the Subcommittee
today to discuss the topics mentioned in your invitation letter,
including the Airports Authority's financial status, our capital
investment plans, the Airports Authority's role in constructing the
Dulles Corridor Metrorail Project, and our views on the perimeter
restrictions at Ronald Reagan Washington National Airport.
When Congress enacted the Metropolitan Washington Airports Act of
1986, it not only consented to the creation of the Airports Authority
by the Commonwealth of Virginia and the District of Columbia, but also
entrusted the Airports Authority with two substantial Federal assets,
Ronald Reagan Washington National Airport (Reagan National) and
Washington Dulles International Airport (Dulles International) and
directed us to operate, improve, protect and develop these Airports in
a manner befitting their status as gateways to the Nation's capital to
travelers from throughout the world. We believe that over the past
twenty-four years, the Airports Authority has performed the role well
and has achieved many of the goals that Congress expected of it.

History of the Airports
Reagan National Airport was built by the Federal Government and
opened in 1941. Today, its original geography and airfield layout are
largely unchanged. Virtually all take-offs and landings are conducted
on a single runway that is 6,855 feet long. Dulles International,
located 26 miles west of downtown Washington, also was built by the
Federal Government, and opened in 1962 with three runways. Today, it
encompasses more than 11,000 acres and operates with four runways
(averaging 10,500 feet in length) that can accommodate every commercial
aircraft currently in operation.
Although built to handle most of the Washington region's projected
air traffic, throughout the 1960s and 1970s Dulles International was
underutilized, while most of the region's air traffic remained
concentrated at an increasingly congested Reagan National.
With the Federal Government as the operator of two airports, one
congested and the other underutilized, the U.S. Department of
Transportation sought to re-establish and enforce Reagan National's
role as a primarily short-haul Airport and Dulles International's role
as the full-service, expansion Airport that would handle the region's
long-haul and international air service, as well as the region's future
air traffic growth. In 1981, the Department issued the Metropolitan
Washington Airports Policy which contained several Federal Aviation
Administration (FAA) rules to implement these airport roles, including
rules for Reagan National that:

Set the number of mainline air carrier flights, or
``slots,'' at 37 per hour;

Established an annual passenger limit of 16 million;

Limited night time operations to only the quietest aircraft;
and

Established a perimeter of 1,000 miles beyond which non-stop
flights could not fly into or out of the airport.

In 1986, then Secretary of Transportation Elizabeth Dole worked
successfully with Congress to develop legislation to transfer operation
of the two airports to a new independent Airports Authority. This
decision came about for a number of reasons, but one of the most
significant was the need to put the airports into the hands of an
entity that could make investments the airports badly needed, but were
not being made by the Federal Government, by accessing the bond market
and issuing debt secured by airport revenue. Also, the transfer of the
airports to an independent authority would allow it to be self-
supporting, receive needed capital investments, and increase their
contribution to the growth of the Washington region's economy.

Congressional Direction to the Airports Authority
The Transfer Act was enacted with the following Congressional
findings:

The Federal Government has a continuing, but limited,
interest in the operation of the airports;

An independent local body will facilitate timely
improvements at both airports to meet growing air travel
demand;

All other major airports in the United States are operated
by public entities at the state, regional, or local level;

Any change in the status of the two airports must also take
into account the interests of the nearby communities, and other
interested groups, as well as the interests of the affected
Federal and State governments;

In the Transfer Act, Congress effectively delivered four major
guidelines to the Airports Authority:

1. Construct timely infrastructure improvements at both
airports to meet the region's demand for air travel;

2. Plan new facilities at Reagan National based on the FAA
``High Density Rule,'' which limited the number of mainline air
carrier operations per hour to 37, and which Congress placed in
the Transfer Act, but without the 16 million passenger cap
previously adopted by the FAA, which Congress elected to
eliminate;

3. Plan new facilities at Reagan National to accommodate the
expected passenger levels and aircraft size associated with
non-stop service limited to markets within a 1,250 mile
perimeter, which Congress also placed in the Transfer Act; and

4. Plan new facilities at Dulles International to accommodate
short- and long-haul domestic flights, international flights
and, along with Baltimore-Washington International Airport, the
large majority of future growth in the Washington metropolitan
region's air transportation needs.

Airports Authority's Stewardship
The Airports Authority has consistently followed these guidelines
in its operation and development of the airports.

1. Master Planning
In 1988, the Airports Authority adopted the National Airport Master
Plan which was designed to provide for facilities that would serve the
projected numbers of passengers at the airport, but would not bring
about any significant increase in air traffic served at the airport. A
Master Plan was adopted for Dulles International in 1987, which called
for doubling the size of the Main Terminal and the addition of new
midfield terminals and runways to meet the major growth in air travel
demand projected for the Washington region. Over the years, the
Airports Authority has amended these master plans, but maintained these
basic policies.

2. Capital Improvements
Reagan National--Since the transfer, the Airports Authority has
financed approximately $1.2 billion in capital improvements at Reagan
National. The most significant of these improvements was completed in
1997 with the opening of one million square feet in new terminal space,
three new parking garages with over 5,000 spaces, a new roadway system
and direct connections to Metrorail and the garages via two enclosed
pedestrian bridges. These improvements included no significant
improvements to the airfield, and, in accord with the statutory
limitations, maintained the airport's 44 gates, adhering to the airport
capacity that had existed at the time of the transfer.
Dulles International--Since the transfer, the Airports Authority
has financed approximately $4.7 billion in capital improvements at
Dulles International. Included in these improvements are the following
major projects:

Expansion of the Main Terminal in 1996 at a cost of $322
million;

Opening of the new Mid-field ``B'' Concourse at a cost of
$145 million in 1998;

Expansion of a ``B'' Concourse at a cost of $302 million in
2008;

Completion of a new fourth runway and other airfield
improvements at a cost of $355 million in 2008; and

Opening of a new underground train system at a cost of $1.4
billion earlier this year.

These extensive improvements were planned, designed and constructed
based on Congress's transfer guidelines that, of the two airports,
Dulles International be developed to accommodate the vast majority of
the growth in the region's demand for air service, especially long-
distance and international flights.

3. Passenger Service
Reagan National--Consistent with Congress's direction, largely
reflected in the slot and perimeter limitations, passenger traffic at
Reagan National has remained relatively stable since the transfer,
though recent years have deviated somewhat from this overall pattern.
From 1987 until 2001, passenger traffic ranged between 15 million and
16 million passengers a year. The events of September 11, 2001,
resulted in a 22-day closing of Reagan National and a decrease in the
passenger traffic for that year to 13.3 million, followed by a further
decrease in 2002 to 12.9 million. Between 2005 and 2009, after the
enactment of the Wendell H. Ford Aviation Investment Reform Act for the
21st Century (AIR-21) and the Vision 100--Century of Aviation
Reauthorization Act (Vision 100), passenger totals grew at Reagan
National, to a high point of 18.7 million passengers in 2007. Passenger
levels decreased to 17.6 million passengers in 2009.
Dulles International--Passenger traffic at Dulles International
also has been consistent with Congress's guidelines, more than doubling
since the transfer, from 11 million passengers in 1987 to 23.2 million
in 2009. Indeed, with the entry of a low-fare start-up airline
Independence Air, total passengers at Dulles International, both
domestic and international, increased to 27 million in 2005. The
subsequent demise of Independence Air, coupled with rising fuel prices
and the generally poor economy, resulted in the passenger total at
Dulles decreasing to 23.2 million in 2009.
Domestic traffic at Dulles International has historically been more
affected by economic cycles. Since the mid-1990s, domestic traffic
generally ranged between 12 million and 16 million. Due to Independence
Air, domestic traffic ranged between 17.6 million to as high as 18.8
million in 2007, the year prior to airlines cutting seats due to
soaring fuel prices and the worsening economy. Domestic traffic dropped
by a million passengers in 2008 and another 600,000 in 2009 resulting
in 17.2 million domestic seats at Dulles International in 2009.
International traffic at Dulles International has grown
substantially over the years. At the time of the transfer,
international passengers represented approximately 9 percent of the
total passengers served by the Airport, and service to six
international destinations was provided; in 2009, the percentage of
international passengers had grown to twenty-seven percent, and the
number of overseas locations to forty-five. It is essential to note
that this international traffic at Dulles International is highly
dependent upon the extensive array of domestic flights that enable
international passengers to connect to these international flights at
Dulles International. Dulles International would not have the robust
international traffic it has today without this connecting domestic
service.
Cargo operations at Dulles International have similarly grown over
the years. At the time of the transfer, 208 million pounds of cargo was
flown in and out of Dulles in 1987. In 2009, this has increased three
fold to 623 million pounds.

4. Financial Management
The Airports Authority has managed its financial operations in a
responsible and prudent manner.
Each year, the Airports Authority produces financial statements
that are audited by external certified public accountants, and over the
years we have regularly received unqualified audit opinions. Also, each
year audits are performed, in accordance with OMB Circular A-133, to
review the Airports Authority's compliance with requirements associated
with the Federal grants we receive. These audits have regularly found
no significant issues of non-compliance. In addition, each year a
Comprehensive Annual Financial Report of the Airports Authority's
financial condition is prepared following guidelines of the Government
Finance Officers Association of the United States and Canada (GFOA).
For the past 20 years, the Airports Authority has received a
Certificate of Achievement from the GFOA, signifying that our annual
financial reports conform to the highest standards of public financial
reporting.
Currently, the Airports Authority's outstanding aviation-related
debt totals approximately $5.2 billion, with $4.4 billion, or 84
percent, in fixed-rate general airport revenue bonds. The Airports
Authority is fortunate to have earned credit ratings on these revenue
bonds which are among the highest ratings of any airport in the United
States. Fitch, Moody's, and Standard & Poors each assigns a ``double
A'' rating to the Airports Authority's aviation credit (``AA,'' ``Aa3''
and ``AA-,'' respectively). In its most recent ratings report (July
2010), Fitch states that ``the AA rating reflects the Authority's well-
established role as an international gateway, historically strong
financial operations, a strong and growing air trade area and the
demonstrated ability of management to guide a complex capital
program.'' In its July 2010 report, Moody's notes the ``strong,
conservative management of airport operations and careful long-term
capital planning,'' and in its July 2010 report, Standard & Poors
points to ``an experienced senior management team overseeing financial
management and capital development.''
I should note that, although Fitch and Moody's have recently
affirmed the Airports Authority's ``double A'' ratings, both agencies
have modified their outlook for our airport revenue bonds from
``stable'' to ``negative'' (Standard & Poors maintained the outlook as
``stable''). These ``negative'' outlooks do not stem from concerns over
Airports Authority's management of the airports or of its finances.
Rather, these outlooks reflect concerns over our near-term financial
flexibility, given the modest level of projected future activity growth
at the two airports. They also reflect concerns regarding the
substantial increase in Airports Authority debt service that will be
added to airline rates and charges, particularly at Dulles
International, as major capital improvements are completed and come on
line, and with associated negative trends in debt service coverage
ratios and cost per enplaned passenger. For instance, average cost per
enplaned passenger at Dulles International is projected to reach $27,
which is high compared to similar airports. The Airports Authority is
working to address these matters, including multiple steps to restrain
expenditures, and the payment of increased debt service with non-
airline funds.

5. Regional Economic Development
Both Reagan National and Dulles International have become
significant economic assets for the Washington metropolitan region.
Over 7,000 individuals work at Reagan National, and 17,900 at
Dulles International, including Airports Authority employees and
personnel associated with the airlines, airport concessionaires and
other businesses operating at the Airports. It was estimated in 2005
that the two airports created $6.5 billion in revenues for businesses
supplying passenger and air cargo services at the airports.
Many businesses decide to locate in the Washington metropolitan
region, in significant part, because of the quality and reach of the
domestic and international air service offered at the Airports. The
Greater Washington Initiative, a regional marketing and economic
development organization, cites the global connectivity that is
provided by the Airports as a key benefit that the region offers new
businesses. The economic development and land use plans of the region's
counties and cities are premised, in part, on the presence of the
airports and the role they play in attracting new employers to the
region. And, over the years, the Airports Authority has worked to
develop close relationships with these local governments and their
citizens, including by working to ensure that airport operations are
compatible with neighboring communities.

6. Dulles Corridor Metrorail Project
Since the early planning for Dulles International, an important
component of the overall vision for the Airport included rapid rail
transit. When land was acquired in the late 1950s for the Dulles
Airport Access Highway, sufficient right-of-way was acquired to
accommodate a transit line to the airport. In 1964, the FAA's Master
Plan for Dulles International recommended that the median of the Dulles
Airport Access Highway be reserved for a future transit line.
However, achieving the reality of rail to Dulles International
remained elusive over the following decades. It was not until the early
2000s that efforts had progressed to the point that the Commonwealth of
Virginia was able to initiate the process for applying to the Federal
Transit Administration for Federal funds to assist in the construction
of a rail line to Dulles International. This proposed rail line would
be an extension of the metropolitan Washington regional Metrorail
System which has been operated since the mid-1970s by the Washington
Metropolitan Area Transit Authority (WMATA), would in large part be
constructed in the median of the Dulles Airport Access Highway, and
would continue past Dulles International into Loudoun County.
Subsequently, the Airports Authority submitted a two-part proposal
to the Commonwealth: first, that the Airports Authority assume
responsibility for the rail line construction line since it was to be
located on Airports Authority-leased property in the median of the
Dulles Airport Access Highway and since major construction activities
would occur on Dulles International itself; and, second, that the
Airports Authority become the operator of the Dulles Toll Road, then
operated by the Virginia Department of Transportation, and use revenue
from the toll road to assist in financing the construction of the rail
line.
Ultimately, the Commonwealth accepted the Airports Authority's
proposal and, in 2007, the two parties executed an agreement that
transferred to the Airports Authority the authority to operate the
Dulles Toll Road and use toll revenue to finance the rail line
construction, and which placed responsibility for the construction on
the Airports Authority. At the same time, an agreement was executed by
Fairfax and Loudoun Counties and the Airports Authority which committed
each party to share in the funding of the rail line construction.
Agreement also was reached with WMATA which provided that, following
WMATA's acceptance of the completed rail line, it would assume full
responsibility for the line's operation and maintenance.
In March 2009, the FTA and the Airports Authority executed a Full
Funding Grant Agreement which provided $900 million in Federal funds
for the first phase of the rail line project. This phase will run from
Interstate 66, near the West Falls Church Metro station, to Wiehle
Avenue in Reston. The Full Funding Grant Agreement provides Federal
funding for only this phase of the project.
The first phase of the rail project is currently under
construction, is providing 1,624 jobs, and is approximately 19 percent
completed. It is projected to reach substantial completion in the
latter part of 2013. The second phase of the project, which will extend
the rail line to Dulles International and beyond into Loudoun County,
is projected to begin construction in 2012.
Challenges to the Airports Authority and the Two Airports
While the Airports Authority has accomplished much over the last
quarter of a century, we face many challenges as we plan for an
uncertain future.
The recent economic recession has had a substantial impact on the
aviation industry and on the two Airports. For instance, the number
passengers utilizing Reagan National in 2009 was 3.8 percent less than
at the start of the recession; at Dulles International, the 2009 level
of passengers was 6.3 percent less.
In 2010, the aviation industry has seen a positive turn-around. A
year ago, a number of U.S. airlines were in danger of bankruptcy, while
this year they are announcing profits. The International Air Transport
Association (IATA) has reversed its initial projection that the
industry would lose $5.6 billion in 2010, and now expects profits of up
to $2.5 billion. However, much of this turn-around is due to airlines
having eliminated a substantial amount of domestic flight and seat
capacity over the past 24 months--a reduction that airlines are
continuing to maintain even as the economy begins to improve.
While this reduction in capacity may have been good for the
airlines, it has created difficulties for airports. Airports plan
capital projects many years in advance due to planning and construction
lead times. Thus, projects that are now being completed were planned at
a time when growth in airline capacity was anticipated; unfortunately,
not only has this growth not occurred, but also in the past 2 years
capacity has actually been reduced.
For the Airports Authority, this reduction in airline capacity
presents a particular challenge at Dulles International due to the
substantial investments that have made in capital projects which are
now coming online. The debt service on these completed projects is
largely funded through airline operations at the Airport. However, with
the reductions in airline capacity, this debt service is now
effectively being assigned to reduced airline operations, resulting in
higher airline costs per enplaned passenger. Moreover, this particular
challenge, we believe, would be increased by the addition of beyond-
perimeter flights at Reagan National that would further reduce
passenger levels at Dulles International.

