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SECRETARY SLATER'S AFRICAN AVIATION INITIATIVE, H.R. 3741, AND THE EUROPEAN COMMISSION'S PRELIMINARY POSITION ON TWO TRANSATLANTIC ALLIANCES
THURSDAY, July 30, 1998
House of Representatives,
Subcommittee on Aviation,
Committee on Transportation and Infrastructure,
Washington, D.C.
The subcommittee met, pursuant to notice, at 1:05 p.m., in Room 2167, Rayburn House Office Building, Hon. John J. Duncan (chairman of the subcommittee) presiding.
Mr. DUNCAN. We will go ahead and call the subcommittee to order at this time.
First, I would like to say good afternoon and welcome everyone to today's hearing regarding a number of very important issues related to international aviation. The subcommittee is very pleased and honored to have with us as our lead witness today the very distinguished Secretary of Transportation, the Honorable Rodney Slater. Thank you very much, Mr. Secretary, for taking time from what I know is a very busy schedule. We're honored with your presence here today.
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I, first, want to say that Secretary Slater, in my opinion, has done an outstanding job at the Department of Transportation in his work as Secretary and also in his former position as the Administrator of the Federal Highway Administration. Since becoming Secretary, he has immersed himself in aviation matters and has really done a great job on many issues including bilateral agreements and others that have benefited many of our U.S. carriers and their employees. We look forward to hearing from Secretary Slater on his African aviation initiative which will help improve aviation safety and security in Africa. So, again, Mr. Secretary, thank you for being here with us today.
Secretary SLATER. Thank you, Mr. Chairman.
Mr. DUNCAN. The subcommittee will also hear from our distinguished witnesses on legislation, H.R. 3741, the Aviation Bilateral Accountability Act. This bill was introduced by my good friend, the ranking member of the subcommittee, Mr. Lipinski, as well as Mr. DeFazio from Oregon, who also serves on the subcommittee. This bill would essentially require congressional approval for each U.S. bilateral aviation agreement. Although the Executive branch briefs Congress on the progress of these negotiations, there is no formal process of congressional involvement. So, we would look forward to looking into this today as well.
And, finally, we will hear from our witnesses on the growing involvement of the European Commission into existing and impending alliances which involve a number of U.S. carriers. These are all very important issues, and we look forward to this afternoon's hearing. I now yield to the ranking member, Mr. Lipinski.
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Mr. LIPINSKI. Thank you, Mr. Chairman, for holding this hearing on a number of important issues, including the Secretary's Safe Skies for Africa initiative, the recent EC announcement regarding two major transatlantic alliances in the Aviation Bilateral Accountability Act, introduced by Congressman DeFazio, Congressman Traficant, and myself.
Let me take a few minutes to explain my legislation. Currently, bilateral, civil aviation agreements are Executive agreements that are negotiated and signed by representatives from the Department of State and the Department of Transportation. Congress does not play any official role in the approval of bilateral aviation agreements. Let me stress that I am not saying that Congress does not play any role in the bilateral process. It is true that a Member of Congress can assign a staff member to the negotiation delegation to observe the formal negotiation process. It is also true that the Department of Transportation tried very hard to keep Members of Congress and their staff informed about the progress of negotiations through briefings and one-on-one meetings. I thank them for their efforts. Unfortunately, it is not enough. The important details of agreements are often negotiated informally and can only be revealed to Members of Congress and their staff after an agreement is signed and in place where there is nothing we can do about it.
My legislation should not be interpreted in any way as criticizing or doubting the administration's ability to negotiate good, bilateral aviation agreements. In fact, this administration has successfully negotiated a great number of bilateral aviation agreements, half of which are open skies. However, bilateral aviation agreements set the terms for how U.S. carriers will operate and compete in foreign countries for years to come. The agreements have a tremendous long-term impact on U.S. carriers, U.S. cities, U.S. consumers, and the U.S. economy. In effect, bilateral aviation agreements are trade agreements that determine the amount of access the U.S. will have to particular foreign markets. Congress should not be excluded from agreements of such magnitude.
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As Members of Congress, we represent the U.S. cities and U.S. consumers affected by bilateral aviation agreements. We represent the business owners, the leisure traveler, and the consumer, the flying public in general. As elected representatives of the people, we should have the right to make sure that bilateral aviation agreements are negotiated to give U.S. consumers the most access at the best price. A brief congressional review period of 90 days, at the most, is not unreasonable.
There are no real deadlines for the completion of bilateral aviation agreements. In fact, now there is often a delay between the time an agreement is announced and the time it is implemented. Even if an agreement is time-sensitive, the agreement will govern aviation policy between the United States and the foreign country for years to come. Because of these lasting effects, bilateral aviation agreements should not be rushed into and blindly accepted just because of a tight schedule.
It is worth mentioning, there is no doubt that under H.R. 3741 U.S. carriers will heavily lobby Members of Congress concerning bilateral aviation agreements. This is no surprise since U.S. carriers now heavily lobby the Department of Transportation doing negotiation with foreign countries. However, contrary to popular opinion, the United States Congress is able to balance the interests of several U.S. carriers with the best interests of the U.S. and the U.S. consumers.
Finally, I want to thank, as I mentioned earlier, Congressman DeFazio and Congressman Traficant, for their support of the Bilateral Accountability Act.
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Mr. Chairman, I know that we have two other very important issues on the agenda today. As you know, I am very interested in the recent announcement of the European Commission regarding two of the four major transatlantic alliances. The EC has been investigating the alliances for two years, and I am very interested in what they have to say about the alliances and their effect on competition in Europe. I look forward to hearing from our witness today regarding their impressions of the EC announcement.
I also look forward to hearing from Secretary Slater about his recent trip to Africa and the important work that is being done on Safe Skies for Africa initiative. I agree that Africa holds tremendous potential as a major market for U.S. goods and services. I am interested to learn more about what is being done to improve the safety and security of aviation infrastructure of Africa. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you, Mr. Lipinski. Mr. Ehlers.
Mr. EHLERS. In the interest of time, Mr. Chairman, I bypass an opening statement.
Mr. DUNCAN. Well, thank you very much. Mr. Poshard.
Mr. POSHARD. Mr. Chairman. No, thank you.
Mr. DUNCAN. I thank you very much.
Do any other members wish to—Mr. Hutchinson.
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Mr. HUTCHINSON. Thank you, Mr. Chairman. I just want to take a moment of personal privilege and extend greetings to the Secretary as another Arkansas traveler, and just want to tell you how proud we are of the job that you're doing. There's a lot of great comments in my State for that job that you're doing for our country, and we're very proud of the work that you're doing. I look forward to your testimony today.
