The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

December 7, 2000

President Clinton today will announce three actions to reduce airline delays and improve air travel for America: an Executive Order directing the Federal Aviation Administration to create a performance-based organization to focus solely on efficient operation of the air traffic control system; appointment of a group of business and labor leaders from outside of the aviation industry to serve as a board of directors for this organization; and a review of impediments to congestion pricing at airports. Joined at the White House by the Secretary of Transportation, the Administrator of the Federal Aviation Administration (FAA), and the editor of National Geographic Traveler, a consumer travel magazine, the President also will call on Congress to reform the way air traffic control services are financed.

CHALLENGES TO OUR AIR TRAVEL SYSTEM. Our nation has the safest air transportation system in the world, but air travel is no longer as efficient as it is safe. The recent, explosive growth in air travel is straining the limits of the air traffic control system operated by the FAA as well as the runway capacity at key airports. Flight delays and cancellations have soared, costing passengers and airlines billions of dollars and contributing to widespread passenger frustration and anger.

To address this problem, the FAA must be structured to manage the high-tech, high-demand operations of a 21st century air traffic control system. As 24/7 service provider, the air traffic system in some respects is more like a business than a typical government activity. It should operate with a clear mission, measurable performance goals, and identifiable users. The Clinton Administration has worked with the Congress to provide the building blocks of a more efficient air traffic control system, including flexibility from federal personnel and procurement rules. Today?s action by the President builds on these steps by creating a distinct management unit for the air traffic system ? the Air Traffic Organization ? and giving it the incentives and tools to operate more flexibly and efficiently. The FAA Administrator will continue to regulate the air traffic sytem to ensure that it operates safely and securely, as well as efficiently. At the same time, because it is freed from the day-to-day operational concerns of air traffic, the rest of the FAA will be able to focus its energies on leading our aviation system at large.

PRESIDENT CLINTON WILL TODAY ANNOUNCE STEPS TO REDUCE AIR TRAFFIC CONTROL AND AIRPORT DELAYS. To accelerate efforts to reduce delay and improve air travel for consumers, the President will announce the following steps:

? Executive Order Directing FAA to Create a Performance-Based Organization to Make Air Traffic Control More Efficient: The President is issuing an Executive Order directing the FAA to create a ?performance-based organization? -- the Air Traffic Organization -- to manage the operation of air traffic services. It will be located within the FAA, but will be separate from, and overseen by, the FAA's safety, regulatory and enforcement arm. Establishment of this new organization is a major step towards development of a 21st century aviation system.

The new organization will be devoted exclusively to its ?core business? ? the delivery of air traffic control services. It will be managed by a Chief Operating Officer, who will be hired through a nationwide competitive search; the COO will negotiate a performance agreement with the FAA Administrator and be paid partly based on performance. In collaboration with its customers (airlines and other air traffic control users), the organization will set clear performance goals, which will be spelled out in a performance agreement; using agreed-upon indicators, customers can measure the organization?s performance and hold it accountable.

? Designation of Business and Labor Leaders to Oversee Air Traffic PBO: Secretary of Transportation Rodney E. Slater is designating five distinguished individuals for appointment to the Air Traffic Services Subcommittee of the FAA's Aviation Management Advisory Council. Congress created the five-member Subcommittee in recent legislation. It will function as a board of directors, overseeing the management and budget of the Air Traffic Organization and ensuring that it becomes more customer-driven and performance-based. The designees are:

? John J. Cullinane, President, The Cullinane Group
? Nancy Kassebaum Baker, former U.S. Senator from Kansas
? Leon Lynch, International Vice President, United Steelworkers of America
? Sharon Patrick, President and COO, Martha Stewart Living Omnimedia, Inc.
? John W. Snow, Chairman, President and CEO, CSX Corporation

? DOT/FAA Federal Review of Impediments to Airport Congestion Pricing: The President is directing the Department of Transportation (DOT) and the FAA to review the statutory and regulatory impediments to the use of congestion pricing and other market mechanisms to provide for more efficient use of existing runway capacity and encourage the creation of new capacity. For instance, charging airlines more to land at airports during peak hours could reduce congestion and delays. The FAA is already looking at options for congestion management, including market mechanisms, to reduce delay at LaGuardia Airport. DOT and FAA should expand that effort and seek statutory relief where appropriate.

THE WHITE HOUSE WILL RELEASE A REPORT OUTLINING NEED FOR A NEW AIR TRAFFIC ORGAN IZATION. The White House report outlines the challenges facing the aviation system, the steps the FAA has taken to address them, and the need to create an a new performance-based organization to operate the air traffic system more efficiently.

CONGRESS MUST TAKE ADDITIONAL ACTION. These Executive actions, building upon current reforms within the FAA, are necessary but not sufficient to allow the Air Traffic Organization to operate a 21st century air traffic system. As the Administration said in 1995, the individual reforms of the ATC system are interrelated, and "fundamental air traffic reform requires that these changes be made together or the benefit of individual changes will be greatly reduced." Thus, the President also will call on Congress to reform the way air traffic services are financed, in keeping with recommendations from both the Administration and the congressionally created National Civil Aviation Review Commission:

? Congress should replace the excise tax on passengers with authorization for the Air Traffic Organization to set cost-based charges on commercial users of the air traffic control system. (General aviation should continue to pay the fuel tax.). The Air Traffic Organization must be able to price its services, in order to balance supply and demand in the short run and meet customer demand in the long run.

? As soon as the Air Traffic Organization is fully financed by cost-based fees, Congress should allow it to borrow funds from Treasury or on private markets to finance long-term capital investments. Fees would replace direct appropriations for capital, and would enable debt financing of needed capital investment.

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