Perspective on the Slot and Perimeter Rules
As part of the current FAA reauthorization process, proposals have
been made that would authorize an additional 42 slots (21 slot pairs or
round-trip flights) at Reagan National that may fly beyond the 1,250
mile perimeter. Thirty-two of these 42 beyond-perimeter flights would
be ``conversions'' from within-perimeter hub flights and 10 authorized
from existing unused off-hour slots (from 6 a.m., 10 and 11 p.m.).
Currently, 24 beyond-perimeter slots (12 slot pairs or round-trip
flights) are authorized at Reagan National. Twelve of these existing
beyond-perimeter slots were authorized in 2000 by AIR-21, and twelve
slots were authorized in 2003 by Vision 100. Adding 21 slot pairs to
the 12 existing slot pairs, for a total of 33 slot pairs, would be the
single largest increase in beyond-perimeter flights at Reagan National.
This proposed change would bring Reagan National to 33 beyond-perimeter
departures a day, which would be more than 50 percent of the current
number of beyond-perimeter departures at Dulles International (59) and
would equal the current number of beyond-perimeter departures at
Baltimore Washington International Thurgood Marshall (BWI Marshall)
(33).
The Airports Authority believes that such an expansion of beyond-
perimeter slots at Reagan National will have adverse impacts at both
airports. We are already preparing for an increase in passengers at
Reagan National later this year. Delta and JetBlue flight schedules for
this fall, while not increasing the number of flights at Reagan
National, will be utilizing larger aircraft, thus increasing the number
of available seats by as much as 8 percent.
At Reagan National, our primary concern is the effect that
additional beyond-perimeter flights will have on passenger wait times
at Transportation Security Administration (TSA) security screening
locations. An expansion of 42 beyond-perimeter flights a day will, we
believe, increase the number of passengers arriving at and departing
from Reagan National by slightly more than one million a year. This
would represent a 5.7 percent increase over the Airport's 2009 level of
passengers and would occur primarily in the peak, or busiest, periods
of passenger activity. Our preliminary analysis suggests that a
passenger increase of this level will lengthen passenger wait time at
some security screening locations.
This concern is heightened by the deployment of Advanced Imaging
Technology (AIT) screening machines at Reagan National security
screening locations. With current facility constraints and current
passenger traffic, we only have space to accommodate four AIT machines
at the Airport. Two of our four security screening areas, absent major
facility alterations, cannot accommodate any AIT machines. Greater
passenger levels will make deploying more AIT machines even more of a
challenge. The Airports Authority intends to work with TSA to increase
the deployment of these machines to ensure that Reagan National
maintains the highest level of passenger security.
Additionally, with increased beyond-perimeter activity, Reagan
National is likely to experience an increase in connecting passengers.
Baggage handling facilities have been developed since the Transfer Act
primarily to handle departing and arriving passengers. Creating more of
a ``hub'' at Reagan National could require significant investment in
new baggage handling facilities and equipment.
Equally, if not more, significant is our concern regarding the
impact that 42 new beyond-perimeter flights at Reagan National may have
on Dulles International. (Impacts are also expected to be experienced
at BWI Marshall. Our preliminary analysis indicates that these new
flights would carry on the order of 1.6 million passengers a year, and
that many of these passengers, were it not for these new flights at
Reagan National, would be flying into and out of Dulles International
or BWI Marshall. That analysis also indicates that Dulles International
could lose approximately 700,000 passengers a year, and BWI Marshall
could lose 500,000 passengers a year as a result of the new beyond-
perimeter Reagan National flights.
Such a loss of passengers would, we believe, adversely affect a
number of airlines operating at Dulles International, by increasing
their cost per enplaned passenger. For many airlines, the cost of
operating at Dulles International has recently grown substantially as
debt service associated with the construction of the Airport's new
fourth runway and underground automated train system--projects whose
capital cost totaled over $1.8 billion--has been added to the landing
fees and other charges assessed the airlines. Our clear concern is that
the decline in Dulles International passengers prompted by the new
beyond-perimeter flights at Reagan National, and the resulting impact
this passenger loss may have on the net revenue and cost per
enplanement associated with airlines operating at Dulles International,
will only serve to exacerbate the financial difficulty that operating
at the Airport now presents for many airlines, thereby putting into
question the viability of their continued presence at Dulles
International.

Conclusion
Prior to the transfer of Reagan National and Dulles International
to the Airports Authority, the Federal Government took decisive action
on a number of occasions to establish airport facilities in the
Washington metropolitan region that would provide the nature and
quality of air transportation service that the region would require. In
the course of taking those actions, decisions were made and policies
were developed that assigned different roles and functions to these
airports and represented a conscious balancing of competing airport-
stakeholders' interests.
At the time Reagan National and Dulles International were
transferred to the Airports Authority, Congress provided a clear
roadmap for the Airports Authority to follow, and a set of guidelines
to govern its journey. We believe that, over the years, the Airports
Authority has acted in accordance with that roadmap and those
guidelines, and has served as a good steward of the airport assets with
which it was entrusted. It is in that role as steward that we wish to
convey our view that altering the slot and perimeter rules applicable
to Reagan National, along the lines now proposed, will have undesired
consequences on these important airport assets.
We do understand the interest of air carriers to serve destinations
outside the Reagan National perimeter, and we believe we have provided
excellent facilities at Dulles International for them to provide that
service. It is, therefore, our recommendation that Congress not alter
the slot and perimeter rules, thereby adding beyond-perimeter flights
and passengers to Reagan National, without regard to, and certainly
without a full and accurate understanding of, the ability of Reagan
National to absorb the consequences of the slot and perimeter rule
changes, the impact these changes would have on the traveling public
and neighboring communities, and the consequences the changes would
have on the economic sustainability of Dulles International and BWI
Marshall.

Senator Dorgan. Ms. Hampton, thank you very much.
As a matter of courtesy, I suggested that if Senator Ensign
wished to take the 3-minutes opening statement, I would be
happy to recognize him.