Secretary SLATER. Thank you.
Mr. DUNCAN. All right. Thank you very much. Ms. Brown.
Ms. BROWN. Thank you, Mr. Chairman. I want to welcome Secretary Slater here today, and let me say right away that I'm very supportive and feel very strongly about the Safe Sky initiative. I was with the President and your staff when we went on that historical trip to Africa earlier this year, and I can tell you that Africa will be a major trading partner for the U.S. in the very near future, and I also want to commend the Orlando Airport for their already having programs and exchanging and bringing African leaders for training in the Orlando area. So, welcome.
Secretary SLATER. Thank you.
Mr. DUNCAN. Thank you very much. Ms. Eddie Bernice Johnson of Texas.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you, Mr. Chairman. I have no prepared remarks. I simply want to welcome the Secretary and say that more and more traffic is going to Africa, and I think it is important that we give some attention to safe skies, and I appreciate him being here, and thank you very much.
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Secretary SLATER. Thank you.
Mr. DUNCAN. Well, thank you very much, and I want to welcome Mr. Baldacci to the hearing, and, Mr. Baldacci, thank you.
Mr. BALDACCI. Thank you very much, Mr. Chairman. I just want to thank the Secretary for visiting Maine and spending time in Maine after he was appointed and confirmed, and for working with you now in this capacity here and trying to hold up the Maine-Arkansas connection on this side of the table over here. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you. Dr. Cooksey. All right, Mr. Berry.
Mr. BERRY. Thank you, Mr. Chairman. I, too, just want to welcome Secretary Slater who's the only constituent from the first congressional district besides me here today. I appreciate everything he does very much, and I can tell you that the folks in the first congressional district are very proud of the job that the Secretary has done. Thank you.
Mr. DUNCAN. Thank you. Thank you very much.
Well, Secretary Slater, you may begin with your testimony.
TESTIMONY OF RODNEY E. SLATER, SECRETARY, U.S. DEPARTMENT OF TRANSPORTATION
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Secretary SLATER. Thank you. Mr. Chairman, members of the committee, it is, indeed, a pleasure for me to come before the Committee on Transportation Infrastructure and especially the Subcommittee on Aviation to talk about international aviation matters, and especially the Africa Aviation initiative announced by our President and carried forth by the members of the Department of Transportation, along with all of our efforts in partnership with the Congress and with the private sector as well.
Let me begin by saying that these are exciting times in transportation, and I want to say at the outset that I congratulate the committee on the tremendous success of passing the largest transportation bill in this history of the country dealing with surface transportation. I speak of the passage of the Transportation Equity Act for the 21st Century. President Clinton, as you know, has made infrastructure investment one of the lynch pins of the economic vitality, an economic program that he has offered forth from day one of his administration, and I am proud to have had the opportunity to work with members of this committee and Members of the Congress in passing this most important piece of legislation, again, the Transportation Equity Act for the 21st Century.
Early on, the President said that we have to put our fiscal house in order; we have to invest in our people whether it's education, child care, health care, the environment, and the like, but we also have to open markets to U.S. goods and services around the world. Transportation is essential to giving us the international reach we need to serve those markets around the world, and so our discussion today, especially about aviation, really begins the dialogue about America's future in the global economy. I would believe, Mr. Chairman, members of the committee, that our aviation system will be as important to this country in the first half of the 21st century as the construction of the interstate system was for this country in the second half of the 20th century. Many of us, as you know, we've had this discussion. The interstate system opened up America and tied America together. Well, our aviation system for the 21st century must tie this Nation to the world. So, again, let me thank you for this opportunity to begin our dialogue as members of the Subcommittee on Aviation as to the important role that aviation will play as we go into a new century and a new millennium.
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This hearing today comes at a very good time. Aviation safety and security have been at the front and the forefront for some time, both here and overseas. At the same time, we have been working hard to keep our workers and businesses competitive in the global economy. Many other nations have sought to do the same for themselves. And, so it is good that we reach forth in partnership in new ways to work with the nations of the world in ensuring that our transportation systems have an international reach.
Today, trade accounts for nearly one-third of our economy, so we must be ever-vigilant when it comes to opening new markets. I'm pleased that this administration has signed some 260 trade agreements and that more than 60 have involved transportation, with 30 of them, as you noted, Mr. Chairman, involving open skies initiatives. We are doing everything we can to assure that the aviation industry remains vibrant and supportive of an expanding world economy.
Now, many of you noted my recent trip to Africa, and you also noted, as did you, in particular, Congresswoman Brown, the President's recent historic visit to the continent. I was pleased to be the first cabinet official to return to the continent after the President's historic trip to follow up on the Safe Skies initiative that was announced during the closing days of his historic visit, expanding some 12 days where he visited all parts of the continent. But it was in the Dakar, Senegal that he announced the Safe Skies initiative for Africa, and the objective there is to bring Africa into the global economy and to do so through the use of transportation in general but aviation in particular. But in order to get to that point, we have to ensure that matters of safety and security are effectively addressed, and that's what my trip was all about.
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I returned for an eight-day trip through and across the continent; my third trip to the continent since becoming Secretary of Transportation. In the last year, I've had the good fortune to visit 10 countries in sub-Sahara Africa, and I've met with heads of state and government ministers and diplomats from nearly every country in the region. What impresses me most is that Africa is a continent on the move. We have a number of democratic governments that are being formed in sub-Sahara Africa; actually, the number has quadrupled in the last decade. Three-fourths of the region's 48 countries have begun economic reforms. We have a great opportunity there. With more than 10 percent of the world's population and vast reserves of natural resources, Africa represents a market with great potential and a great opportunity for the United States. Already, we export more to sub-Sahara Africa than to all of the states of the former Soviet Union and more than 100,000 U.S. jobs depend on trade with Africa.
Now, the President stated rather succinctly—and I'd like to close with this point—our new relationship with Africa. He said, ''In the years to come, the question will not be what can we do for Africa or what can we do about Africa, but what can we do with Africa?'' And, so I'm pleased that, along with my trip, that part of the time our Treasury Secretary Bob Rubin was on the continent visiting with finance ministers. I'm pleased that Commerce Secretary Bill Daley will take a trade mission to the continent in September, and I'm also pleased to announce here today that the President will hold the first-ever cabinet level U.S.-Africa trade and economic cooperation forum here in the United States in December.
Now, Congress has shown great leadership on this point, as well, as you move forward to passage of the African Growth and Opportunity Act. It, too, will forge a new trade and development relationship between the United States and the countries of Africa.
