A dire situation is facing the U.S. airline industry because of the slowing economy and oil prices as high as $130 per barrel. Since December 2007, nine airlines have filed for bankruptcy and eight of those nine have ceased operations altogether. In survival mode, airlines are seeking ways to increase revenue and cut costs. Domestic capacity cuts of 20 percent are likely this year.
Airline passengers are suffering. According to the Bureau of Transportation Statistics, on-time arrival performance during the first four months of 2008 was the second worst since 1995. In addition to new cuts in domestic capacity, airlines are announcing new charges for everything from checked baggage to aisle or window seat choice.
With record jet fuel prices, a slowing economy, shrinking airline capacity and growing delays in the air traffic control system, there is a vital need for critical elements in the stalled Federal Aviation Administration reauthorization bill that passed the House last September.
The funding provided in the FAA reauthorization bill for the agencys operations, staffing, research and development, and airport development projects is critical to maintain the safest aviation system in the world. We must invest in aviation capacity and safety projects. Airports need a stable source of funding in order to plan appropriately. The reauthorization bill provides such funding stability for many vital airport development projects.
In addition, we must modernize our antiquated air traffic control system to the Next Generation Air Transportation System, or NextGen. The benefits of a modernized, satellite-based system are invaluable in terms of efficiency, cost and safety. NextGen will provide for more efficient use of the airspace and reduce fuel usage, emissions, delays and passenger inconvenience. This is no small task. It will take leadership, collaboration, coordination and a common vision.
The FAA reauthorization bill sets the framework for such an approach. Certainly, the various federal departments, aviation manufacturers, airlines, operators and airline employees all share a stake in the success of the new system. Congress, too, must play its role. We must provide the necessary resources and funding to implement NextGen. We also must provide proper and vigilant oversight as this $20 billion, 20-year effort moves forward. Additionally, Congress must allow the decommissioning of obsolete facilities and the consolidation of redundant sites. To realize the cost savings built into NextGens overall budget, closure of obsolete facilities is necessary. We simply cant afford to build a new system on top of the old one.
System efficiency will help passengers by addressing capacity, congestion and delays, but the FAA reauthorization bill also contains provisions to address the passenger experience right now through a Passenger Bill of Rights. As some of the most frequent fliers, Members of Congress know well the trials of flying: delayed and canceled flights, lack of information and the discomfort that goes along with such inconveniencies.
The FAA reauthorization bill requires emergency contingency plans for airlines and airports, monthly air carrier reports on diversions and cancellations, a consumer complaints hotline, the establishment of an advisory committee for aviation consumer protection, a denied boarding compensation adjustment every two years and an expansion of airline consumer complaint investigations. These requirements are important to airline passengers.
The bill contains several environmental provisions that address climate change emissions reduction in the aviation arena. In particular, the bill directs the FAA to enter into a 10-year cooperative agreement to carry out a program for the development, maturing and certification of continuous, lower energy, emissions and noise engines and airframe technology.
It also authorizes the FAA to fund six projects at public-use airports to take promising environmental research concepts into the actual airport environment. Similarly, the FAA is authorized to establish a pilot program at five public-use airports to design, develop and test new air traffic flow management technologies with the ultimate goal of decreasing emissions and increasing fuel savings. These are provisions that will benefit the global community.
Air carriers need to be able to better forecast their fixed cost requirements, and having a stable long-term war risk insurance program is essential to struggling air carriers. The FAA reauthorization bill includes a provision, which ultimately sunsets, that ensures that the premiums paid by the carriers to the federal government and accumulated over the years will be used for seed money for a private-sector insurance risk pool for the airlines. The airlines have paid the federal government $948 million since 2001 in premiums and interest earned for war risk insurance, and it is estimated that $2.23 billion will be available in 2018. Given the precarious situation our airlines find themselves in today, this program makes a lot of sense.
Much has changed since the House passed the FAA reauthorization bill last September. The need for the bill and the many critical provisions it contains is even more pronounced in light of the soaring fuel prices, slowing economy, aging aviation infrastructure and system inefficiencies. We must get an FAA bill done this year.
Rep. Tom Petri (R-Wis.) is ranking member of the Transportation and Infrastructure Subcommittee on Aviation.