STATEMENT OF HON. JOHN ENSIGN,
U.S. SENATOR FROM NEVADA

Senator Ensign. Thank you, Mr. Chairman. My remarks this
afternoon will focus on the perimeter rule at Reagan Washington
National Airport. As we all know, I've long been a critic of
this anti-competitive and antiquated rule, which prohibits air
carriers from flying direct routes to the Western United
States. While Congress has granted a few exceptions over the
years, travelers in and out of our nation's capital continue to
be inconvenienced by the hassle and expense of getting to
Dulles.
For the past several months members of this committee and
others have been working on a proposal to make some
modifications, some modest modifications to the perimeter rule,
and I am hopeful that Congress can pass the FAA reauthorization
bill, with this proposal included, very soon. Under our
proposal, a total of 21 additional round-trip beyond-perimeter
flights would be allowed, including five new flights awarded to
new entrant or limited incumbent carriers, and 16 conversion
flights where new incumbent air carriers could convert existing
within-perimeter flights to beyond-perimeter flights.
It is important to note that these converted flights are
not new flights, rather they are simply replacing existing
flights that are distributed on a proportional basis according
to an air carrier's existing service at DCA.
I understand the that the Metropolitan Washington Airports
Authority has some concern with relaxing this perimeter, as we
have heard today, which is why our proposal has a number of
provisions aimed at addressing some of those concerns. First,
the Department of Transportation would evaluate the proposed
flights and be able to collectively disapprove of the
conversions if they determine they are not in the public
interest. Second, air carriers are prohibited from selling,
trading, leasing, or otherwise transferring the flights to fly
beyond the perimeter. Third, the conversions would be phased in
over a 2-year period. And finally, carriers may not use wide-
body aircraft in their exemption, insuring that the same
aircraft with the same quiet technology operating in the
airport today will be the same aircraft that will be used with
these exemptions.
Mr. Chairman, Dulles no longer needs protection. The
original protection of the rule was to promote Dulles as the
Washington areas long-haul airport and convert National into
the region's short-haul airport. Last year, 23 million
passengers passed through Dulles, which is 6 million more than
17 million passengers that flew from Reagan. Yet today there
are only a dozen non-stop flights between Reagan and the entire
Western United States, four to Denver, three to Phoenix, two to
Seattle, one to Las Vegas, one to Los Angeles, and one to Salt
Lake. To put that number in perspective, that is 12 beyond the
perimeter out of the 400 flights daily. The beyond perimeter
flights represent just 3 percent of the daily domestic
operations at DCA. The proposal under discussion would mean
that more passengers traveling from the West would take a
direct flight in and out of National, avoiding the
inconvenience and additional expense associated with getting
into the city from Dulles. The compromise is a reasonable pro-
competition solution that gives tourists and business travelers
from around the Nation another option for visiting the Nation's
capital.
Thank you, Mr. Chairman.
Senator Dorgan. Senator Ensign, thank you very much.
Well, I thank all of you for the testimony. Let me begin
some questions. I have a fair number of questions so I will
abide by the time limit and then we'll have other rounds.
Ms. Kurland, Secretary Kurland, you indicated that there
was additional capacity at National, and you cited a 2007 GAO
report. Is that correct?
Ms. Kurland. You know, in terms of capacity, I think it
would be better----
Senator Dorgan. I'm just asking--your testimony, you cited
a GAO report saying that there is additional capacity, the 2007
GAO report says there's additional capacity.
Ms. Kurland. Right.
Senator Dorgan. Let me make a point, that in 2007 when GAO
said there was additional capacity at National, there was 1.1
million more passengers flying out of National, 1.1 million
more were flying then and the GAO said, at that moment, there
is more capacity.
And so, Ms. Hampton, tell me about the notion that there is
not enough capacity at National if the GAO says there is and
we're now 1.1 million below what we used to have when GAO said
there was additional capacity.
Ms. Hampton. Yes, sir. I think what the GAO was referring
to was airside capacity, particularly runway capacity. I think
many people in this room are familiar with National Airport,
and if you remember back in 2007, we were totally at capacity
in our garages at National Airport, people were not able to get
in our garages. This was the increased air traffic we
experienced from the AIR-21 and Vision 100 legislative change.
So it was necessary for us to build a new deck on our parking
lot.
Senator Dorgan. So you've done that.
Ms. Hampton. We have built that deck, yes.
Senator Dorgan. So, this is about--then it becomes not
about whether there's runway capacity and the capability of
more operations at National, the issue garage space and the
issue of security.
And so, let me just ask about that for a moment. The
security representation to us has been it's--now 5 minutes,
could go to an hour if you do 16 conversions and five
additional slots.
Mr. Kair, do you--do you suspect there's a condition under
which there would be an average one hour wait at any port in
National if we do 16 conversions, which means no new flights,
conversions of flights that now exist, and five new slots?
Mr. Kair. Sir, in general terms, the process that TSA uses
at every airport is we analyze all of the flight loads and we
have a staff and allocation model which ensures we have the
appropriate level of staffing and equipment at every airport to
meet those demands. And we work with the airport authorities to
make sure that they have the spaces required in order for
those--for that equipment and that stocking to be there. So
there are a lot of variables that go into that, including when
those flights are and so forth. But, we do commit that we will
ensure that we will have the proper amount of staffing and
equipment available for bringing operations there.
Senator Dorgan. So whatever operations you're managing,
you're not going to have one hour wait times, I assume, at
National.
Mr. Kair. Well, we will ensure that we have the staffing
and equipment available.
Senator Dorgan. Let me then ask a question about--you're
familiar, I believe, Mr. Snelling and Ms. Hampton, on the
proposed slot swap between LaGuardia and National and between
the two carriers, US Airways and Delta. And, the slot swap,
which was proposed and is now apparently not happening. US
Airways put out a press statement saying, ``We plan to increase
the number of seats we fly at DCA using larger dual-class jets
as a result of the swap.'' They talked about up gauging the
aircraft size, I mean, this was very public. Did Metropolitan
Washington Airports Authority weigh in on those issues, saying
that, ``Gosh, if that happens, we may have a million more
people coming through, we may have hour wait times at the
portals for security, we may not have garage space,'' and did
you make comment on that in opposition to that slot swap?
Ms. Hampton. Mr. Chairman, we have taken it as our
responsibility to manage the airports to the statutes, and we
think it would be well served for all of our airlines to
operate each one of the air carrier slots with an air carrier,
and we commit that we will work with TSA and others to make
sure that we handle that.
Senator Dorgan. That wasn't my question, Ms. Hampton. I'm
asking when--that proposal was made and press statements were
made about up gauging the airplanes, increasing the size of the
airplanes with the slot conversions, very substantial
conversions, whether Metropolitan Washington Airports Authority
decided that they should make the point, as they've made to
this committee and others, that this would be a huge problem,
that you wouldn't be able to handle the load.
Ms. Hampton. We did not make that comment because that's
within our statutes to handle that.
Senator Dorgan. OK. So, that was something you didn't
comment on, I guess one would expect that silence assent, or at
least you had no problem with it.
Let me also ask a couple of questions--and I'll come back
to that later--but when Congress created the Authority, my
understanding was that the ``slots'' were proposed as 25
percent of the slots for the smaller commuter airplanes and 75
percent of the slots for the larger jets. Is that accurate?
Ms. Hampton. I think that's accurate.
Senator Dorgan. And it is the case now that 55 percent of
the smaller commuter planes are flying out of National, not the
25 percent, but 55 percent.
Ms. Hampton. Actually a little larger, 58.
Senator Dorgan. All right, all right. And so then, rather
than 75 percent of the larger jets flying out, we have only 40
percent of the larger jets.
Ms. Hampton. That's correct.
Senator Dorgan. Well, what if you were having to operate
Washington National based on what Congress indicated to you was
going to be happening. Would you decide that it wouldn't be
functional?
Ms. Hampton. No, sir, Mr. Chairman. We would--we would
manage those. As I mentioned earlier, it is not just the
security checkpoints, it's also the baggage areas. We're very
limited in our baggage area. We would manage; we would work
with TSA and we would manage. It's really an infrastructure
issue.
Senator Dorgan. Did you manage bags for 18.6 million people
in 2007 at Washington National?
Ms. Hampton. We did, and that's primarily--primarily
origination-destination traffic, sir.
Senator Dorgan. And was that because you had the capacity
and the facilities to do that?
Ms. Hampton. Right.
Senator Dorgan. And did you have parking space, sufficient
parking space at that point, or at least plans to add parking
space when your 18.6 million passengers come into National?
Ms. Hampton. The second statement, we had plans to add
parking spaces, sir.
Senator Dorgan. And so, now there's, at least in the last
calendar year, 17.5 million passengers, a million less.
And in fact, in your testimony, Mr. Snelling, you
complained a bit in your testimony that, you know, we've some
economic troubles in this country and we have fewer people
flying and that causes kind of a pinch for your revenues and so
on. And yet, what we have heard incessantly for months now, is
that your problem is you're going to have too much traffic at
National. I'm telling you, it doesn't add up, it doesn't add up
a bit to me.
And so, I mean I have a lot of questions and my time is
about exhausted, so I'm going to have to come back to a couple
of other rounds. But, it just seems to me that you're making a
case that on its face is preposterous. You have extra capacity
at the airport, you were flying a million more people in and
out, you were completely silent when there was a very large
swap between two of the major carriers, and yet you say that 16
conversions, no new flights in those 16, just conversions are
going to be a problem. I mean, I don't have the foggiest idea
how one gets to that conclusion. But as I indicated, there are
other questions, I want to ask you about money that you've lost
on interest rate swaps and other things today, but I want to
come back to the question of operations, because, as I
indicated to you, National policy is at this point being
blocked by this Authority, which Mr. Snelling says is
sovereign, and it's not.
So, I will at this point relinquish to the Chair of the
Committee and others for questions, and at which point I have
many other questions.
The Chairman.
The Chairman. Let me just pick up on a point that you were
making, expand on it a bit. This Delta/American slot swap, that
was going to increase the load by about 30-35 percent. You were
silent on that. So I'm trying----
Ms. Hampton. On slot swap----
The Chairman. If that is--if that's the case, and then this
is verbal discussions that our staff, investigative staff,
which is who you're going to have a lot of contact in the
future, had said that it would increase passengers by 30-35
percent. Now, it took place or it didn't take place, it didn't
take place. Nevertheless, how do you reconcile these seemingly
inconsistent positions, you can't take any more passengers, yet
you allowed that one to go by without comment?
Ms. Hampton. Sir, our position is regarding passengers from
beyond the perimeter, which are a different type of passenger
with different needs at the airport.
The Chairman. I--my sort of general impression, is when I
come into D.C., I don't think about what kind of passenger I
am, am I a perimeter related passenger, I land there, OK, and I
become part of the baggage handling system and part of the
security system before I can get on an airplane. And, the
ordinary passenger is what we're talking about here. I'm not
talking about perimeters, I'm talking about passengers. The
statement that some members of this committee have made and
that I think that your position is, we don't want to change, we
can't take any more additional noise, we can't any more
additional passengers, we can't take any more additional
anything, we can't take any more additional security, we don't
have any room for additional security. And yet you were willing
to take 30-35 percent--I don't understand that.
Now, you haven't explained it, so I just note that. It's
also my understanding that right now there are about 135 slots
at National, which are operated with smaller regional jets, but
that are designated for larger aircraft. And if they're
designated for larger aircraft, it seems to me that if you're
going to use these slots efficiently, at some point you're
going to go to larger aircraft. And if that's the case, you'd
not be using regional jets, but using larger aircraft. What do
larger aircraft mean, more passengers.
Ms. Hampton. Senator Rockefeller, it is in the plans and in
the activities of the Airports Authority to manage the
legislation, and to the regulations that we have, including
accommodating the larger airplanes. We encourage the airlines
to switch to the larger airplanes. If the economy improves, we
fully expect that to happen. Adding beyond the perimeter slots,
which are not in our statutes, adds another element for the
Airports Authority that we have not planned for, and that we're
really not prepared to handle. You know, we----
The Chairman. How do you know that you're not? I'm going to
ask the Feds about this in a moment, but how do you know you're
not prepared to handle that, how come you're so certain?
Ms. Hampton. Well, our airport----
The Chairman. You keep quoting as if it's like original
biblical statutes or something.
Ms. Hampton. Well, it's----
The Chairman. The world changes, you know.
Ms. Hampton.well, it's not biblical, but it is
infrastructure. The building was built in 1997, and as you
know, it's a lovely building built by Cesar Pelli. It was
built--the main terminal was built with piers, and they're very
narrow piers, with three various checkpoints.
The Chairman. I'm aware of the architecture, I think it's
one of the nicest airports I've ever been in.
Ms. Hampton. Thank you very much. It works very well.
Passengers know that when they get to the airport that they
will be able to get through the queues and get to their gates.
When we start changing the elements of the plan, we know there
is going to be additional passengers, and there are going to be
additional passengers as the economy improves and we're very
excited about that, and we're very excited to work with TSA. In
fact, this week we're working with TSA because of the plans
Delta has in the South Pier.
The Chairman. Do you accept the general theory that the
West has grown in population, and that the fact that there are
so few flights out of D.C. to the West is anomaly in the
changed conditions of today's demographics?
Ms. Hampton. I think the West has grown its population and
I also think that London County is the fastest growing county
in the country.
The Chairman. And so what's your worry then?
Ms. Hampton. The population is growing everywhere. You
know, I do accept the fact that the West is growing, but I
built--we built our airport in 1997 to meet the statutes that
the government gave us. We have had to accommodate and we are
happy to have accommodated all the security that has happened
after 9/11. We're working very closely with TSA now to, as much
as we can, start expanding the use of the AIT, the Advanced
Imaging Technology machines. And we----
The Chairman. Can I just interrupt for a second because I'm
already 10 seconds over my time and I want to either, actually
both Ms. Kurland and Mr. Sammartino, MWAA argues the slot
proposal would create substantial congestion problems at
National, and some folks do here too. So what is your
assessment of how that would affect the operation of the
airport?
You need to speak up some, Ms. Kurland, you're an important
person, all right.
Ms. Hampton. I'm sorry.
The Chairman. I don't mean speak up physically, I mean
speak up substantively.
Ms. Hampton. Oh.
[Laughter.]
Ms. Hampton. I'm--I would be happy to talk more on the
issues of competition and----
The Chairman. All right, well then we'll go to Mr.
Sammartino.
Mr. Sammartino. Mr. Chairman, thank you for the opportunity
to be here this afternoon.
I would offer that, from an air traffic operational
perspective, we have available capacity today for an increase
in operations at National. That additional capacity is from
underutilized slots that have already been allocated to the GA,
general aviation corporate community. The traffic in that
community is running at about 10 percent of normal operations.
So hour by hour, we have additional capacity at National
Airport.
The Chairman. I thank you sir.
My time has run out.
Senator Dorgan. Senator Warner.
Senator Warner. Thank you, Mr. Chairman.
As--Mr. Snelling and Ms. Hampton, when you go to the
bonding authorities, you make out projections over what period
of time approximately to secure these bonds?
Mr. Snelling. I'll refer to our President on the length of
time.
Ms. Hampton. Our projections to the rating agencies
generally go out through the end of our construction, which
right now is about 7 years.
Senator Warner. All right. So a fluctuation in 1 year up or
down on traffic, you know, it can always be absorbed. But what
we're talking about here are structural changes in the overall
framework. So, as we look at, you know, how you do financings,
you do financings over a long-term plan, so I don't think year
to year fluctuations--you've got to build those in.
We're--a lot of conversation here about National, I guess
one of the things I'm--question about--I want to come back to
both of your testimonies, the effects this would have at
Dulles. And I think it's important that as we think about the--
the $4.7 billion in additional construction at Dulles over the
years?
Ms. Hampton. $4.8 billion.
Senator Warner. $4.8 billion, that was build upon
assumptions and representations that were made by the Congress
about what the role of Dulles would be, correct?
Ms. Hampton. Yes, sir.
Senator Warner. Now, at Dulles right now, and one of the
things I think you were trying to articulate a little bit about
earlier, is whether Dulles is a hub airport rather than a final
destination, people pass through Dulles on the way to
international theater. If we create 21 more out of perimeter
slots that currently either go to Dulles or go to BWI, because
this has effects on both airports, what you do is while that--
for those passengers who are end-pointing at National, but it
diminishes the theater ability for these out of perimeter
airlines to fly into the international hub, so would it be your
conclusion that you would see a fairly significant drop-off of
international traffic out of Dulles, something we've been
working on 20 years to develop?
Ms. Hampton. Yes, Senator, we are very concerned that the
loss of domestic passengers at Dulles would hurt the
international service.
Senator Warner. And hasn't most of the growth at Dulles
come from international passengers, not from domestic
passengers?
Ms. Hampton. Yes, sir.
Senator Warner. And domestic passengers were down in this
last year a million.
Ms. Hampton. Domestic passengers have been down, very flat
for the last 5 years.
Senator Warner. So, again, as we think about the fact that,
you know, because of these added infrastructure investments,
for example, like rail, one of the things I--it is sometimes a
hassle in traffic to get to Dulles, let me agree with all my
colleagues as somebody who tried to do something about that on
a previous job and he was not as successful, and I understand
it. But one of the things that we have been planning and
talking about for 25 years in this region, is to get rail to
Dulles. But, are not some of the assumptions building the rail
to Dulles is to assume a prosperous Dulles Airport?
Ms. Hampton. Yes, sir.
Senator Warner. Have--when the rating agencies put you on
negative watch, did they consider the potential decrease of
what you've estimated of 700,000 decrease in passengers
annually at Dulles when they made that estimation?
Ms. Hampton. No, sir, there has been no discussion of that
with the rating agency.
Senator Warner. So that would be an added factor on
potentially downgrading of investments of the Commonwealth of
Virginia, the local communities, and the Federal Government
have made in jeopardizing the long-term viability of this bond
rating with this unanticipated 700,000 additional loss, right?
Ms. Hampton. I believe that would be the case.
Senator Warner. I have a few more questions, as well.
The other question I have is--have we seen any analysis,
and I know this is one of the reasons why Senator Cardin and
Senator Mikulski wanted to be here, but have submitted
statements, of the potential harm done to BWI by the loss of
500,000 passengers, again, based on your estimation?
Ms. Hampton. We have not done an analysis, other than the
analysis that we did that showed that Dulles International,
under this proposal, would lose 700,000 passengers, and that
Baltimore/Washington Marshall would lose 500,000 passengers.
Senator Warner. Again, I know the State of Maryland has
made enormous investments, based upon the assumptions of what--
that the law would be followed.
Now, again, I would agree with the Chairman's comments, and
scientists comments, and that is, the west is growing. And your
positions, and we've differed on this, of absolutely no change.
I didn't concur with, I think we needed some level of
compromise.
We had--this is not the first time this issue has come up
and we've had other changes, I believe in the last two rounds
it was about, one time, 12 additional slots, another time 10.
This is more than doubling what the previous rounds of slowly
escalating slot additions outside of the perimeter in terms of,
if you were going to assume--even though you don't want any
change, you're going to have to get stuck with something. Now,
wouldn't it be, perhaps, rational to assume that, well, you got
whacked by 12 one time, whacked by 10 another. This kind of
proposal that's being performed would double what the--the
changes the Congress has made in the past, is that correct?
Ms. Hampton. Yes, sir. We will be good stewards. What the
Congress gives us, we will do. We are here to tell you what we
believe, and we believe that this will have a negative effect
on National Airport, and on Dulles Airport.
Senator Warner. Let me get one other question in, maybe
Mr.--you all can answer, Mr. Sammartino can answer this. And
that is that, you know, one of the concerns, you know, I think
as folks in good faith tried to work through this and we
thought, ``Well, let's just do slot switches from inside the
perimeter hub to outside the perimeter hub,'' so--and I
particularly appreciate my friend from Nevada's comments, and
some others who have been involved in this that there would try
to be the same type aircraft, although I would be much more
sympathetic if it actually was the same type of aircraft,
because there are sometimes these short-haul commuter flights
to Philadelphia that would be--while not wide-body--
dramatically increased passenger size in terms of the size of
aircraft would be slotted out. And you're saying, ``Well, that
means small markets wouldn't be affected.''
But I guess I would ask Mr. Sammartino, or Ms. Hampton--
nothing would preclude a carrier, once they switched out, say,
a Philadelphia hub for a Los Angeles or a Phoenix hub, to then
say within their existing inside the perimeter slots to switch
out a Portland, Maine for a Philadelphia or a Charleston, West
Virginia for a Philadelphia, so that you could back--in terms
of backfilling, nothing would preclude an airline from making,
you know, a rational business choice to trade out a smaller
market inside of the perimeter for a hub market inside the
perimeter?
Ms. Hampton. That would be correct.
Senator Warner. So, the possibility exists, and again,
we're trying to get a balance here of all of--my time's
expired, I apologize--that this balance between inside of the