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During my trip, I held a number of meetings, and we will get into that over the course of the discussion, but I want to bring my comments to a close with reference to two other issues that I know are matters of importance to the members of this committee. The first deals with alliances between the U.S. and European airlines, alliances that have helped to liberalize international aviation and that could do so even more, but we have to, again, look at these in an objective way and make decisions as relates to these proposed alliances as relates to the interests of the American people.
Of interest to you, I know, is the European Authority's interest in ensuring that international aviation develops in a pro-competitive way which can include their evaluation of alliances. We need to work with the EU on approaches to evaluating alliances and their competitive implications.
The second issue that I know is of importance to you deals with a matter of particular importance to your ranking member, Congressman Lipinski—and you made reference to it, sir—and I'd like to close my remarks on this point: Regarding the proposed Aviation Bilateral and Accountability Act, I know that this is a subject that is dear to you and a subject of interest to others. While we believe that the current process for negotiating international aviation agreements work well in involving Congress as we undertake these negotiations, clearly, more can be done in this area and this regard, and so we welcome the opportunity to discuss this legislation with you. As importantly, we welcome the opportunity to discuss this issue with you. It is our hope that there can be the involvement and the partnership that is so much in evidence as we work with the members of this committee and with the Congress on all transportation matters, and we look forward, sir, to the discussion that we'll have on this and other matters over the course of today's discussion.
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In closing, you're going to hear from a number of businesses that will talk about the great opportunities available on the continent of Africa. We have airlines represented here; we have manufacturers represented here. There is talk about a $14 billion opportunity as it relates to aircraft alone over the next decade through purchases by the various nations of the continent in the coming year. That is only the beginning. We will, I believe, have untold opportunities to enhance the quality of the lives of Americans and the lives of Africans as we move forward with this new relationship that is developing between two major continents as we move into a new century and a new millennium. Again, Mr. Chairman and members of the committee, thank you for this opportunity to come before you today to discuss this very important matter.
Mr. DUNCAN. Thank you very much, Secretary Slater, and we've had, prior to you beginning your testimony, we've had five other members join us, and I would like—because we're always honored to have the ranking member of the full committee with us, Mr. Oberstar, and I'd like to see if he has any statement at this time.
Mr. OBERSTAR. Thank you very much, Mr. Chairman. I appreciate the courtesy, and it was good seeing you at lunch, although you should have stayed a little bit longer.
This is an important hearing. It's an opportunity to hear, as the Secretary's just done, a report on his trip to Africa. It's an opportunity to review the international alliance position taken by the European Commission, and I thank you and Mr. Lipinski for remaining vigilant on these subjects.
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On the Africa trip, Mr. Secretary, you made us all proud of your voyage there; the most recent one, a trip with the President and over a year ago when you visited Africa as the first Secretary of Transportation to do so. As you address the issues with our African nation allies, you undertake one of the most difficult challenges for them.
In the course of the work of the Pan Am 103 Commission, on which I served, we did not go to Africa, but we did review with the FAA staff in Europe the conditions of security in Africa right on the heels of the explosion of the UTA French carrier over Chad, an explosion that was caused very similarly by—very similar fashion to Pan Am 103 by a bomb, in a suitcase, on board that aircraft, and it was our FBI that unraveled the threads that led to the conclusion of how it happened, where it happened, and the steps that should be taken.
At that time, it was the consensus of not only our FAA but the French, the Germans, British that Africa, security-wise, for aviation purposes Africa was a basket-case, for good reason. They had higher priorities. Feeding malnourished and starving populations; finding economic development for countries with vast unemployment and little educational base. They had many other priorities than setting up security for airports. Yet, they recognized that this was an important source of tourism revenue. We won't plumb that issue further here, but I encourage you to proceed with the best of technical advise, counsel, and support for those countries.
But, ultimately, it comes down to a matter of cost. Can they afford to put into place in their governmental structure the security measures that are necessary to encourage continued air travel? It's going to be a matter of financial support, budgetary choices, and I certainly would be willing to vote for such financial support as an incentive, as an initiative, pump priming if you will, but in the long haul, they've got to find a way to make that self-sustaining. I think your contribution from these initiatives will be an enduring one, and I look forward to reports 5 or 10 years from now about the work that they're doing and the seed work that Secretary Slater contributed.
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On another subject, I'm less pleased about the Department's recent decision to allow British Airways to serve Denver without first resolving to the satisfaction of U.S. Airways their service from Charlotte to Gatwick. I could understand if the British were dragging their feet on service to Heathrow out of Charlotte in competition with BA, but Gatwick is not the prize that Heathrow is, and I know that you've had several discussions with the minister of transport that on the basis of those discussions and on the trust that I believe you've developed with the minister, you're prepared to move ahead, and that's an intensely personal decision. But it just, to me, comes down to, once again, the British rolling into U.S. discussions; holding off for something that they want, and we get less than what is in our national interest, and we pay again and again for rights we've already paid for.
I know the pressures that you and your predecessors as Secretary are under from the carriers who compete vigorously with each other and compete for that primary position in the various markets they serve, but I just think this was a case where it would have been better to hold off a little bit longer and get a much better deal.
Now, if you proceed from here to the discussion of the BA-AA alliance, I must caution you that it must be done only with the most absolute guarantee of total open skies on the U.S.-Netherlands model. No price controls, no slot constraints, no market inhibitions, total open skies so that those routes that America purchased for just under $.5 billion, $400 million to be exact, become valueless, because they are now free and open and they're not exclusionary. That's a true open skies agreement, and if we get anything less than that, we will again be at an extraordinary disadvantage in international aviation trade in that very lucrative market. I think that's enough said for the moment. Thank you, Mr. Chairman.
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Mr. DUNCAN. Thank you very much. Before we begin the questions, we'll see if anybody else has any opening statements? Mr. Traficant.
Mr. TRAFICANT. Thank you, Mr. Chairman, and thank you for having the hearing. It seems you get an awful lot done, and this is an important issue, and I want to welcome the Secretary here. I think he's done a real good job. I'm glad to see that we're taking a position on this trial of these two Libyans that claim to be solely responsible for 103 in allowing for a neutral setting in a neutral country which we had objected to prior. I would just like to say that that whole issue, in my opinion, is yet to be resolved, because I believe that if these two Libyans were totally, solely responsible, they would have choked on a chicken bone by now, and I don't believe what I'm hearing out that whole Pan Am ordeal.
I also want to just take a minute today to talk about something that's very important. I want to commend the ranking member—and I think it's very important that we all understand this, because at this point I think only Peter and myself are the two co-sponsors on a piece of legislation I think is very important, and our ranking member has done a very good job on it. It's called the Aviation Bilateral Accountability Act, and I think the committee should take it very seriously, because the Constitution's quite clear. It says Congress shall regulate commerce with foreign nations. That is not an unambiguous statement.