perimeter, outside of perimeter, service to our smaller markets
which are so critical around the country, they could see a
diminution of flights as rational business people made choices
to replace those smaller-market flights with flights to inside
the perimeter flight hubs like Charlotte and Philadelphia?
Ms. Hampton. I agree.
Senator Warner. Thank you, Mr. Chairman.
Senator Dorgan. Senator Ensign?
Senator Ensign. Thank you, Mr. Chairman.
What Senator Warner just talked about could happen right
now. They have the full right because the legislation basically
says that they can't switch it from the small markets to the
West Coast, but they could switch right now between what you
said, Philadelphia. So there's no change in that, and they're
just going to make the business decisions. This legislation
doesn't affect what you just said.
Now, Ms. Hampton, you said population is growing in the
West, but it's growing everywhere. Well, frankly, it's not
growing everywhere. OK? There are states that are losing
population and the East and a lot of the Mid-West is not
growing, the West is growing, that's a reality in the United
States. Certainly, Virginia's growing, as well, but the West
has been, and the South has certainly been where most of the
growth in the United States has happened, that's one of the
reasons that we're trying to do this legislation.
I want to correct something else that you said that didn't
make sense to me. You talked about origination/destination
passengers--I'm very familiar with, that's what we have in Las
Vegas, we have O&D passengers. You talked about that these are
not going to be O&D passengers, you're concerned mostly about
your transfer passengers. But then you talked about wait times
at the security checkpoints. Well, transfer passengers don't
take time at the security checkpoints. So, that's why you're
being inconsistent with that argument.
And then last, before I let you answer that, what doesn't
make sense to me as far as you worrying about Dulles, is in
your 700,000 figure that you said that will decrease in Dulles,
how much--how many of those passengers decrease at Dulles did
you attribute to USAir transferring their slots from inside the
perimeter to outside? What was the figure that you used for
USAir? Because USAir is going to get about half the slots,
right? They're going to be able to change--about half of the
slots that are going to go from inside to outside are going to
be USAir. What percentage did you use?
Ms. Hampton. OK, if I could I'll try to take your questions
in order.
Senator Ensign. Answer that last one first.
Ms. Hampton. OK.
As we understand the legislation, USAir would benefit from
half of these slots----
Senator Ensign. Yep.
Ms. Hampton.--half of the amount of passengers would be
attributed to US Airways.
Senator Ensign. How many international passengers does
USAir have going out of Dulles right now?
Ms. Hampton. USAir doesn't have any international.
Senator Ensign. So you're worried about international
passengers, that's a whole argument Senator Warner was just
making, and yet you're attributing half of the drop in
international passengers from Dulles--it just doesn't make
sense to me. If that's your big concern, international
passengers, and USAir doesn't fly international passengers out
of Dulles, that's where your concern is the biggest drop,
because you all talked about them taking that from, and you
know, this becoming a hub-type of a situation at DCA. That's
not the way that USAir works, for their international.
Ms. Hampton. They would come from other airlines, other
than US Airways.
Senator Ensign. So, you're thinking they're going to
transfer from one airline to another airline?
Ms. Hampton. Yes. Yes, sir.
Senator Ensign. Do a lot of people do that today? Transfer
one airline to another airline to go international?
Ms. Hampton. Not to go international. What would happen is,
if a flight is coming from, let's say, Los Angeles, through
Dulles, and then going on to London and half of those people on
the flight are domestic passengers, they would get off the
plane, and they would come to the Washington metropolitan area.
The other half would get on a flight and fly international. The
ones who are domestic passengers would make the economics of
that flight not work if those people that were flying
domestically now to Dulles International were not on that plane
and, in fact, came to National Airport.
So, it would make that flight to Dulles not economical. The
airline would, logically--then move that flight from Dulles----
Senator Ensign. Mr. Sammartino, do people that fly--in
other words, if they're not flying internationally, do people
fly, generally, and transfer airlines, especially American
carriers--do they fly domestically and transfer airlines to fly
internationally?
Mr. Sammartino. Senator, I wish I could answer the
question----
Senator Ensign. Maybe we can get that question from you.
Let me go back and maybe you can answer some of the other
questions that I started answering.
Ms. Hampton. You talked about what I called transfer
passengers. There will be both transfer passengers, and
origination/destination passengers. The transfer passengers
have their own issues, as far as the ability to sort the
luggage. Origination/destination passengers would create
additional pressure through the security screening locations.
Senator Ensign. What happens if the economy improves more
than it was in 2007?
Ms. Hampton. We are very much hoping that that's the case
and that is in our plans to be able to accommodate that, sir.
This would be----
Senator Ensign. What happens if it increases more than what
you're planning? You'd make accommodations.
Ms. Hampton. Well, you know----
Senator Ensign. Correct?
Ms. Hampton.--we will work to accommodate it.
Senator Ensign. Listen, listen--airports do that all of the
time. I mean, in Las Vegas, we were growing faster than anybody
ever predicted for a long time. They had to make changes to
baggage handling, changes to security lines, changes to
everything, and you do it. Because that's what is required,
that's part of the jobs that you're assigned to do, you do it.
But what we're trying to do here is something that, first
of all, can make airlines more competitive in the marketplace.
Airlines have been hurting for a long time, they're just now
starting to recover, and we're trying to make it to where,
listen, I'm going to be flying out of Dulles, OK, because it's
just more convenient for me, I'm going to continue to fly out
of Dulles, the number of flights, I probably--even if this
thing passes, I don't even know if USAir is going to take one
of their slots, you know, to Las Vegas. I'm just talking about
the health of airlines and the competitiveness, and I just
think that a lot of the arguments that a lot of you have made
today just do not add up. And I think Chairman Dorgan and
Chairman Rockefeller have made some really good arguments
today, and your arguments just have not, you know, kind of held
water.
I apologize, my time is up, Mr. Chairman.
Senator Dorgan. All right, thank you, Senator Ensign.
Let me make a quick point. There is nothing that has been
discussed today that will ever benefit Bismarck, North Dakota.
There is no out-of-the-perimeter flight from Dulles to
Bismarck, nor will there be. So, I don't have--I'm not into
this discussion. All I want to do is pass an FAA
reauthorization bill, that largely has been blocked by the
position of two airports, here, and the Metropolitan Authority.
And, let me see, Mr. Snelling, it seems to me your position
is a position that time stands still. The testimony today
suggests that you have a notion of how many slots there are,
outer perimeter, and new slots, and that's what will always be.
That's not the case. Time doesn't stand still. Time marches on,
and the fact is, if you're managing this airport with a belief
and an understanding that your financial structure depends on
Congress doing nothing with respect to these issues, you're not
managing the airport very well. Your response?
Mr. Snelling. Well, my view is that we're not in a static
state of events, that we have a planning horizon, we've spent
capital investments based on that planning horizon, and if the
Congress--which we absolutely acknowledge is the one who's
going to make this determination--if they tell us to do it a
different way, then we'll start planning a different way and
doing different things.
Senator Dorgan. But you're telling Congress, ``Don't you
dare tell us to do it another way, you're going to break the
back of these two airports,'' that's what you're telling us.
Mr. Snelling. I would never tell Congress anything except
my honest opinion on an issue, when asked.
Senator Dorgan. Well, I understand that, is that your
honest opinion?
Mr. Snelling. Yes.
Senator Dorgan. Sixteen conversions and five new slots are
going to break the back of the financial planning of the
Metropolitan Airports Authority with National and Dulles? Do
you really believe that?
Mr. Snelling. I really believe that it wouldn't be good for
our airport system. And I also think that there are issues,
here, that we haven't had time to discuss. I mean, when you
have a hub at National, which is what we don't really have now,
then you need a whole new and different baggage-sorting system.
Baggage has to be sorted from one plane to another. When it's a
destination airport, people go, they pick up their bags, and
they go. The bags don't have to be sent from one airline to
another.
It's a very complicated business, the airport business. And
it really takes time to accommodate changes in operations.
Senator Dorgan. Well, but you're apparently planning for
something that won't be, and that is a future that looks like
the past. And so, you know, good for you, but I think it's a
huge mistake. I'm going to come back to you in just a second.
Mr. Snelling. Sure.
Senator Dorgan. I want to ask Mr. Sammartino, do you work
for Secretary Kurland?
Mr. Sammartino. I work in the FAA----
Senator Dorgan. I don't understand the hierarchy here.
Mr. Sammartino. OK.
Senator Dorgan. Do you work under her?
Ms. Kurland. I work for the Secretary of Transportation----
Senator Dorgan. OK, so different stovepipes.
Ms. Kurland.--but, we work together.
Senator Dorgan. Well, I was going to ask you whether you
agree with her, so let me read what she just said in her
testimony. ``Reagan National,'' I'm quoting Ms. Kurland, ``is a
relatively high-fare airport, having the third-highest fare
premium of the 121 markets that were examined.'' Then she says,
``For a large portion of passengers, especially time-sensitive
passengers, the three airports in the Washington-metropolitan
area are not effective substitutes for each other. Price
competition from the Washington, Baltimore Washington
International, and Dulles are not effectively disciplining the
fares at Reagan National.''
That is fascinating testimony to me, and comes to a point
that suggests, Mr. Snelling, that you and the Authority are
managing Washington National at the highest fares, and you've
decided, you know what? We don't want anything to interrupt
that. And the preposterous position, as far as I'm concerned,
and I've already told Ms. Hampton this, is you are suggesting
that if, somehow there are 16 conversions--16 out of the
hundreds of flights a day out at National, 16 conversions that
fly outside of the perimeter, that somehow it will be--do
terrible injury to Dulles--suggesting, of course, that nothing
will happen with respect to something that we, who study the
economic system, call competition. The world's largest airline
will exist at Dulles. It's a merger between United and
Continental. When completed: the world's largest airline.
So, you think the world's largest airline sits there at
Dulles and decides, ``You know what? If this is what they're
going to do, God bless them, there's nothing we can do about
that.'' You don't understand that United Airlines will do
everything possible, including perhaps, even engage in price
competition. God forbid that should happen with respect to
those who fly out of National, but perhaps even a little good
old-fashioned price competition to make sure you don't bleed
all of those passengers?
And, you know, the reason I'm mentioning this to you, you
all showed me a consultant's study that was done, it wasn't
worth what you paid for it--I don't have the foggiest idea what
you paid for it. But when I asked the question, ``Does this
suggest that United would behave as the world's largest airline
would, and want to compete?'' No, we didn't consider that.
Didn't consider that.
So, tell me your notion of how all of this is going to work
if you're going to keep Washington National as one of the
highest-fare airports in the country, and essentially stop
competition in its tracks?
Mr. Snelling. Let me address that, sir. We live in a free
market, and people have choices. And Reagan is a more
convenient airport, and it's capacity-limited. And it's a
basic, free-market principle that if there's much more demand
than there is the ability to meet it, that those prices will be
higher. So, it's not unexpected that a capacity-limited, very
convenient airport will have higher rates. We don't do that,
the airlines do that.
Senator Dorgan. Oh, Mr. Snelling, you say we live in a free
market and people have choices; your position at this table is
to limit people's choices, isn't that the case? You're here,
and you have, for the last months, been telling the Chairman,
myself, and others and all who would listen that you want to
limit people's choices, isn't that the case?
Mr. Snelling. We do what Congress tells us to do. We won't
be----
Senator Dorgan. No, that's not the case. You are suggesting
people's choices be limited, and you just told me that we have
a system here in which people have choice, that's not your
position.
Mr. Snelling. I respectfully disagree. I mean, I really
believe in competition, and we want to encourage it every way
we can.
Senator Dorgan. Well, then----
Mr. Snelling. I just don't think that the proposal will
meet the needs that I know you have, and I'd like to meet.
Senator Dorgan. Would you all hire a consultant that
considers the competition that would exist between Dulles and
National if, in fact, a small number--16 conversions out of
hundreds of flights a day will be outside the perimeter? Would
you hire a consultant that would at least do what an Econ 101
student would have to do on a term paper?
So, I don't mean--well, I guess I do mean to diminish the
information that has been given to us, because it is not--it is
not right, it doesn't nearly meet the laugh test, in my
judgment.
Let me ask, again, Mr. Snelling, are you aware that the
Metropolitan Washington Airports Authority has approached the
carriers that are serving in DCA and suggesting that they make
more efficient use of slots, including using larger aircraft?
Mr. Snelling. Yes, I am aware of that.
Senator Dorgan. And what is the purpose of coming to this
committee suggesting that you can't accommodate more, and then
at the same time telling the major carriers that they ought to
be using larger aircraft? Tell me how that adds up?
Mr. Snelling. Our purpose is to fulfill the capacity we
have within the rules that Congress has given us. And if
Congress changes those rules, we'll follow what Congress tells
us to do. Right now, we're following what Congress has told us
to do.
Senator Dorgan. So, is it OK if Congress changes the rules?
Do we have your OK?
Mr. Snelling. I have no such presumption as to tell
Congress what they should do or not do.
Senator Dorgan. Well, you've been telling Congress, for the
last 4 months, my friend.
Mr. Snelling. No, really, sir, what I've been doing is
answering the questions put to me on what I think is right for
the Airports Authority.
Senator Dorgan. Senator Rockefeller?
The Chairman. I hate to take you off your roll.
[Laughter.]
The Chairman. Let me be honest. The--I'm always honest, so
let's just carry on tradition. You believe that you're so
sovereign--do you believe that you are under the direct
jurisdiction----
Mr. Snelling. Of course.
The Chairman.--of this committee?
Mr. Snelling. Absolutely.
The Chairman. And that you can't move to the right or the
left by more than six inches if we decide that we really don't
want to have you do that?
Mr. Snelling. I know that completely. And the term that
you're using was never used in any context externally to the
Airports Authority. That term was used only in an internal
debate as to who should make policy. The Board is sovereign in
the Authority in terms of making policy. We're not sovereign in
anything else, and we're certainly not sovereign as it relates
to you or this committee or the Congress of the United States.
The Chairman. I'm pleased to hear that, and you wouldn't
even exist, I might say, if it hadn't been for me.
Mr. Snelling. We agree.
The Chairman. So, you can thank me.
Mr. Snelling. We do thank you, sir.
The Chairman. That's good.
This is the situation we find ourselves in. You have about
98 percent of the Congress on our side of it, the Senate,
waiting to vote for this bill. There are a few who are holding
up this bill, and they're doing it based upon what the Chairman
and I have always suspected, information which you give them.
And that information is to keep, as the Chairman suggested, the
status quo, go back to where it was originally, not recognize
that the West Coast is--as the Senator from Nevada indicated--
has grown exponentially.
Northern Virginia is very unusual in the East. You won't
find that in the South, you won't find that in Appalachia, you
won't find that in the Northeast a lot. The growth is out
there. Don't you have a responsibility to service the West
Coast to a greater extent than you do now, which is virtually
sort of one flight, per day, per huge city on the West Coast?
Mr. Snelling. We do have that responsibility, which is why
we're building rail transit out to Dulles, the only great
National capital in the world that I know of that doesn't have
rail transit. We want to make it----
The Chairman. I don't think the West Coast comes in on
light rail. I'm interested in the air--see, part of the problem
I have here is you talk about how your ratings are down. But I
don't think the ratings--first of all, I can't imagine three
more successful airports in this country than BWI, National,
and Dulles. I think the future for each of those airports is
just unlimited.
Now, you say you have some financial problems. You do not
have financial problems because of what you're doing at the
airports. You do not have financial problems because of
baggage, because of security, because of ramps and all of the
rest of it. You have financial problems because you've invested
a lot of money in some really stunning, colorful, interesting,
and excellent transportation, to make life easier on the way
out there.
I have to tell you that I am--coming from West Virginia, I
sort of come from Bismarck, too. We have a little bit more
traffic than they do, but one of the reasons that the
Charleston airport, for example, has done so well, the
Charleston, West Virginia airport, is because they're
extraordinarily aggressive. All they look at is the future, and
what can they get? And they're considered one of the 10 best
airports in the United States of America because of this. It's
the attitude of the Board, in your case, it would be the
Authority. They're looking to the future, they embrace the
future, they want the future, they understand that life isn't
easy, they understand that we're going to come out of the
recession, they understand that we're in a recession. We don't
have any capacity to build what you're building up here in the
way of transportation, but your airport--your airports are
guaranteed for the future. We're going to--the recession, I
don't know if it'll be 2013 or 2014 when we come out of it. I
don't know, but we're going to come out of it. And your future
is going to be absolutely magnificent.
So, I'm sitting here bamboozled that the reason that no
airport in the United States is going to get the air traffic
control system GPS and--which will increase the number of
opportunities, and allow planes to land and take off more
quickly, allow them on an altitude basis to be closer to each
other, because it's much more measurable, the difference
between an x-ray and an MRI is very substantial and we all know
that.
But none of that can happen, because the bill is being held
up. We can't pass it because this--somehow this offer on slots
that we've offered, which was rigorously worked through with
Senators from the west who have very major positions, to be
frank, in the Republican Party, that they compromised like
crazy. And they're willing to take this piece of legislation
and pass it. And do all of the things that will make your two
airports, and all of the airports around the country, including
my little airport in Charleston, West Virginia, and Bismarck--
whatever they have there, I don't know what, do you have
concrete on the ground?
[Laughter.]
Senator Dorgan. You know, that's not funny. We have
wonderful air service.
The Chairman. Well, that's what I was just about to say.
But do you understand what you're doing? That's what I'm
saying.
Mr. Snelling. Well----
The Chairman. You are stopping through the information and
your influence on some, you're stopping this bill from passing,
and you can't feel very good about that. I don't want you to
feel very good about that.
Mr. Snelling. Senator----
The Chairman. If you somehow would release some people, and
encourage some slot arrangements, we could settle this and have
it done, and America would be a better place, and so would the
world.
Mr. Snelling.--Senator, you have a much higher opinion of
our ability to add and detract than we have. I'm a solid
proponent of the FAA reauthorization bill--a solid proponent of
it, and a solid proponent of NextGen. I wouldn't hold those up,
in any way. Nor do I think that I or we have the capacity----
The Chairman. But you are. I said I was going to be frank,
and I am--you are. And I think you need to take that home and
think about it. And I think you need to think about the West
Coast--don't they deserve to be treated as though they are
exactly what they are? A very resilient, very vibrant, very--
you know, tax savvy, everything savvy part of the world which
is growing. Good grief, my youngest son has just moved out
there. He thinks the future is out there. I thought he was
going to stay here, in the East, no, he's going out there.
You know, it just--it doesn't add up, to me. And
particularly when this bill is just simply ready to pass. It
passed, already, 93 to nothing, it didn't have the slot
arrangements in it. But the slot arrangements, they, somehow
you think they're going to destroy you. That you can't handle
them. And I don't think the GAO thinks that, and I don't think
that Mr. Sammartino thinks that, but you do, and so that really
carries, unfortunately, a lot of weight and puts you in the
position of stopping this bill. I don't think you're happy
about that. You're not happy about a number of things. We've
got a lot of quotes that you've made over the years, which
we're not--I'm not going to put on the record, here, for your
sake.
How do you respond to that? I mean, I've been rude, but I'm
also angry.
Mr. Snelling. I'm sorry about that.
Ms. Hampton. Yes.
Sir, I think we at the Airports Authority, as the Chairman
said, very much support the FAA reauthorization. It is not an
easy thing to be sitting here in front of you, but we truly
believe that the slots would have a negative effect on National
Airport and a negative effect on Dulles Airport, both from the
domestic and the international perspective. And that's what
we're here to say, just to tell you what we believe. We believe
that we have done what Congress wanted us to do. We believe
that Congress set up Reagan National to be a short-haul
airport, and we think we've done a good job, and we've been
good stewards.
The Chairman. I'm way over my time.
Senator Dorgan. Senator Warner.
Senator Warner. Thank you, Mr. Chairman.
And again, I want to come back again to this contentious
issue and commend you and the Chair of the Committee for, you
know, enormous hard work on this. And, I'm new here, but I know
how much the Chairman of the Committee and the Chairman of the
Subcommittee have worked so hard, and nothing surprised me more
than the education of--the enormous need we have to get a
NextGen system and how much that's needed.
I would take issue of a few things. I would urge that, you
know, this is one of a series of issues, PFC and an interesting
debate between which PFC issues would still need to be worked
out and issues between UPS and FedEx that are also contentious,
and issues with the House.
I would also ask, Mr. Chairman, that we make part of the
record the letter from 11 members raising concerns about this
approach, not all from the region. As a matter of fact, six of
them from the West, the six members representing the Northwest,
part of America that felt that this approach disadvantaged
their communities, their states, and I hope that would be part
of the record as well.
[The information previously referred to follows:]