Over the past several decades, Congress had steadily handed much of our authority to the executive branch. I do not believe it's in the best interest in any and all areas, but specifically on aviation. These agreements tend to be complex and controversial, but they are commerce with foreign nations, clearly within our purview, and I think Mr. Lipinski is right on target. They have a profound impact on not only safety but jobs, and I believe that Congress should review and scrutinize and approve these agreements.
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So, with that, I would just like to say, Chairman, thank you for the hearing, and thank you for the opportunity to look at the Lipinski bill that I think is good for the country and makes a lot of sense. I yield back my time.
Mr. DUNCAN. Thank you very much, Mr. Traficant. Mr. Bass? Thank you. Mr. DeFazio.
Mr. DEFAZIO. I'll wait for questions.
Mr. DUNCAN. Okay, Mr. Cummings. All right. We'll go first then for questions. I yield my time to Dr. Ehlers.
Mr. EHLERS. I will pass at this time, Mr. Chairman.
Mr. DUNCAN. All right. Mr. DeFazio.
Mr. DEFAZIO. Thank you, Mr. Chairman. Mr. Secretary, I'm pleased to see you here today. In moving forward on the initiative, obviously, one of the principal concerns I bring to this committee is aviation safety and the safety of the flying public, obviously, concern about the American flying public, but——
Mr. DUNCAN. Mr. DeFazio, let me interrupt you. I messed up. I accidentally—I didn't see Ms. Danner had—I apologize, Ms. Danner. I must have been looking the other way when you came in. I'd like Ms. Danner to give any opening statements that she would——
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Ms. DANNER. I have none, but thank you for your courtesy, Mr. Chairman.
Mr. DUNCAN. Okay. Well, thanks very much. Mr. DeFazio.
[Laughter.]
I apologize.
Mr. DEFAZIO. Thank you, Mr. Chairman.
Mr. Secretary, pleased to see you here today.
[Laughter.]
We've done this before since I've been in Congress. One day, we stopped the clock and the chaplain came out and said the prayer all over again, and we had another day, so we could do some legislative ledger domain.
But in terms of the flying public, I'm wondering what initiative the U.S. can take to help. Ranking member Oberstar referred to the security concerns at the airports. I'm also concerned about the state of air traffic control, because we had the—I guess it was just off of South Africa in the ocean where we had the collision of the military plane, so if you could address those questions and how your initiative is dealing with those concerns, I'd appreciate it.
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Secretary SLATER. Sure. Thank you, Congressman DeFazio. Let me say that we have worked very aggressively from day one to deal with matters of safety as it relates to our transportation system. As a matter of fact, we've said that safety is our number one priority. We know that to be the number one transportation priority of the President, and even domestically we've demonstrated a strong commitment there, whether it's promoting the use of seatbelts; coming out against drunk driving, and promoting measures in that regard; dealing with air bag issues and the like. On the aviation front, coming forth with a focused agenda on aviation safety and security with a commitment to reduce crashes in the U.S. by 80 percent over a decade. We've tried to be very, very aggressive in dealing with this issue.
In doing so, though, the more and more we got into focusing on our safety concerns domestically and dealt with the growing importance of transportation in the international market as the President and Vice President go forth with the Congress in making the case for U.S. businesses and concerns in the global, economic arena, we found that our transportation system has to have an international reach and so it is therefore important for us to work with countries around the world to deal with matters of safety and security, and we've heard some examples that have come to the forefront in even the opening statements that you all, as members of the committee, have offered.
It is a serious concern, especially on the continent of Africa. As Congressman Oberstar noted, and while the President was on the continent and talking about new relations with Africa for a new century and a new millennium, we determined early on that it was essential to make safe skies a centerpiece of that new relationship, and he announced that in Dakar at the close of his historic trip. Specifically, what we hope to do is to quadruple the number of African countries that meet the ICAO standards, the International Civil Aviation Organization standards for aviation safety oversight, and we want to do that within three years. So, we're trying to come up with some specific targets, specific periods of time. We also want to improve airport security at 8 to 12 airports in Africa within 3 years, and then, finally, we want to improve regional air navigation services across the continent.
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When I went back with members of my delegation, we made a couple of things clear during our negotiations and during our discussions with the almost—I believe it was 29 countries that attended the two regional meetings that we held. We said, ''Number one, while we have announced this and have stated our willingness to be good partners with you in this regard, this has to be your initiative.'' We made that clear to the countries. We also—and this goes to a point that Congressman Oberstar made as well—we shared with them that they ultimately have to bear the financial responsibility for the initiative, but we did tell them that there would be opportunities for us to provide seed resources to also work with them to engage international financial organizations like the World Bank which attended our meeting along with the African Development Bank and others in providing resources for these purposes. But we shared with them that there are costs that are involved in the aviation experience, whether it's overflight fees or landing fees, those kinds of costs that were they to collect those appropriately and then devote them to infrastructure investment, they could actually meet the financial challenges for implementing such a program, and we made that point to them.
And, so we also said you've got to have high level political leadership and commitment to this process as well, because now, in many of the countries, they don't have an autonomous civil aviation authority, and they don't have these resources that go into an aviation trust fund as we have here in the United States. The funds go into a general fund and, as has been noted, there are other priorities that are competing for those funds, and a lot of times they don't go for this use.
In making the case about safety and security and the importance of transportation and aviation to their long-term economic well-being, we argued that this would be an appropriate investment of valuable, limited resources, because it serves as an engine for economic activity that can bring additional resources to the coffers, and we had a number of people to come listen, and I believe we're going to have a number to respond, because at the end of the day in both meetings, regional meetings, we signed, sort of, joint ministerial agreements where we laid out a process for moving forward and to a person all of them signed this document and made a commitment to move forward.
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Mr. DEFAZIO. And we'll have some measurable interim benchmarks moving forward and—?
Secretary SLATER. Yes, sir. We will. We will have that.
Mr. DEFAZIO. Thank you, Mr. Secretary.
Mr. DUNCAN. All right, thank you very much. Mr. Hutchinson, we'll come to next.
Mr. HUTCHINSON. Thank you, Mr. Chairman, and, Mr. Secretary, I wanted to ask you a question in a moment about your initiative in the Safe Skies initiative for Africa, but, first, I wanted to ask a local matter. In Northwest Arkansas, of course, we're completing, and, hopefully, we'll soon dedicate the Northwest Arkansas Regional Airport, which is very key to the continued economic growth in Northwest Arkansas which was designated the sixth fastest growing region in the country, and we, the airport, would like to be able to expand in Northwest Arkansas, access to other airports. A request was made by American Eagle for additional slots out of Chicago, and the Department of Transportation granted slots, two round-trips from Chicago to the regional airport. I was concerned because a third slot that was very important was not granted, and I think other cities received a third slot, and so looking at that, I felt like that a third slot would be very, very important in Northwest Arkansas and hope you'll take a look at that. I did write you a letter previously, and I just want to address your attention to that, and I think there were 60 slots and only 55 have been granted out of Chicago, so there's some available so that, technically, you should be able to do that. Do you know whether you're able to reevaluate that?
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Secretary SLATER. Well, let me just say that I do recall getting the inquiry. I don't think I've seen the letter, but I know that you and I have had conversations about this. This is something that we will look at as we do future rounds, but I will say this—and I think you touch on a very good point, and I think one of the finest examples of this is Northwest Arkansas. For a long time, this was a part of the country that was very difficult to access. The airport will make that much easier, but also the construction of the expanded road system, highway 71, moving through the region, very, very important as well. And it really speaks to how transportation can actually open up a region to economic opportunity and continued prosperity.
But I think there's something else that's going on in Northwest Arkansas that's very significant as well and that is, notwithstanding those needs, you had very visionary and dedicated entrepreneurs like Sam Walton and the Tysons and the Hunts and others who you know very well; a commitment to education, and other factors that have really come together in a powerful way to bring about the kind of prosperity that would leave national organizations recognizing this region as the sixth fastest growing region in the country.
In order for that to continue, though, you will have to make those improvements to transportation, and we, as the Department of Transportation, look forward to working with you on the slot issue and other matters involving your transportation concerns as we do with all of the members of the committee, because we know how important it is to future growth and development and opportunity. And, so we will look at the slot question for you, but we also look to this region and to others as evidence of other things that are good going on in the country, and I just wanted to acknowledge that in response to your question.
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Mr. HUTCHINSON. Thank you for that answer and for the good add for Northwest Arkansas. I look forward to coming back there very soon, Mr. Secretary. In regard to the Safe Skies for Africa initiative, what degree of involvement, in terms of time, money, and personnel, will be required by the Department to provide technical assistance to the African nations?
Secretary SLATER. Congressman Hutchinson, that's a good question, and I can tell you that that is something that we keep at the forefront. I mean, we're always mindful of that. I should say in answering the question that I want to thank the committee for the resources that you make available to us to do these kinds of things, but we are mindful of having to get the best return on this kind of investment, and what we have done thus far is, clearly, I've made some trips to the continent, but I think we're at a stage now where much more important than the trips will be actually working through a process that will put together a plan for the individual countries that will step forward, because that's what we've asked them to do; to step forward with a commitment of high level political leadership to provide the resources and the commitment necessary to make this a reality.
Mr. HUTCHINSON. You don't have any budget for that?
Secretary SLATER. We don't have a budget right now, but I can tell you that we're going to be very sensitive in dealing with the matter, and we are starting the process of working up a budget, and I'd be happy to share that with the committee and with you, sir, as we go forward. But this is something that we're very sensitive to.
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I also think—and we'll have to work through this—but the more the private sector becomes involved in this process, I think that we will be able to really measure the value of that investment as relates to the return for an improvement in the skies that U.S. business leaders and those on recreational travel who are U.S. citizens take to places like Africa, but also the opportunity for Boeing, for Pratt-Whitney, for an American Airlines or United Airlines, and some of the other companies here represented to provide goods and services with a return to the U.S. economic market. Those will be things that will allow, I think, to better value the worth of the kind of contribution that we're talking about making.
Mr. HUTCHINSON. Thank you very much. Thanks, Mr. Chairman.
Mr. DUNCAN. Thank you, Mr. Hutchinson. I'd like to go next to Ms. Danner for any questions that she has at this time.
Ms. DANNER. Thank you. It's good to see you again.
Mr. DUNCAN Good seeing you again.
Ms. DANNER. It was very good to have you in our district and we appreciate it very, very much.
Mr. DUNCAN Thank you.
Ms. DANNER. As you may or may not know, Jane Garvey was in our district just the week before—
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Mr. DUNCAN I know.
Ms. DANNER. So we appreciate your attention to our concerns in Kansas City.
Secretary Slater, I'd like to have you share a little insight on a subject that we really haven't touched on here, but one that is of concern to me. You know, in the past, we negotiated one-on-one with European countries such as Germany, France, et cetera, and now when we're talking about aviation policy, we're dealing really with the European Union, and most particularly, I think Carlton's name comes to our mind when we're thinking about—actually, figuratively speaking, not literally—the muscle that he has with regard to the issue. So that he can make or break aviation agreements. Would you share with us your insight into how we're going to be able to relate to them vis-a-vis what is happening with the European? As a group, they're so much stronger than as one nation standing alone.
Secretary SLATER. Yes. Congresswoman Danner, let me say that what I hope to do in offering my comments here is really begin a dialogue that I think we need to have in a substantive way on this issue. Because it's going to become more and more a matter of discussion for us. As you noted, we have basically dealt with the countries of Europe individually in the past. We have a number of good open skies agreements that we have entered into with them—specifically, Germany, but clearly others. We are trying to move forward on a new agreement with the UK. But we're doing this now in a context where the countries of Europe are working through how they will organize themselves to deal with these and other concerns in the future. We respect that process.
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One argument that we've made is that any action on the part of the European Union should not adversely impact the bilateral relations that have already been put in place. So we will monitor the situation closely in that regard. We will continue, as I noted, naming specifically the UK to enhance our bilateral relations with the countries of Europe, as we will with other countries around the world. But as I said at the beginning, I hope that this is the beginning of a dialogue about this issue and others. Because I think that with the passage of time, we will have more and more to say about this and other issues as it relates to the UK—I'm sorry, as it relates to the EU. I'm sorry.
Ms. DANNER. Thank you very much. Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you.
Secretary SLATER. By the way, I did have a wonderful time in Kansas City for the summit dealing with agriculture and transportation.
Ms. DANNER. We do hope that you had some of our barbecue.
[Laughter.]
You know, when we passed TEA 21, and we were all accused of having sent pork to our district. Now the only pork that we want to transport in our district was from the northern part to Kansas City, where we would create barbecue for you to come and enjoy.
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Secretary SLATER. Thank you, thank you.
Mr. DUNCAN. Dr. Cooksey.
Mr. COOKSEY. Thank you, Mr. Chairman.
I would like to emphasize that I agree with the comments of my friend and colleague, Mr. Oberstar, that I hope that we do move into Africa; free market forces do dictate what goes on there. I've worked in East Africa primarily for several years in the mid-1980's and into the early part of this decade, and traveled there not as a politician or on taxpayers dollars but paid my own ticket. It gives you a little bit different perspective when you're a regular passenger. My question is, what airports in Africa currently meet the ICAO safety standards?