cc: Majority Leader Harry Reid
Minority Leader Mitch McConnell

Senator Dorgan. Without objection.
Senator Warner. So, I think it is a broader issue. And
again, I'm going to go back to where I started, I'm going to
make one or two other points. You know, I don't concur fully
with the Airports Authority of no change. And I appreciate
again, and I know at the end of the day, I think both these
Chairs have said they have no dog in this fight, and we--the
Chairman of the Committee worked hard for a compromise at the
Committee level that I actively supported, and unfortunately it
fell short. He is operating totally in the best interest.
But there are--I think there are enormous issues,
commitments made in terms of the Airports Authority, in terms
of simply doing what they were told, why the plan, go to the
bond market, make representations about what we can expect.
And, I think they have performed those duties appropriately.
And with the negative outlook right now, before you would
factor in another 700,000 passenger loss, you don't even have
to get to the issues around National. I mean, I do think some
of the testimony today around National about ability to absorb
have enlightened me, but with the issues around Dulles lay
enormous concerns.
And again, for all of us in this region who have fought for
years to try to get that Dulles rail, again, the underlying
financial assumptions on that project are also put in jeopardy
based on a constantly shifting set of rules. Even if you
expected a set of rules, well, things change, the world
changes, Congress changes. But if there was any kind of
assumption of what the changes might be, no matter what your
position may be in terms of zero changes, you know, past
reference might be a good idea. Well, one time it was 10, one
time it was 12, now we're talking 21. That is an exponentially
different level of change.
I also think it's important--and I've got something else in
mind--I think it's important to come back to one point that he
made, because I think I've spent more time in business than I
have in this line of work--I used to be a pretty good business
guy. I think people do rational things for financial interests.
And the bond that has been set up at National right now, in
terms of people flying into hubs or flying into small markets,
almost always inside the perimeter. Outside perimeter, hub
markets are more profitable because you have that ability to
leverage to other flights. So why--we've got this balance, but
this notion that if you take away inside perimeter slots and
replace them with even more prosperous outside perimeter slots,
which will have larger capacity. A rational being, if you lose
flights at Charlotte and Philadelphia, a rational being will
supplement those flights at Charlotte and Philadelphia with
taking away flights from less prosperous markets that rely
right now on perhaps that only service to National.
So the notion that this would have no effect, and people
can make those changes, now people don't make those changes
because that capacity inside perimeters has been filled and the
market is at an equilibrium. But if you take away that
equilibrium, any rational company is going to go ahead and
refill the inside perimeter slots. And where are they going to
look? I think they're going to look at the secondary markets
served inside the perimeter, and that will create a whole new
set of challenges. So I do urge--I'll echo with my colleagues
here--I do believe that that status quo won't work, I do
believe a reasonable compromise makes some sense. I don't
believe what's around here right now hits that goal, nor do 11
other colleagues.
And again, this has been more a statement than a question.
I'll say, do you agree with me, Ms. Hampton, just to make it a
question? But, I would--I would simply again--we have a
difference on this, but I want to close, just with again,
compliments to both the Chair and the Subcommittee Chair, they
have worked extraordinarily hard on this bill. And, what is
remarkable as a new person--and I know they chase them, because
there has been four or five other times when we've tried to get
FAA reauthorization, long before I was here, where they never
got to the finish line. And they both need to be commended for
their great work in terms of moving it along. And again, I hope
that the 11 and some other members who may have concerns, that
we can still find some reasonable compromise, that this doesn't
benefit one particular subsection of the West or one particular
carrier over others. And would still hope we could get to that
point.
Thank you, Mr. Chairman.
Senator Dorgan. Senator Warner, thank you very much.
Let me go back to this concrete reference just for a
moment, to say that if the first--the first time I have heard
someone from West Virginia make fun of another State.
[Laughter.]
Senator Dorgan. I want to make sure that, if all you would
like, you get on a mail list, I'll send you a travel log for
North Dakota, a wonderful place.
My colleague, Senator Warner, makes a case. He's a good
colleague and bright and aggressive and fights hard for the
things he believes in. He makes the case, as----
Senator Warner. I take lessons from both of these Chairs.
Senator Dorgan. As has been the case around here on a lot
of issues. And the case is always, this is a carefully
balanced, carefully calculated, carefully weighed set of issues
and the balance exists. It's like, you know, it's like a loose
thread on a cheap sweater, you pull the thread and the arm
falls off. You cannot possibly do that, you can't alter it.
Well, of course that's not the case at all in my judgment. We
have a disagreement about that.
The 2007 GAO report, that I referred to earlier, says this
about the slots that were added and they have been added at
D.C. National, despite the testimony and despite all the
representations about the sky falling, here's what they said
about the slots that were added previously, GAO, ``We did not
find evidence that beyond perimeter flights to and from Reagan
National affected flights from the same airports to or from
Dulles or BWI. We analyzed fare and passenger data between
Dulles and BWI, and those airports, and for all the traffic
serving Dulles and BWI, and in doing so, we observed the data
didn't produce any distinguishable trends,'' etcetera,
etcetera.
Now, you know, I don't know how you can do better than that
in terms of making the argument that the representations that
the sky will fall if this happens are wrong. They've been made
before and it didn't happen before.
So, I just, you know, let me go through a couple things,
what we've learned today. There was a proposed slot exchange
that would have significant impact on Washington National in
terms of larger airplanes, advertised by press release. And
there were several opportunities to make comment by all
interested parties on that slot exchange. The Metropolitan
Washington Airports Authority chose not to say anything.
Strange, if in fact they're at capacity, have no bathrooms, and
garages, and all, you know. So, deciding on that big issue,
we'll be silent, totally uncharacteristic from what we see
today.
Number two, asking carriers to use larger airplanes, make
more efficient use of slots and use larger airplanes at DCA. Is
that in keeping with what we're hearing and the reasons to
block the FAA bill, because you can't accommodate more
passengers?
Number three, unused slots--Mr. Sammartino pointed out--I
believe there are 12 slots an hour for general aviation, I
think it's somewhere in that neighborhood, is that right?
Mr. Sammartino. There are 12 authorized slots per hour for
general aviation, but actual usage, is only two.
Senator Dorgan. Right. So you have 12 authorized slots per
hour for general aviation and let's say two are used, slightly
less, slightly fewer than two, so you have 10 slots an hour
that are authorized and not used, just in terms of capacity.
Then, in addition, you would have planned and should have built
for an understanding that 25 percent of your flights will be
smaller commuter airplanes. If you say you pay close attention
to us, to what Congress says is your charge, then you would
have created an airport that believed that 75 percent of your
flights would be with larger jet carriers. And yet, only 40
percent of your flights are with the larger jets.
My point is, look at all these things, there's nothing here
that adds up. I'm sorry. I know you make the best case you can,
as does my colleague, but it simply doesn't add up. And if I--
if this were a case where, look, we're having a debate and
you're equal to the task--I listened to Senator Rockefeller and
you, you know what, it's a standoff. If that were what I felt,
I'd say, ``You know what, you've got a pretty decent case, we
better look at this.'' My point is, I don't think you have a
case at all. And I would just read the GAO thing and just stop
and say, ``You know what, you've been wrong and are wrong.''
But, having said all that, I want to ask you one additional
question and then we'll move on to the end of the hearing. I do
want to ask the question, and I only ask this because it is not
about capacity, it's because there has been representations
about how you're having some financial issues and worried about
bond markets and so on. My understanding is that you lost $51
million in interest rate swaps. I'd like to understand how the
Metropolitan Washington Airports Authority would have lost $51
million in interest rate swaps.
Mr. Snelling?
Ms. Hampton. The question was asked, ``Did we deal in
credit default swaps?'' And the answer to that is no, we did
not deal in credit default swaps. The Airports Authority
established a risk management program about 7 or 8 years ago to
manage exposure to variable interest rates. We currently have
interest rate swap agreements. We had some swaps with Lehman
Brothers. When Lehman Brothers went bankrupt, it was necessary
for us to unwind those swaps and we chose to do that as quickly
as possible to get out of the bankruptcy litigation and any
unknowns. The Airports Authority, in our risk management
program, had always set aside funds to manage the risk. We
actually made special trips to New York with our Board to
educate our Board on both the risk and the advantage of
interest rate swaps.
In this economy things happened. The $15 million was
related to the bankruptcy of Lehman Brothers, the $35 million
was a decision that we made to unwind swaps that were insured
by Ambac, and at that time we unwound those swaps and paid the
$35 million. In both cases we took variable rate debt and
changed that variable rate debt into fixed rate debt. And I am
knowledgeable about this because, in my previous life at the
Airports Authority, I was the CFO.
Senator Dorgan. I'll just let that sit as testimony. It
raises other interesting issues that I'm interested in, but I
think the hearing has gone on long enough. I'll just that lay
there in terms of a response to my question.
I want to end the hearing by saying this: I think it is the
case that if you were betting, you'd probably bet that this FAA
reauthorization bill will continue to blocked and this year
will end, and we're nearly at a point now where there's barely
enough time to finish it even if we had an accord.
My colleague--to my colleague from Virginia, I would say
that this issue is the issue. It is not going to be FedEx and
UPS as an issue that holds it up, it's not going to be several
other issues. I think most of those are resolvable and we
understand how they're resolvable. This is the issue that will
likely hold it up if it's held up.
And if that's the case, we will be--the Congress will be, I
should say, perhaps next May, July, September, whenever it gets
organized finally and tries to figure out, alright, how do we
start over, how do we begin moving on this, and we will as a
country fall far behind on the issues of NextGen and air
traffic control modernization. And it's a shame, because this
country deserves better than that, deserves better stewardship,
better management, it just deserves better from all of us. You
represent your interest and that's fine. We calculate that
interest against the interest of the country, all other
airports against the interest of needing to keep an opportunity
for aviation to work and to operate in this country and to
modernize. It will be a profound disappointment, to me
certainly, and not just me I hope, if at the end of the year we
have not done what our country should expect us to do, all
because we have decided that this carefully constructed balance
and the scales that exist between the three airports in this
region, especially between Dulles and National, could be
injured by taking 16 flights that now exist and converting
them, in terms of the number of miles they fly.
Again, I think at this hearing you have demonstrated a
profound misunderstanding of the importance of the issue and
also represented to us a series of things that just don't add
up in terms of your behavior, your silence on much larger
changes to aircraft coming in and out of National, with the
slots--the slot proposal and other things.
But having said all that, I can't change your testimony or
your views. If those are your views and they're your views
going forward, so be it. I do think that this hearing also
suggests some other issues for Senator Rockefeller and the full
Committee and that is, we created the Metropolitan Washington
Airports Authority. We didn't create it with a credo of
yesterday forever. Yesterday forever is not going to exist,
some people behave that way, but that's not going to be the
case. And I think the question of the Metropolitan Washington
Airports Authority, who it's accountable to, how it should be
accountable, whether it makes sense to maintain National as the
third highest airport in the country for rates, and try to
prevent competition and prevent choices, whether that makes
sense. And if that's the way it is managed, should there be
some accountability to the Congress, to this committee, should
there be perhaps some modernization of the Metropolitan
Washington Airports Authority to evaluate how do you create an
authority that has competition as a high order in addition to
maintaining sterling airports.
The one thing that would unite all three of us remaining at
the dais, is I think all of us, who fly out of both airports,
and all of us would want this capital city, our Nation's
capital to have airports that we can be enormously proud of. We
want these to be the best airports in the world, no question
about that. But, that's not going to happen, it simply will not
happen if we decide we're going to delay for another year and
another year, the essential things that are necessary in the
FAA reauthorization bill, and I'm afraid that's the position
that the Metropolitan Washington Airports Authority is taking
and is going to result in.
I say to my colleague from Virginia, as I said before, I
appreciate your tenacity. We profoundly disagree. I thank the
witnesses. This is probably somewhere between a migraine
headache and a root canal for you, but you know what, we have--
the Congress has a right and a duty to ask very tough
questions. We've asked those questions and have gotten very
unsatisfactory answers, at least for me, and I hope that in the
weeks ahead, perhaps we can find ways to reach agreement, at
least on the essentials, dealing with this issue.
Senator Rockefeller, do you have anything more?
If not, this hearing is adjourned.
[Whereupon, at 4:20 p.m., the hearing was adjourned.]