Secretary SLATER. Sure.
Mr. COOKSEY. I guessed five of them. I will see how close I am. You have eight.
Secretary SLATER. Yes. Let me just say that we have two new and really fine examples in Ethiopia and Ghana, where they have both received what is called Category 1 status. We also have South Africa.
Mr. COOKSEY. Two airports there, Johannesburg and Capetown.
Secretary SLATER. That's right. We have—
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Mr. COOKSEY. What about Kenya? Do you have airports there—Nairobi and Mombasa—or is Mombasa on the list?
Secretary SLATER. Right. Let me just say that we have actually a number of airports that are functioning under old agreements where they meet certain levels of safety and security. But they may not be at the highest level, the Category 1 status, which means that they can't expand their activities as they interface with the U.S., but they still may have some access to our market. So we have a few airports like that. For the most part, we're talking about Senegal.
Mr. COOKSEY. Do you include North Africa as part of the region?
Secretary SLATER. When we're talking here, we're talking about South Sahara.
Mr. COOKSEY. South Sahara. Okay.
Secretary SLATER. Yes.
Mr. COOKSEY. Well, I'll strike Morocco.
Secretary SLATER. I think I named them all. Okay.
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Mr. COOKSEY. One of our concerns—and I had my wife and children over there periodically—needless to say, is safety. On one of my last trips, I was in Mozambique toward the end of the civil war. Really, the only way we could travel from Maputo up to the Indian Bonnet Bay was using a GPS. I'm a pilot and the first GPS I ever saw used—and I was up in the cockpit—was in East Africa.
Secretary SLATER. Is that right?
Mr. COOKSEY. They have no VOR over there. How will they be able to use GPS across Sahara?
Secretary SLATER. Well, as a part of our——
Mr. COOKSEY. ——provision for that?
Secretary SLATER. Yes. Let me just say that, as a part of our initiative beyond, you know, quadrupling the number of countries that meet the ICAO standards and beyond dealing with 8 to 12 countries that meet various security standards, we hope to work with the countries to put in place the best navigation equipment possible. We'll just have to see how that proceeds. But the one thing that we noticed was that you do have some regions coming together and talking about how they can make this kind of investment regionwide, which is really the best way to approach it. We had representatives from the Akwatia region and also the Asabic region, southern Africa. They were talking about how they are really discussing these matters and looking at it over a region so as to get the best return on investment.
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Also, our trip to Ethiopia allowed us to meet with what is called the ECA, and also the Organization for African Unity. There again, with those two organizations, we were talking about how we can make some of these technology investments across broad regions, giving the countries then the ability to share in the burden of this kind of investment. Clearly, this provides an opportunity for U.S. industries. We would like to make a strong case on their behalf.
Mr. COOKSEY. I would encourage you, as you work out treaties and negotiations, not forget about the airport—not just the security so much, but the immigration and customs procedures, because that can be a hassle. We were taking, quite frankly, medical equipment in there.
Secretary SLATER. Yes.
Mr. COOKSEY. I refused to pay the bribes. You could get through in 30 minutes for $20 and $50. I was a little foolish in my youth and the demands that—you go through the process, but you'd have your equipment delayed for a half a day—
Secretary SLATER. Right.
Mr. COOKSEY. ——or sometimes overnight, and that's a problem. So I really think that you should address that because that's a problem in some of these countries almost as much as the safety concerns are.
Secretary SLATER. Point well taken.
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Mr. COOKSEY. What about airplane maintenance for engines? Because in a lot of these countries, you'll have one plane that flies in easily from—say Europe to Nairobi to Mombasa. That will be the only plane for that airline to go in there. What do you expect to do? What are your plans to be able to service these airplanes if an engine goes out, if an autopilot goes out, if there's some other mechanical problem? Will the airlines have a joint service capability in these major airports? Will all the passengers on that plane be stranded until another plane comes in a day later or two days later?
Secretary SLATER. Yes. Well, I can tell you that when we look at matters of safety and security, we view it in the broad context so as to take into account matters of, you know, immigration and customs, and the points that you raised. But it would also take into account concerns about maintenance of vehicles—or aircraft, I'm sorry. One place that we talked about this issue probably more than another was in Ethiopia, where we had the occasion to actually sort of announce in a public way the acquisition of a new Boeing simulator dealing with 757, 767 aircraft—really the first sort of simulator of this type outside the U.S. With Ethiopian Airlines, a company that really has been in existence now for about one-half century, had its beginning with the aid and assistance of TWA, a U.S. airline, we talked a lot about matters of training, matters of, you know, equipment overhaul, and things of that nature. So clearly, the point I want to make is that these issues will be matters of concern that we discuss with our partners as we go forward. I would think that this would be one other issue to be addressed on a regional basis, so that the countries can share the burden and spread the resources when it comes to making this kind of investment.
Mr. COOKSEY. One last comment, if I could, Mr. Chairman: When I was going there, particularly the late 1980's, Kenya had a relatively somewhat democratic government. Their airline was marginal when we flew there. On the other hand, Ethiopia had a government that was in chaos, a nation that was in chaos and that had a relatively good airline. So I assume it was because of that relationship with TWA. That may be a pattern because they were flying new aircraft. They had new Boeing aircraft at that time. It was a well-managed airline with competitive prices. The people I had that were in my groups felt comfortable. There was only one American carrier there at that time and that was Pan American.
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Secretary SLATER. Pan American, yes.
Mr. COOKSEY. We tended to fly European carriers at that time because there were some people from North Africa that had a habit of hijacking American carriers. We felt safer on Swiss Air in Kenya.
Thank you, Mr. Chairman. Thank you, Mr. Slater.
Mr. DUNCAN. Okay. Thank you very much.
Secretary SLATER. Mr. Chairman, Mr. Chairman, if I may just make one quick comment?
Mr. DUNCAN. Sure.
Secretary SLATER. Let me just say, Congressman, as it relates to Kenya, during the course of our trip, we did announce new code-sharing arrangements between Northwest and Kenya Airways. So we are seeing significant improvement within the aviation structure in Kenya. We also had direct discussions with their Minister of Transport, who talked about the possibility of looking at an even—well, an open skies regime with the U.S. as we go forward. So we are seeing some improvement there.
Your point about the issue of stability and how, you know, that can be important when it comes to the safety and security of a country as it relates to matters pertaining to aviation is well taken. It's really this hope of greater stability across the continent that creates the kind of opportunity that we see—that we're trying to take advantage of—with this very comprehensive strategy of engagement that includes my effort as it relates to aviation, but also the effort on the part of Secretary Rubin, who was there during much of the time I was there, and Secretary Daley, who will go, and others who will follow. So I just wanted to acknowledge the sensitivity we have to those points that you raised in you comments.
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Mr. COOKSEY. Well, African people are wonderful, gentle, genteel people. They have a problem we have in this country periodically—they have some bad politicians.
Secretary SLATER. Yes.
Mr. COOKSEY. Hopefully they're overcoming that.
Secretary SLATER. Okay.
Mr. DUNCAN. Thank you very much. Ms. Brown.
Ms. BROWN. Thank you.
Mr. Secretary, first of all, I want to tell you that I really know that you understand central Florida and some of the problems, how important tourism is to—
Secretary SLATER. Oh, yes.
Ms. BROWN. —central Florida. With that, I would like to echo some of the concerns that some of my colleagues have raised. The Orlando-Gatwick route is very important to central Florida—almost a $77 million importance.
Secretary SLATER. Yes.
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Ms. BROWN. I understand that you—meaning you and the Department of Transportation—have to do what you have to do as far as negotiation is concerned, but I don't want the community penalized—
Secretary SLATER. Right.
Ms. BROWN. —by not a good faith effort on the other side.
Secretary SLATER. Sure.
Ms. BROWN. In that regard, I have a letter to that effect. But do you want to share anything with—
Secretary SLATER. I would be pleased to, Congresswoman Brown. Let me just say that in central Florida, you actually have the number one destination, tourism destination site in the United States, Orlando, and all of the activities there. We understand the importance of aviation to tourism. I can tell you that one of the things that we found very interesting during our trip to Africa was the very positive relationship that exists between Florida, in particular, but Orlando more specifically, and a number of the countries in Africa. You have a very proactive leadership team there that's already reaching out and providing technical assistance and training opportunity for their counterparts throughout Africa. This is establishing very positive relations.
We also, in Senegal, in particular, met with port officials who are very interested in establishing sister port relations with Miami, with Jacksonville, and some of the other ports there in Florida. So I think that there is the growing appreciation for the opportunity that exists. Now in the broader context of U.S.-international relations with, say, other countries, and particularly the U.K., let me assure you that we have a long view here. We have really with the U.K. one of the most restricted aviation agreements of any country with whom we interface. I see Congressman Oberstar acknowledging that as well. We plan to be very aggressive in trying to improve that situation.
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In these discussions that we have had of late, regarding U.S. Airways and BA, and access to Denver, and access to Gatwick, I have had, for the first time, some of these discussions with U.K. officials—most specifically, the Deputy Prime Minister, Deputy Prime Minister Prescott. I have actually moved forth with some of my decisions in a way that evidences a growing trust that I have for the relationship that is developing and the specifics that we're discussing.
Now with that said, I can tell you that in the final analysis it is my intent, and the intent on the part of the Department, to work very hard to ensure that the interests of U.S. carriers and U.S. aviation industry interests are recognized, respected, and dealt with in the appropriate fashion. For all of the decisions that I make along the way, there will be clearly a process and reason that supports the decision. There will be the opportunity for dialogue about that. I appreciate the comments that have come forth regarding the continued concern that we all have for U.S. Airways when it comes to getting financially-viable slots as it relates to Gatwick.
I can tell you in my most recent communications to the Deputy Prime Minister I once again raised that issue. I talked about it not only for the winter season, but also for the summer season. I expressed my clear understanding and intent to see him continue to be responsive and helpful to us in this regard and evidenced the willingness on my part to do the same; then in the course of that communication acknowledged that the authority for BA to fly to Denver was approved. We continue to monitor the situation, but I appreciate you concerns. I appreciate the concerns raised by Congressman Oberstar and others who are members of this committee, as well as others who are Members of the Congress, and specifically Members of the Senate.
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Ms. BROWN. Well, Mr. Secretary, let me just say that I do have a letter to kind of follow up. Because Orlando has been very aggressive in establishing this tourist relationship. There is some real concern that we don't get penalized for—
Secretary SLATER. Right.
Ms. BROWN. —the give-and-take that's not going on.
Secretary SLATER. I understand. If I may, let me also say that one other matter that I know is important to you, and I mention it because it came up in a meeting yesterday. You should know that during the first meeting of the new Amtrak board that there was discussion about high-speed rail—
Ms. BROWN. Yes.
Secretary SLATER. —how important that is as it relates to a number of regions in the country beyond the Northeast, and that was specifically noted. We talked about the Midwest. We talked about Florida. We talked about the West. We talked about the South as well. But, specifically, there was mention about the possible line that would run from basically—
Ms. BROWN. Miami, Orlando, Tampa.
Secretary SLATER. That particular region. I just wanted to acknowledge that because I know that's important to you and important to tourism purposes as well.
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Ms. BROWN. Thank you, Mr. Secretary, you're right on it.
[Laughter.]
Mr. DUNCAN. Thank you very much, Ms. Brown. Mr. Bass.
Mr. BASS. Thank you very much, Mr. Chairman.
Mr. Secretary, I've been listening to your comments here about the southern part of the African continent. I'd like to ask you sort of a general question about safety of their regularly-scheduled commercial air traffic in some of these areas you mentioned. I don't remember the number—six or eight ICAO-approved airports, and so forth. Can you give me some feeling for the reliability, familiarity, the compatibility, I guess, three words to describe the navigation systems in the area? If you were a passenger on an airplane, where would you want to fly in the South African continent? Where would you not want to fly?
Secretary SLATER. Well, let me say that I can answer the question really from some firsthand experience now because I have made three trips to the continent. In our most recent trip, we actually covered, oh, about 18,000 miles, spent some 40 hours in the air.
Mr. BASS. Were you familiar with how they were navigating and the types of instruments—
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Secretary SLATER. Yes, as a matter of fact, we had a member of the staff, David Traynham, who is here with me today, who was formerly a member of your staff here on Capitol Hill, who frankly has direct responsibility within the FAA for helping us now deal with those issues. I know that he spent a lot of time talking to our pilots, as they communicated with various air traffic controllers and other officials, to just get a sense of the process and how it was working. We have now the benefit of that information as we take a very objective view and assessment here.
Mr. BASS. So would you say your pilots were using the same kind of navigation systems that we use in this country and in Western Europe? Or were they using more international, you know, GPS—this kind of thing? Do they have VOR, ILS, so forth and so on, there?
Secretary SLATER. Well, not—
Mr. BASS. If not, how do you get into an airport in bad weather?