A P P E N D I X

Prepared Joint Statement of U.S. Senators Benjamin L. Cardin
and Barbara A. Mikulski of Maryland

Thank you Chairman Dorgan for the opportunity to share our views on
an issue that is of great importance to our region.
In 1987, Congress created the Metropolitan Washington Airports
Authority (MWAA) to run Reagan National and Washington Dulles
International Airports. The creation of MWAA represented a commitment
from Congress to the residents of the DC Metropolitan area on the safe
operation of Reagan National Airport when it transferred authority over
to MWAA.
Those commitments were codified by Congress in the perimeter and
slot rules.
The system of operation that emerged from the 1987 agreement has
worked well for the region's three major airports. Over the last 20
years significant investments in the region's airports have led to
marked improvements in efficiency, safety and quality of service at
Thurgood Marshall-Baltimore Washington International Airport in Anne
Arundel County, Maryland; Dulles International Airport in Loudoun
County, Virginia; and Reagan National Airport in Arlington, Virginia.
These across the board investments have helped the region's airports
successfully meet the growing demands of the traveling public that come
to Baltimore-Washington area.
The 1987 agreement was reached through a collaborative process that
involved input from local and regional stakeholders. Doing so helped
ensure a successful long-term growth and management plan for the
region's commercial airports.
If changes to current airport operations and service in the region
are needed, a similar process to the one that was followed in 1987
should be used. Engaging the region's aviation, transportation,
economic development and planning experts is both courteous and smart
to ensure that the best outcome is reached.
After all, these are decisions that have a tremendous affect on our
region's economy and quality of life.
Many of the recent legislative proposals to change the National
Airport slots and perimeter rules in the current FAA authorization bill
would significantly alter the 1987 agreement.
These changes to the rules dictating operations at National could
degrade service at all three of the region's airports. Furthermore,
neither the region's transportation planning nor aviation authorities
were consulted on any of the slots or perimeter rule alteration
proposals.
The Metropolitan Washington Airports Authority has stated that
additional flights at DCA would ``put a greater strain on Reagan
National's facilities designed and improved to be a short-medium haul
airport with limited parking, ticket counters, gates, luggage
processing capability and security screening facilities.'' MWAA
estimates that the proposals being considered would ``add 1,674 to
2,426 departing passengers per day, an increase of 6.3 to 9.2 percent
above the 26,444 daily passengers who now depart from Reagan
National.''
Allowing more flights in and out of National Airport impacts the
safety of the airport's small tarmac and runway capacity. The airport
has one runway that is used by commercial aircraft for take-offs and
landings and only has 45 gates to accommodate arriving flights.
Unlike many airports that are deliberately located away from
population centers because of jet noise and air pollution, National
Airport is located in the heart of the Greater Washington Area's urban
center. The noise and emissions from the jets landing and taking off
from National Airport directly impacts the quality of life for
residents in Prince George's and Montgomery Counties in Maryland, the
District of Columbia, and Fairfax and Arlington Counties of Virginia.
Consistent service at National Airport lends itself to the steady
growth at the region's major hub airports which has been at the heart
of the regions' business communities' economic development plans.
Companies like Northup-Grumman, L3, General Dynamics Inc., IBM,
Deloitte and other major employers in the Baltimore Washington area
strategically located themselves around BWI Airport.
Several major companies have similarly located along the Dulles
corridor in Loudoun and Fairfax Counties.
The steady growth in service at the region's large international
airports helped create an attractive business climate for these major
companies to locate around. This would not have been possible without
Congress's agreement to maintain the status quo of service at National
Airport that in turn made Dulles and BWI the region's growth airports.
While it is unclear how carriers would implement the new available
flights, based on existing service and prior historical evidence of the
impacts of increased slots at DCA allowing flights to be converted from
within perimeter to beyond the perimeter would have a direct impact on
the west coast service offered out of BWI Marshall. Under any scenario,
service reductions at BWI Marshall as a result of the slots proposals
will reduce the value and return on recent infrastructure investments
made by the airport. The State has invested more than $1.5 billion in
the Airport during the past 10 years and plans to invest more than $684
million during the next 6 years.
We remind colleagues that eliminating or changing the perimeter
rule, or adjusting the slots rules at National Airport will result in
tremendous economic pressure to abandon or reduce service to cities
inside the perimeter for higher revenue, long-haul flights outside of
the perimeter.
Cities such as Atlanta, Charlotte, Philadelphia, Cincinnati,
Cleveland, Newark, Memphis, Tampa, Minneapolis, Miami, Boston and
Detroit, which are all currently within the perimeter, could lose their
service or have it reduced if the perimeter rule is eliminated or
altered.
We welcome a collaborative and open process should changes to our
region's airport operations be necessary. We ask that colleagues
respect the need to work with us and local transportation, aviation,
and planning experts when changes are sought.
______

Prepared Statement of Hon. Jim Webb, U.S. Senator from Virginia

Mr. Chairman, thank you for the opportunity to submit a statement
for the record concerning the Metropolitan Washington Airports
Authority and its operations in the National Capital Region. As you
know, the Airports Authority employs about 1,400 staff to oversee two
major airports--Washington Dulles International Airport (IAD) and
Washington-Reagan National Airport (DCA)--while maintaining an
efficient airspace in coordination with Thurgood Marshall Baltimore-
Washington International Airport (BWI).
The Authority has a stellar track record of handling that
responsibility since its establishment 23 years ago. Congress in 1987
established the Authority as a professional organization to operate the
airports efficiently, making a commitment to the surrounding
communities regarding aircraft noise and traffic. That commitment was
codified by Congress in the so-called perimeter and slot rules. Changes
to these rules threaten to seriously degrade service to Reagan
National, Dulles International, and Baltimore-Washington International
airports, and break the commitment Congress made to local communities.
Most importantly, the massive infrastructure and business
investments that have been made in recent years at Reagan National and
Dulles International Airports were predicated on the carefully balanced
slot and perimeter rules. Those rules govern the number and type of
flights at each airport, and the regional business model depends
heavily on that fragile balance. Because Dulles is better situated to
handle the demands of long-haul flying, Congress wisely established the
perimeter rule to move long-haul traffic to Dulles where the space
exists to handle the necessary parking and infrastructure expansion.
The multi-billion dollar Dulles Development program, and the
investments in rail service to Dulles, are all predicated upon Congress
keeping its word on the perimeter rule. Eliminating or changing the
perimeter rule will not only overburden capacity at Reagan National
Airport by overwhelming the facilities but would significantly change
the infrastructure improvements needed at Dulles International Airport
-many of which are already under construction. Sizable business
interests have located their operations in Fairfax and Loudoun Counties
based on their proximity to Dulles and on assumptions about the
stability of the slot and perimeter rules.
Similarly, the Airports Authority rebuilt much of Reagan National
Airport about 10 years ago, transforming it into one of the most
efficient airports in the Nation as the facilities constructed were
matched to the number of flights established by law. It did so with the
slot and perimeter restrictions in mind. Any increase in the number of
flights at Reagan National will overburden critical airport facilities
and infrastructure, causing serious disruptions. New or converted
flights will create more demand for parking where none is available, as
well as congested ticket counters, gates, and local roadways. This
situation is only exacerbated by the addition of new Advanced Imaging
Technology (ATI) security scanners being deployed at the Reagan
National.
We have seen examples of service in other congested airspaces where
reasonable slots restrictions have controlled or reduced growing delays
in flight times. Any potential Congressional action only serves to
further break the bond that was created with the neighbors of the
airports, and threatens to destroy the business model that has enabled
such significant development in the Dulles Corridor.
In sum, the Airports Authority has a proven track record of
managing the operations of these airports safely, professionally, and
efficiently. Furthermore, the slot and perimeter rules established by
Congress have been critical in fostering long-term business and
infrastructure investment in the region. I would like to reiterate my
commitment to this important issue, and to commend my Virginia
counterpart, Sen. Warner, for his many efforts.
______

Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Hon. Susan L. Kurland

Question 1. MWAA has stated there are 135 flights currently
operated from National Airport in ``air carrier'' slots by aircraft
classified as ``commuters''--that is, smaller aircraft having 76 seats
or less. If these 135 ``air carrier'' slots were up-gauged and fully
utilized, what would be the resulting increase in passengers at
National?
Answer. Large air carrier aircraft in use at DCA, those with more
than 76 passenger seats, average 120 seats per flight. The number of
smaller aircraft using air carrier slots varies, as does the equipment
used. Recent schedule data indicate an average of 60 seats per
operation on those smaller aircraft. Based on the 135 flights indicated
by MWAA, upgauging and utilizing the slots at the larger air carrier
aircraft average could result in about 16,000 additional daily
passengers.

Question 2. How does the noise footprint of 737s that operate
beyond perimeter compare to regional jets, MD-90s, Dash-8s, 717s, and
757s that operate within perimeter?
Answer. The fleet mix operating beyond the perimeter includes 737s,
A319s, and A320s. As a result of technological advances, newer
generations of these aircraft have reduced noise impacts. The primary
Boeing 737 variant operating beyond the perimeter is the 737-800. While
the noise footprint of the 737-800 is greater than the noise footprint
for nearly any type of aircraft operating from within the perimeter,
both the A319s and the A320s have a smaller footprint than several of
the aircraft now operating from within the perimeter. Accordingly, any
consideration of cumulative noise impacts is highly dependent on the
specific fleet mix.

Question 3. MWAA cites concerns about the financial impact the slot
proposal will have on Dulles Airport. Since the creation of West Coast
slots at National in 2000, what are the trends in passenger traffic
from Dulles to those markets? Has traffic increased or decreased from
Dulles to those markets? Is it fair to say the West Coast market for
Dulles has grown since the addition of West Coast slots at National
airport?
Answer. Yes, an analysis of passenger traffic from DCA and IAD to
western points including Denver, Las Vegas, Los Angeles, Phoenix, Salt
Lake City and Seattle from 2000 through 2009 indicates that traffic
grew, in terms of passengers that originated at both DCA and IAD, on an
annual basis. Between 2000 and 2009 traffic between DCA and western
points grew 66 percent. During the same period, Dulles traffic to the
same western points grew by 33 percent. Traffic increased substantially
for both National and Dulles.

Question 4. Do you believe the addition of West Coast slots at
National will increase or decrease combined traffic from National and
Dulles to West Coast cities served by those slots?
Answer. Increase. Based on the analysis conducted for the previous
question, it is anticipated that additional points on the West Coast
served nonstop from National will increase the combined traffic from
National and Dulles to the West Coast.

Question 5. Does the slot proposal present a substantial threat to
the financial health of Dulles Airport?
Answer. I'm not in a position to respond to this question; the
Metropolitan Washington Airports Authority operates Dulles Airport
would be in the best position to respond on this issue.
______

Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Susan L. Kurland

Question 1. Ms. Kurland, do you consider the availability of slots
as a significant barrier to entry at Reagan National for new entrants?
Answer. New entrants have had a difficult time obtaining entry to
Reagan National. A significant portion of the new entry that has
occurred is attributable, not to use of the buy-sell rules that are
available, but to the award of slot exemptions under mandate from the
Congress. Low-cost carriers have complained that access to the slot
market has been essentially denied to them by the incumbent carriers at
the airport. Low-cost carriers have only a 3.3 percent share of slot
interest holdings at DCA.

Question 2. Ms. Kurland, do landing and take-off slots at Reagan
National represent a property right for an airline or an operating
privilege?
Answer. The High Density Rule, governing slots at Reagan National
(14 CFR 93.223), states:

Slots do not represent a property right but represent an
operating privilege subject to absolute FAA control.

Question 3. Ms. Kurland, if the D.C. Circuit rules with US Airways
and Delta in its case against the FAA regarding its proposed swap of
slots between Reagan National and LaGuardia, and the two airlines are
able to exchange slots between the two airports as they initially
proposed, do you believe it would increase, decrease, or have no effect
on airline competition at Reagan National?
Answer. As we found in the Notice granting, with conditions, the
waiver request by US Airways and Delta to proceed with a proposed
exchange of slots at Reagan National and LaGuardia Airports, airline
competition at Reagan National would be adversely affected by the
transaction, due to a combination of increased airport concentration,
an increase in the number of monopoly or dominant markets in which
increased pricing power could be exercised, and the potential for use
of transferred slot interests in an anticompetitive manner. For these
reasons, we proposed that the parties divest slots at the airport as a
condition for approval of the transaction.

Question 4. Ms. Kurland, on average, do you believe that slot
controlled airports have higher ticket prices than non-slot controlled
airports? Do you believe that increased concentration of slots
ownership at slot controlled airport is associated with higher ticket
prices?
Answer. Ticket prices at slot controlled airports vary more
directly based on extent of low-cost carrier competition, than on mere
status as being slot controlled. In a ``Domestic Airline Fares Consumer
Report'' published by DOT, Reagan National ranked third of 121 city
markets for the 3rd quarter of 2009 in fare premium percentage, while
LaGuardia was 16th. Newark was 11th, and JFK was 31st, while non slot-
controlled Dulles was 9th and non slot-controlled Thurgood Marshall
Baltimore-Washington was 99th. Passengers pay more for nonstop service
of equivalent distance at DCA than at alternative airports that have
more LCC competitive services.

Question 5. Ms. Kurland, do you believe that Reagan National,
Dulles, and Baltimore Washington International are part of a single
market for air transportation services in the metropolitan Washington
DC areas, or does each airport represent largely separate markets? Are
your views consistent with the Department of Justice's views?
Answer. The significant price differentials among these three
airports indicate that they are not effective economic substitutes for
one another in domestic travel. Most travelers do not treat them
interchangeably, as they would if the airports were in a single market.
In its comments on the proposed slot swap to DOT, the Department of
Justice noted as well that the sometimes significant differences in
average fares at the airports, the high values attached to the slots,
and carrier efforts to protect their slots ``show that there is
differentiation between LGA and DCA and other area airports.''

Question 6. Ms. Kurland, would it provide clarity for the FAA and
airlines if Congress weighed in with a statutory change that says
something to the effect that if any airlines propose to exchange slots
between slot controlled airports, the FAA shall take the potential
impacts of competition in account when evaluating any waiver petition?
Answer. As we explained in the Notice granting, with conditions,
the waiver request of US Airways and Delta to proceed with the exchange
of slots at Reagan National and LaGuardia airports, the Department of
Transportation has the statutory authority to review the competitive
aspects of the proposed transaction.

Question 7. Ms. Kurland, as you know, one of the proposals for
changing the current perimeter rule and Reagan National include the
conversion of 32 slots for flights from large hub airports within the
perimeter to Reagan National for an equal amount of slots for flights
from Reagan National to cities beyond the perimeter. Proponents of such
a slot conversion scheme argue that smaller airports within the
perimeter would not be impacted because the slots converted must be for
a flight from Reagan National to a large hub within the perimeter.
Under the current law, is there anything keeping an airline from
backfilling the flight from Reagan National to a large hub it has
``converted'' with slots for a flight from Reagan National to any size
airport it currently flies to?
Answer. Under current law, the Department can only ensure that AIR-
21 slot exemptions are utilized for designated communities. Slots are
fully fungible, and can be utilized for any destination.

Question 8. Ms. Kurland, the FAA has a use or lose requirement in
place to ensure that underutilized slots are reallocated to carriers
that will use them efficiently. My understanding is that the rule
requires that slots be used 80 percent of the time over a two-month
period. Otherwise, the airline has to return the slots to the FAA, for
possible reassignment to another carrier. Nationally, has airlines'
reduction in capacity over the past few years through cutting back
flights led to an increase in slots that have been lost as a result of
the use or lose rule?
Answer. There have not been any peak hour slots (7 a.m. to 10 p.m.)
lost due to use or lose in the past few years.

Question 9. In the past two decades, has the FAA ever enforced the
use or lose rule at Reagan National? If so, on how many separate
occasions? And in what years?
Answer. The FAA enforces and monitors the use or lose rule on a
regular basis. Carriers report usage for each two-month period and must
meet the minimum usage in each bi-monthly cycle. Peak hour slots, those
between 7 a.m. and 10 p.m., are rarely lost due to use or lose rules as
carriers meet the minimum usage or trade them to other carriers. After
9/11, DCA was initially closed and scheduled traffic returned on a
phased basis as new security rules were implemented. The FAA granted a
general waiver to the usage rules to recognize those operating
constraints. The most recent peak hour slot withdrawn for failing to
meet the minimum usage requirements was in 2004. In the early 1990s the
FAA increased the minimum usage to 80 percent from 65 percent. The FAA
withdrew some slots following that rule change. Some carriers have had
slots withdrawn periodically during the off-peak hours of 6 a.m. and 10
p.m. to midnight. However, during these low demand hours, the FAA
typically has slots available for allocation.

Question 10. Are there ways for carriers to game the system and
keep an underutilized slot out of a competitor's hand? For example the
Department of Justice in its comments to the FAA in the proposed swap
of slots between DCA and LaGuardia stated ``. . . one way to minimize
the cost of meeting the 80 percent use or lose requirement is to fly
excessive frequencies or small planes . . . another way to hold onto
slots without using them productively is referred to as `babysitting' .
. .''
Answer. We believe some carriers at slot controlled airports have
adopted approaches that literally comply with the current 80 percent
use-or-lose provision, but have allowed underutilization of their slot
holdings.

Question 10a. Is there any way for the FAA to ensure that airlines
can't game the system at Reagan National with respect to the use or
lose rule?
Answer. The Department is in the process of reviewing this issue.
______

Response to Written Questions Submitted by Hon. Mark Warner to
Hon. Susan L. Kurland

Question 1. What factors are considered when making decisions about
slot allocations under standard procedures? Is the promotion of
competition a factor that is considered?
Answer. Slots were originally allocated on the basis of existing
carrier service at DCA. In order to reallocate slots that have become
available for redistribution, the FAA conducts a random lottery. These
slots are first made available to new entrant and limited incumbent
carriers, then to larger carriers only on a temporary basis until the
next lottery. See 14 CFR 93.225 for these procedures. The last slot
lottery at DCA was held in 2003. For the allocation of slot exemptions
under AIR-21 authority, Congress has provided specific criteria for
selections. For beyond-perimeter exemptions, increasing competition by
new entrant carriers or in multiple markets is one of four selection
criteria. For within-perimeter exemptions, status as a new entrant or
limited incumbent carrier is one of five selection criteria, except
that it does not apply in the instance of awards involving small hub or
nonhub airports. Another criterion, applicable for all within-perimeter
selections, is producing ``maximum competitive benefits, including low
fares.'' See 49 U.S.C. 41718.

Question 2. In your opinion, would a slot conversion proposal,
allocated proportionate to air carriers' current presence at DCA,
promote competition among carriers at DCA or would it allocate a scarce
resource disproportionately to carriers who already have a significant
presence at DCA?
Answer. Expansion and beyond-perimeter use of slots are matters on
which the Department has historically deferred to Congress, given its
longstanding interest and considerable experience in these issues. The
slot proposals before the Congress are complex in a number of regards,
and we believe they are best weighed and addressed by Congress.
______

Response to Written Questions Submitted by Hon. Maria Cantwell to
Lee R. Kair

Question 1. Mr. Kair, as you know airports are installing Advanced
Imaging Technology (AIT) for primary screening. My understanding is
that it takes longer for these devices to screen passengers than the
current technology. Additionally, depending on the layout of the
security area at a given airport, the larger footprint of these AIT
devices may lead to fewer independent lanes for screening passengers,
thus lowering capacity. The combination of these factors may lead to a
lower throughput of passengers through the security lines at some
airports, possibly leading to longer lines and wait times, especially
during busier times of the day. Does DHS expect nominally longer
passenger wait times at security lanes when the AIT devices are
installed at Reagan National Airport for primary screening during the
busier times of the day?
Answer. AIT screening does take slightly longer than walk-through
metal detector screening for the average, fully-divested passenger. The
difference varies, but is in terms of seconds and not minutes. A
concept of operations and protocols have been established to ensure
that traffic flow through the checkpoint is not degraded due to
installation of Advanced Imaging Technology. The limiting factor in the
passenger screening process at the checkpoints is not the time
passengers spend transiting either the existing or the new personal
screening equipment. Rather it is time spent on examining carry-on
baggage and other personal property. For all deployments, the
Transportation Security Administration works closely with airports to
ensure protocols and equipment do not delay the screening process while
enhancing security for the traveling public.

Question 2. Would DHS expect nominally longer passenger wait times
at Reagan National security lanes utilizing AIT devices if the number
of passengers having to be cleared per hour in any given hour increases
by 500 individuals? 1000 individuals? 1500 individuals?
Answer. Not necessarily. Any significant increase in passenger
traffic would prompt a review of whether the checkpoint's existing
lanes and equipment would meet that new volume on a consistent basis.
This analysis is independent of Advanced Imaging Technology. For all
deployments, the Transportation Security Administration works closely
with airports to ensure adequate floor space, equipment, and staff are
available for screening demands.

Question 3. Does DHS model the projected passenger capacity and
throughput through security lines? Has DHS modeled these factors for
Reagan National Airport under different scenarios for the volume of
passengers departing the airport per hour? What is the estimated
capacity increase that leads to a bottleneck at the security
checkpoint?
Answer. Yes. The Department of Homeland Security utilizes a
sophisticated discrete event simulation model to identify checkpoints
with capacity constraints. This model incorporates flight schedules
provided by the Official Airline Guide and information provided to
Federal Security Directors through collaboration with their respective
airport stakeholders to determine projected passengers for each
checkpoint down to a 5 minute interval. As a generalization, if a
checkpoint is at capacity, a 10 percent increase in passenger volume
may result in a bottleneck at that checkpoint.
______

Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Hon. Charles Darwin Snelling

Question 1. If overall West Coast traffic from National and Dulles
grows with the addition of slots at National, and the slot proposal
eliminates the current financial firewalls between National and Dulles,
wouldn't both airports be in a stronger financial position as a system?
Answer. The elimination of the ``financial firewall'' between
Reagan National and Dulles International, would allow airline rates and
charges to be set for the two airports as if they were a single
facility. Eliminating the firewall would be useful in enabling the
Airports Authority to ensure the cost to the airlines of serving Dulles
International is competitive with the cost to the airlines of serving
Reagan National. Eliminating the firewall would not make the airports
stronger financially, but would permit the Airports Authority to manage
cost better to assure Dulles International remains generally
competitive and comparable to the costs of operating at Reagan
National.
The ``financial firewall'' is found in part in the Transfer Act (49
U.S.C., 49101 et seq.), which authorized the lease of the two
Airports. It would need to be amended to allow the Airports Authority
to blend the rates. If this were done, the airports would be in a
better financial position as a system.

Question 2. Given that Congress has already modified the perimeter
in two previous FAA reauthorization bills, do you believe it is
appropriate to expect additional modifications in the future, and
manage Dulles finances accordingly?
Answer. To the extent that Congress determines to authorize
additional within- or beyond-perimeter flights at Reagan National, we
will do our best to manage the airport's facilities and the Authority's
finances to accommodate the new flights to the maximum degree possible,
taking into account the airport's very limited physical capacity, with
one air carrier runway and constrained landside facilities. We cannot,
however guarantee that sufficient modifications can be made to avoid
congestion and delays in services in the future. In the event of
additional slots, managing Dulles' finances would benefit from the
elimination of the financial firewall.

Question 3. MWAA has stated there are 135 flights currently
operated from Reagan National Airport in ``air carrier'' slots by
aircraft classified as ``commuters''--that is, smaller aircraft having
76 seats or less. If these 135 ``air carrier'' slots were up-gauged and
fully utilized, what would be the resulting increase in passengers at
Reagan National?
Answer. There are approximately 135 daily departures from Reagan
National operated by airlines using ``air carrier'' slots to operate
smaller ``commuter'' aircraft. These departures are tied to the same
number of arrival flights, with the result that there are today
approximately 270 ``air carrier'' slots at Reagan National that are
operating using ``commuter'' aircraft.
We estimate 16,600 additional daily passengers (or 6 million daily
passengers per year) could result from airlines utilizing 100 percent
of their current air carrier slots with up-gauged aircraft.
This amount was calculated by:

Determining an average number of seats for aircraft
currently operated at Reagan National: 56.51 seats for commuter
aircraft and 133.56 seats for air carrier aircraft;

Calculating the difference in those average numbers of seats
(133.56 - 56.51 = +76.85 seats);

Multiplying the difference by 270 slots (76.85 x 270) to
arrive at the number of new seats per day (20,750 new seats);

Multiplying this number of new seats by 80 percent, the
average percentage of seats filled per flight at Reagan
National (20,750 x .80) to arrive at the number of new or
additional passengers per day (16,600 passengers);

Multiplying this number of new passengers per day by 365
days to arrive at the number of additional passengers per year
((6 million passengers);

An additional 6 million passengers would represent a 34 percent
increase in the present volume of annual passengers at Reagan National
(17.6 million passengers for the September 2009-August 2010 period). An
annual passenger level of 23.6 million passengers would be a 26 percent
increase compared to the largest number of passengers ever served in a
year at Reagan National (18.7 million in 2007).
______

Response to Written Questions Submitted by Hon. Maria Cantwell to
Hon. Charles Darwin Snelling

Question 1. Mr. Snelling and Ms. Hampton, as you know last year US
Airways requested an FAA waiver to trade some of the takeoff and
landing slots they control at LaGuardia airport for some of the takeoff
and landings slots Delta controls at Reagan National airport. Included
in the joint comments by the two airlines to the FAA in its request for
a waiver is the following: ``US Airways will make more efficient use of
the DCA slots than Delta by upgauging aircraft. Specifically, U.S.
Airways--words redacted--larger jets, which will increase U.S. Airways'
two-class service significantly and expand capacity at DCA overall. The
projected effect is to increase total capacity at DCA by approximately
2.5 million annual roundtrip seats.''
In 2009, there were roughly seventeen and a half million passenger
traveling through Reagan National. Assume the swap goes forward either
through a court decision or some negotiated settlement between the FAA
and the two airlines. And assume the actual increase in passengers
turns out to be a significant fraction of the projected increase in
capacity in annual roundtrip seats.
Broadly speaking, how would the increase impact terminal-side
facilities such as security lines, ticket counters, baggage handling,
gates, parking, and so on at the airport? Where would you expect there
be operational bottlenecks? What actions would the MWAA then take to
relieve these bottlenecks?
Answer. Terminal Facilities: Reagan National operates as four
separate, independent terminal zones. As a consequence, impacts felt as
a result of increased passenger activity in one zone cannot quickly and
easily be mitigated by using available capacity from another. Figure 1
indicates the different terminal zones.

Terminal Facilities: Operational bottlenecks and unacceptably long
queues would be anticipated at the North Pier and Center Pier security
screening checkpoints. We would expect operational bottlenecks to occur
as a result of increased queues in the North Pier and Center Pier
ticketing areas resulting from the increased activity in the US Airways
operation. Finally, we anticipate that the baggage makeup function
supporting US Airways would experience significant congestion as
activity increases.
Terminal Curbside and Roadway: Terminal curb side, where loading
and off loading of passengers takes place, would not be adversely
impacted by an increase in passenger activity. However, we would
anticipate considerable bottlenecks at various intersections on the
roadway system leading into the terminal area. This in turn would have
the effect of potentially backing up the entire airport roadway system
during peak periods.

Question 1a. What actions would the Airports Authority then take to
relieve these bottlenecks?
Answer. In the terminal area, there is little room for future
expansion of the North and Center piers. The Airports Authority would
need to pursue a major redevelopment and expansion of the Terminal A
zone (see Figure 1 above). Initial improvements at critical roadway
intersections would have to be constructed to mitigate the initial
impacts of additional traffic; however, these initial improvements
would probably not address the long-term impacts to the roadway system.
We would anticipate that the redevelopment and expansion of Terminal A,
coupled with the increase in vehicular traffic, would ultimately
necessitate a major reconfiguration of the airport roadway. The
redevelopment of the terminal area and roadway would be a five to 7
year effort.

Question 2. Did the MWAA file comments at the FAA in FAA Docket
Number FAA-2010-0109? If not, why not? Based on all the concerns I have
heard raised by the Authority over the years regarding terminal side
capacity constraints with respect to increasing the number of beyond
the perimeter slots by even a modest amount, it seems that such a
potentially significant increase in passengers would cause the
Authority to file comments with the FAA expressing its views regarding
the proposed petition for a waiver.
Answer. The Airports Authority did not submit comments on the slot
exchange proposed by Delta and US Airways at Reagan National because
the proposal did not affect the number or nature of the slots in
question. It has been the practice of the Airports Authority not to
participate in proceedings regarding proposed commercial transactions
between or among airlines that involve slots at Reagan National, so
long as the transactions do not propose to alter the total number or
nature of the slots or slot exemptions that are authorized by statute
or regulation. This practice was reflected in Ms. Hampton's statement
during the September 16, 2010 hearing (transcript, pp. 51-52), ``Mr.
Chairman, we have taken it as our responsibility to manage the airports
to the statutes. . . .''

Question 3. Mr. Snelling and Ms. Hampton, do you consider the
availability of slots as a significant barrier to entry at Reagan
National for new entrants?
Answer. The Airports Authority sees the availability of slots at
Reagan National as part of legislation enacted by the Congress to guide
the Authority's management of National and Dulles International. We
have acted in good faith to follow the roadmap that Congress laid out
in the Transfer Act: i.e., to construct needed improvements at both
Airports; plan and construct facilities at National based on 48 air
carrier and commuter slots per hour and the 1,250 mile perimeter rule;
and plan and construct facilities at Dulles International to
accommodate most of the region's future growth.
In the past twenty years, the Federal Aviation Administration has
held slot proceedings to distribute slots as directed by Congress. The
Airports Authority has accommodated many new entrant carriers at Reagan
National, including AirTran, Alaska, Frontier, Spirit and JetBlue which
will begin service at the airport on November 1, 2010.
The slots remain the creation of Federal regulations, not any
action of the Airports Authority. The Department of Transportation and
its Federal Aviation Administration control what carriers may hold and
use the slots, thereby controlling access by new entrants.

Question 4. Mr. Snelling and Ms. Hampton do landing and takeoff
slots at Reagan National represent a property right for an airline or
an operating privilege?
Answer. This is a question that is open to considerable debate
among, and is answered differently by, many players in the aviation
industry. In our view, slots share characteristics of both a property
interest and a governmental privilege or license. Under Department of
Transportation regulations, they may be traded between carriers,
bought, sold, leased and even held by non-carriers. That regulation
provides, however, that the slots do not create a property interest.

Question 5. Mr. Snelling and Ms. Hampton, if the D.C. Circuit rules
with US Airways and Delta in its case against the FAA regarding its
proposed swap of slots between Reagan National and LaGuardia, and the
two airlines are able to exchange slots between the two airports as
they initially proposed, do you believe it would increase, decrease, or
have no effect on airline competition at Reagan National? Do you
believe it would, increase, decrease, or have no effect on ticket
prices at Reagan National for routes now served by only one airline?
Answer. Should the D.C. Circuit rule that US Airways and Delta may
exchange slots at Reagan National as originally proposed, US Airways
would become the largest carrier at Reagan National and Delta would
have a decrease in activity. The Airports Authority considers the fares
airlines charge at Reagan National, as with any airport, a commercial
decision to be made by each carrier and thus takes no opinion on this
matter.

Question 6. Mr. Snelling and Ms. Hampton, on average, do you
believe that slot controlled airports have higher ticket prices than
non-slot controlled airports? Do you believe that increased
concentration of slots ownership at slot controlled airport is
associated with higher ticket prices?
Answer. The United States Department of Transportation's (USDOT)
Office of Aviation Analysis monitors and reports air fares and is best
able to accurately track and report this information comparing airports
nationwide. Based on the fundamentals of supply and demand, air fares
at significantly slot-controlled airports should be expected to be
higher than at otherwise comparable non-slot-controlled airports.
Increased ownership or control of slots at a slot-controlled airport,
in our opinion, will likely result in higher fares than fares at
comparable non-slot-controlled airports. As a practical matter, the
existence of slot controls at an airport means that there is more
demand, at least at certain hours, than the airport can handle without
serious delays. That in turn means there is more demand for services
than the airport can provide. In economic theory, this results in
higher prices.

Question 7. Mr. Snelling and Ms. Hampton, do you believe that
Reagan National, Dulles International, and Baltimore Washington
International are part of a single market for air transportation
services in the metropolitan Washington DC areas, or does each airport
represent largely separate markets? Are your views consistent with the
Department of Justice's views?
Answer. Reagan National, Dulles International and BWI-Marshall can
be seen both as serving separate air service markets and as part of a
larger single air service market. The airports serve as separate
markets for those travelers who are mostly interested in traveling from
an airport close to their home or business (within 30 to 60 minutes
drive). This is especially true for business travelers who are less
price-sensitive and highly time-conscious. At the same time, the three
Washington region airports may be viewed as serving a single market
consisting of travelers originating from outside the Washington region,
as well as travelers for whom fare is the most important factor in
selecting a flight and airport. When air fare represents such a factor,
travelers will travel beyond their closest airport to obtain the lowest
fare.
The only time (of which we are aware) that the U.S. Department of
Justice (DOJ) addressed the issue of the market served by the
Washington region's three airports was in comments related to the US
Airways and Delta ``slot swap.'' Based on our reading of those
comments, DOJ's position is that, for some air passengers, airports
within the region are substitutes for each other and, for other
passengers, they are not. This suggests that DOJ defines the Washington
market not by geography, but more narrowly by fare classes and
passengers' willingness to pay. The Airports Authority believes it is
generally more realistic to view the Washington region as one market
that is served by the region's three airports, with the market's air
traveler participants free to choose which airport they prefer based on
a variety of factors, including closeness to home or work, convenience
of flight schedules and size of fares. For this reason, we believe that
increases in the availability or prices of flights at Reagan National
may affect passenger choice to fly from Dulles International or BWI-
Marshall.

Question 8. Mr. Snelling and Ms. Hampton, as you know, one of the
proposals for changing the current perimeter rule and Reagan National
include the conversion of 32 slots for flights from large hub airports
within the perimeter to Reagan National for an equal amount of slots
for flights from Reagan National to cities beyond the perimeter. How
would such a proposal, if enacted into law, impact any current
contracts with airlines operating out of Dulles? For example, would it
make any contracts null and void? Would it allow for an airline
operating out of Dulles to renegotiate with the MWAA price, terms, and
conditions?
Answer. With certain exceptions, airlines operating at Reagan
National and Dulles International are signatories to a facilities use
and premises lease agreement with the Airports Authority that provides
access to both airports. That agreement, again with certain exceptions,
generally does not permit a signatory airline operating at Dulles
International to terminate the agreement, or obtain a modification to
the agreement's terms and conditions, based upon an enlargement of the
number of slots or slot exemptions authorized at Reagan National.

Question 9. Proponents of such a slot conversion scheme argue that
smaller airports within the perimeter would not be impacted because the
slots converted must be for a flight from Reagan National to a large
hub within the perimeter. Under the current law, is there anything
keeping an airline from backfilling the flight from Reagan National to
a large hub it has ``converted'' with slots for a flight from Reagan
National to any size airport it currently flies to?
Answer. All slots awarded to carriers, through previous FAA
reauthorization bills (AIR-21 or VISION 100), are actually considered
``exemptions'' to the High Density Rule and are restricted to specific
routes awarded by DOT. These exemptions may not be used to serve other
routes without going through a DOT reallocation proceeding.
Currently, airlines are not restricted on how they may use their
traditional slots and may serve any market within the perimeter and
change them at will. In the proposed language, it would appear airlines
would not be precluded from ``backfilling'' a large hub inside-
perimeter market flight, used to ``convert'' to a beyond-perimeter
flight, with their slots currently used to serve a small inside-
perimeter market flight. We believe this could put small and medium-
sized market air service at risk.
______

Response to Written Questions Submitted by Hon. Mark Warner to
Hon. Charles Darwin Snelling

Question 1. Is there a direct financial incentive for MWAA to limit
flights at DCA? It is my understanding that MWAA receives revenues from
collecting Passenger Facility Charges (PFCs), concessions, landing
fees, etc. Does MWAA receive any revenue from airfare itself?
Answer. There is no direct financial incentive to the Airports
Authority to limit flights at Reagan National, if one considers Reagan
National taken by itself as a standalone airport. However, to fully
answer this question, both Reagan National and Dulles International
must be considered. If we assume that the infrastructure would permit
unlimited flights to Reagan National, the Airports Authority would
benefit financially at Reagan National, although there would also be
additional expenses, both capital and operating. As correctly observed,
there would be additional revenue from Passenger Facility Charges and
concessions (parking, rental cars, food and beverage, etc.) We believe
a negative financial impact would accrue to Dulles International. The
demand for flights at Reagan National is great, and could potentially
draw existing flights and routes from Dulles International. Those
routes and flights at Dulles International may not be replaced in the
near term, as the demand may not support it, and the cost structure is
currently higher at Dulles International, making it more difficult for
airlines to charge market fares that may be feasible. As airlines pay
costs for operations of the airfield and terminal facilities used, that
scenario would leave fixed costs in place at Dulles International,
which would need to be absorbed by fewer flights. The financial impact
to the Airports Authority would likely be negative at Dulles
International, and would result from fewer Passenger Facility Charges
collected at Dulles International, and less concession revenue.

Question 2. If fares are higher at DCA than at other area airports,
who receives that windfall--MWAA or the air carriers?
Answer. The Airlines would receive the benefit of higher fares.
Airlines pay actual costs for airfield operations, and terminal space
used by the airline. Under our Airport Use and Premises Lease Agreement
with the airlines, this cost to the airlines is also mitigated by
sharing net remaining revenue, which is generated by non-airline
revenues such as concessions (parking, rental cars, food and beverage,
etc.). Airlines set the fares for flights into and out of Reagan
National based upon market rates. The benefit of any market rate fares
set by the airlines, in excess of net costs paid to the airports,
accrues to the airlines.

Question 3. The Commerce Committee has proposed to add 16 round
trip slot conversions beyond the perimeter and 5 round trip flights for
new entrants/limited incumbents. That's a total of 42 new slots for
beyond perimeter from Reagan National Airport. Clearly, having 42 new,
round-trip flights to the West Coast from Reagan National Airport,
instead of Dulles Airport, will significantly impact traffic loads at
Dulles. Are you aware of any official studies that state 16+5 is the
``tipping point'' in the balance between National and Dulles?
Answer. We are unaware of any official studies stating 42 new
beyond perimeter slots (16 slot pair conversions and 5 new entrant/
limited incumbent slot pairs) are the ``tipping point'' in the balance
between Reagan National and Dulles International. However, as Ms.
Hampton stated, our analysis indicates that, should 42 beyond perimeter
slots be added at Reagan National, Dulles International could lose
700,000 passengers a year and BWI-Marshall could lose 500,000
passengers per year.

Question 4. We clearly aren't going to repeal this law once
enacted. Are there any remedies that could be taken should traffic
loads to Dulles fall significantly because of this decision?
Answer. A significant decrease in traffic loads at Dulles
International means that the airlines experiencing a decrease would be
required to cover airport fees and charges with fewer revenue
passengers. Moreover, with the upcoming completion of major capital
projects at Dulles International, airline fees and charges will, in the
next few years, increase as the debt service associated with those
projects is loaded into the calculation of airport fees and charges.
Our concern is that, for some airlines, this combination of higher fees
and charges and lower passenger levels would raise the ``tipping
point'' question--i.e., whether their continued operations at Dulles
International remains economically viable. To avoid any airline from
concluding that this point has been reached, the Airports Authority
would, as it has over the past few years, work to reduce airport costs,
and to find non-airline revenue and funds to cover those costs, to the
maximum degree feasible. However, there is only so much the Airports
Authority can do in these areas. A further step, which would require
authorization from Congress, would be for the Airports Authority to
transfer any operating costs from Dulles International to Reagan
National where they could be included in the calculation of the fees
and charges assessed airlines operating at that airport.

Question 5. What are the potential impacts on your airport at
Dulles?
Answer. In a report prepared for the Airports Authority by Oliver
Wyman, it is stated that the proposed increase in beyond-perimeter
flights at Reagan National will equal over 50 percent of the current
beyond-perimeter flights at Dulles International, and equal to the
current beyond-perimeter flights at BWI-Marshall. This report further
explains that there may be a 700,000 potential passenger reduction at
Dulles International with the following possible outcomes:

Existing Dulles International airlines serving beyond-
perimeter destinations could reduce fares and increase flights
to maintain market share; however this is considered unlikely
in today's environment due to almost certain loss of
profitability.

Existing Dulles International hub airline (United) could
``back-fill'' enough of the lost Washington-originating
passengers to some destinations with passengers connecting at
Dulles International from other airports, resulting in minimal
Dulles International flight elimination.

Because of the increase in cost per passenger, United and
non-hub airlines (e.g., American, Virgin America, and Delta)
could determine it is not profitable to continue long-haul
flights in some markets and eliminate the Dulles International
flights to maintain/increase profitability, resulting in
greater Dulles International flight elimination.

Loss in any Dulles International flights could lead to
proportional increases in airport costs (landing fees, rents,
etc.) for remaining flights, potentially resulting in further
flight reductions by airlines that cannot absorb/pass-on the
cost increases, e.g., Low Cost Carriers. If long-haul flights
to Reagan National displace short-haul flights to the
Washington area, Dulles International could benefit by
increasing its share of short-haul flights. This would be an
unusual use of the resources of four long runways at Dulles
International and one short-air carrier runway at Reagan
National.
______

Response to Written Question Submitted by Hon. John D. Rockefeller IV
to Michael J. Sammartino

Question. How does the noise footprint of 737s that operate beyond
perimeter compare to regional jets, MD-90s, Dash-8s, 717s, and 757s
that operate within perimeter?
Answer. The fleet mix operating beyond the perimeter includes 737s,
A319s, and A320s. As a result of technological advances, newer
generations of these aircraft have reduced noise impacts. The primary
Boeing 737 variant operating beyond the perimeter is the 737-800. The
noise footprint of the 737-800 is greater than the noise footprint for
nearly any type of aircraft operating from within the perimeter.
However, both the A319s and the A320s have a smaller footprint than
several of the aircraft operating from within the perimeter.
Accordingly, any consideration of cumulative noise impacts is highly
dependent on the specific fleet mix.
______

Response to Written Questions Submitted by Hon. Maria Cantwell to
Michael J. Sammartino

Question 1. Mr. Sammartino, at Reagan National Airport, is there a
significant difference in the level of airside resources required to
conduct a takeoff or landing operation for air carrier, air taxi, and
general aviation (and other) flights?
Answer. There are not significant differences unless an aircraft
requires additional separation or special handling.
Fleet mix is one factor in runway throughput as different aircraft
types have different separation standards for wake turbulence purposes.
Most of the air carrier and commuter (air taxi) aircraft currently used
at Reagan National Airport are classified by the FAA as Large aircraft.
Boeing 757 aircraft require additional separation and are currently
about 3 percent of the flights. Heavy aircraft also require additional
separation but do not operate at Reagan National on a regular basis.
Some general aviation, business aviation, and smaller carrier
aircraft use the secondary runways when possible, which helps maximize
main runway throughput and minimize.

Question 2. Mr. Sammartino, if the current rules regarding slots
were not in place, is there a practical limit as to how many combined
takeoff and landing operations per hour can be performed at Reagan
National due to airside capacity?
Answer. Airport capacity depends on factors such as runway
configuration, use of the available runways by operators, taxiways and
ground movement areas, aircraft fleet mix, and weather and other
operating conditions. Because of the number of variables, there is no
single capacity number applicable under all conditions. However, the
airport is averaging an available runway throughput of 67 operations
per hour. Furthermore, there may be other airport airside conditions
(such as gate and ramp availability) that limit capacity below runway
capacity, but these limitations are outside of FAA's expertise and
control.

Question 3. Mr. Sammartino, the current rules at Reagan National
allow for 37 slots for take-offs and or landings per hour by air
carriers, 11 slots per hour for commuter flights (air taxis) and 12
slots per hour for general aviation (GA) and other flights.
Additionally, Congress exempted a number of slots from the rules,
including twenty-two for beyond the perimeter flights.
Answer. It is correct that the current rules at Reagan National
allow for thirty-seven slots for take offs and or landing per hour by
candidates. However, the slot exemptions created by Congress include
twenty-four beyond the perimeter slots.

Question 4. In order for GA flights to resume at Reagan National
after 9/11, new security requirements were put in place. A consequence
of these stringent requirements is that the number of GA slots used in
an entire day at Reagan National is frequently below the number of GA
slots available on a per hour basis. What happens to these unused GA
slots? For example, can these slots be reallocated to air carrier or
commuter flights under any circumstance?
Answer. The allocated slots for GA and other unscheduled operations
are unused unless there is demand by that category of operator. The
reservations for unscheduled (``Other'') operations cannot be
reallocated to air carrier or commuter flights under the existing rule.

Question 5. Do you believe that a certain number of GA slots per
hour should be reallocated permanently to air carrier and/or commuter
flights given the reality of flying a GA plane into Reagan National?
Answer. There is clearly unmet demand for additional scheduled
operations at Reagan National. In order to ensure that congestion does
not increase at Reagan National, reductions could be made to the 12
hourly reservations set aside for unscheduled operations to offset
increases in scheduled operations. However, anticipated demand on the
main runway would need to be reviewed as airport runway capacity is
based on some flights using the shorter runways. Terminals, gates, and
landside capacity would also need to be considered.

Question 6. Can the decision to reallocate GA slots at Reagan
National be made through an FAA rule change (through a rulemaking
process), or does it require a statutory change?
Answer. The FAA could change the number of slots and the operator
categories through rulemaking. The perimeter rule is statutory.

Question 7. Mr. Sammartino, DOJ's comments to the FAA in Docket
Number FAA-2010-0109 under ``Slot Hoarding'' (beginning on page 9)
describes ways in which airlines that operate at DCA ``have adopted
practices designed to meet the FAA's use of lose requirement at minimum
cost, keeping slots from falling into the hands of other carriers''.
The public version states that one way to minimize the cost of meeting
the 80 percent use or lose requirement is to fly excessive frequencies
or small planes. The comments go on to discuss the practice of
``babysitting'' of slots. Do you agree with DOJ's comments that
airlines operating slots at Reagan National sometimes fly excessively
or use small planes in order to comply with the letter of the use or
lose rule?
Answer. We believe some carriers at slot-controlled airports have
adopted approaches that comply with existing rules without maximizing
slot allocations with scheduled flights.

Question 8. Are the practices the DOJ refers to as ``babysitting''
something the FAA has observed occurring at Reagan National?
Answer. The FAA review of operations at Reagan National has
generally focused on whether carriers are operating according to
existing rules rather than whether slots are being used to the maximum
extent allowed under the rules. Carriers make decisions on how to use
their slots based on their business model or other needs.

Question 9. Is there any way for the FAA to know for sure if any
gaming of the use or lose rule is taking place at Reagan National?
Answer. The FAA has several data elements to review that are
sufficient to determine if carriers are complying with the rules:
records of the allocated slots, published flight information, proposed
flight plans, actual flight operations, and carrier reported use or
lose information.

Question 10. Is there any way for the FAA to ensure that airlines
can't game the system at Reagan National with respect to the use or
lose rule?
Answer. The FAA has sufficient means to determine if slots are used
in accordance with existing rules.

Question 11. If the use or lose rule was not in effect at Reagan
National, would you expect there to be a nominal reduction in flight
operations?
Answer. The demand for slots at Reagan National is very high so
only a small percentage of slots would likely be unused in the long-
term in the absence of a minimum usage requirement. During certain
conditions, such as economic downturns in the last several years,
airlines have asked the FAA to waive the minimum usage requirements to
allow them to temporarily cancel flights. This suggests that carriers
sometimes operate flights in order to meet the use or lose requirements
when they would prefer to reduce operations.

Question 12. Mr. Sammartino, for calendar 2009, what was the
average number of slots-per-hour used at Reagan National Airport by air
carriers, air taxi, and general aviation (and others)?
Answer. Actual air carrier weekday operations in 2009 averaged 35
per hour and air taxi operations averaged 13 during the peak hours from
7 a.m. to 10 p.m. General aviation and other unscheduled operators
averaged less than one hourly operation. It should be noted that air
traffic count for the air carrier and air taxi categories uses a
passenger seat count number that differs from the slot rule categories
and is based on runway time rather than scheduled time of operation or
gate arrival/departure. The operation count includes flight
cancellations, other delays or disruptions, and slots that are used
less than 100 percent. Total weekday operations in all hours averaged
800: Air carriers: 580; Air Taxi: 210; General Aviation/Other: 10.