Secretary SLATER. Well, let me just say that they definitely don't have everything that's available, say, in the United States and in parts of Europe. But frankly, that's the case across the world. You do use different techniques in different regions of the world. But our objective, as we deal with not only quadrupling the number of countries that need the ICAO standards and increasing from 8 to 12 the airports that meet our various security standards, we also plan to deal with the issue of navigation equipment. We will try to do as best we can in that regard. Now they do have a regional organization in place and it's call CIGNA, if I'm not mistaken. But it is a regional effort underway in the Francophone region of Africa, but it also includes some of the non—some of the Anglophone countries as well. But it is of high quality. Everything that we know about that effort, thus far, suggests to us that they have made the appropriate investment on a regional basis in navigation equipment that is state-of-the-art. Now what we'd like to do is to see that kind of equipment made available on probably a regional basis throughout the continent. I say regional basis, again, to underscore the fact that if it's done in that way, you have the countries then able to balance the burden of that kind of an investment.
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Mr. BASS. In a region where you have countries where some are stable, some are democratic, some aren't, so forth and so on, is it possible that probably over the long-term really satellite-based navigation is going to be the answer in this region?
Secretary SLATER. That's a good point. You're probably—I think that that is what it means; that with the satellite-based navigation systems, you clearly have above and out of, you know, the region that might be in conflict. But I can tell you that the one good thing that we noticed about the trip and that is in evidence with articles on a daily basis, that is a lot of the civil and tribal conflict that has been so much a matter of course across the continent in years past is dissipating. There is this birth of democracy that's taking place. We even had representatives from Nigeria to attend our meeting in Senegal. We made the invitation. But we did it because of the change in atmosphere that's going on there. I mentioned specifically that we visited Dakar and Aurora; that's where we held the regional meetings. But we also visited Cameroon, which, as you know, is right there next door to Nigeria. We also visited Angola. It's clear that they are having their challenges, but things are hopefully improving.
I mentioned Ethiopia. We know about the current situation involving Ethiopia and Eritrea. I mentioned it to say that we made the trip with the sensitivity to and about skirmishes and some of the activity underway. But more than anything was the acknowledgment that there is much more good—much more good—than bad. There is much more peace than conflict. Things are getting progressively better. The Africans themselves are joining forces to ensure that they contain situations when there's a problem. I think that bodes well for the future of prosperity and peace throughout the continent.
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Mr. BASS. Thank you, sir.
Mr. DUNCAN. Thank you very much, Mr. Bass. Ms. Johnson.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you, Mr. Chairman.
Mr. Secretary, I know that technology changes rapidly and certainly the world is changing pretty rapidly now with all of our global interests and trade. The European Union is becoming more and more difficult, it seems to me, to work with. How is this going to impact the relationship between Africa and the U.S.?
Secretary SLATER. Well, I think that we have in the U.S. a very unique opportunity when it comes to dealing with Africa in a much more positive way. Let me just cite a few.
One, we have significant business presence already on the continent—many here represented today but, more importantly, as the docket remains open, I think many, many more will file comments. But Boeing provides aircraft for most of the countries—or a great number; let me just say it that way. It's poised to do even more. Almost at every stop we heard comments about the quality of Boeing products. We also heard about architects and contractors providing design assistance and construction capability for ports and airports, and the like. So there is that presence, but there is the growing opportunity and invitation for U.S. businesses to step forward and to take advantage of a continent coming into its own, a continent enjoying a renaissance, as expressed by Deputy President Mbeki of South Africa.
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The other thing that we have going for us is that many of these countries are experiencing the joy, but also the challenge of democracy. They hold the United States in high esteem when it comes to it serving as a beacon of light and hope as it relates to democracy and democratic principles and ideals. They very much—and you can see this in evidence in the reaction to, not only the President on his most recent visit, but also the First Lady and the members of the delegation. I know you were there in South Africa, in particular, and Congresswoman Brown had comments to make in that regard. But they are really reaching forth to learn more about individual freedom, freedom of religion, and association and those kinds of concerns.
Then, as is unique for America in many, many respects, when a delegation from the United States goes to Africa, there are people there who can see themselves in the delegation. That is the same for a delegation that goes to China, or that goes to the Middle East, or to Latin America, or to all parts of Europe. Really that is the case when it comes to an American delegation, really representative of the American mosaic when it goes to any place on the globe. I think that that is a very special and unique advantage that we have. I think that it is very important for us to take advantage of that opportunity.
We've got 30 million people who trace their roots to Africa. More and more, we will see significant expressions of that relationship. I think now of the recent nomination and confirmation of George Haley as the new Ambassador of Gambia. George Haley is the brother of Alex Haley. Twenty years ago, America got a new image of Africa through the writing of Alex Haley and his book ''Roots.''
I think that there is much for us to enjoy and benefit from the various advantages we have in dealing with Africa, that position, as well, when it comes to vying for opportunities with other countries of the world and especially Europe; I think they know that. I found it interesting that many of the European leaders have either planned or made trips to the continent after the President's historic trip there.
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Ms. EDDIE BERNICE JOHNSON OF TEXAS. Yes. I frequently have said that it gave me an opportunity, my trips that I've had an opportunity to go on, to connect between my motherland and my native land.
But there's a concern I also have about the alliances with the European Union's countries and the airlines in this country. The European Union will still have some influence on perhaps our airlines through the alliances. Do you anticipate that that will be a challenge?
Secretary SLATER. Well, I think as we revisit old relations in a new environment, that there will always be the challenge there. I just think that it's very important for us to be as knowledgeable and as engaged in the process as possible. I think it's incumbent upon this Department, this administration, working with Members of the Congress, and especially members of this committee and subcommittee, when it comes to transportation matters, engaging in the kind of dialogue that we're having now so that we develop, frankly, a better understanding of the dynamics. So that when we go to the table to negotiate, we go with the benefit of history and knowing how things have transpired in the past, as well as with a clear vision of our objectives for the future. I'm open to that kind of process that will put us in that posture.
With that said, I would also like for the record to commend members of my staff. I'm speaking specifically of Charlie Hunnicutt, who heads up our International Policy Office; Nancy McFadden, our legal counsel; and the members of their staff who've really worked with us to enter the 60 or so aviation agreements in the past five years—with 30 of them being open skies. We're building from strength to strength and we're becoming better and more knowledgeable as we go forward. I can tell you that we will never conclude, contemplate agreements, without ensuring that the best interest of the American people has been put forth and made plain.
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Ms. EDDIE BERNICE JOHNSON OF TEXAS. Just one quick last question, Mr. Chairman: You know there's legislation proposed to codify some of these agreements once they're made. If that should happen, do we now—will it place us in a position to have to get legislative permission? Like a trade—like we have to vote on these trade agreements and fast—do you have to come back and get that kind of permission to alter or renegotiate? Because we never know whether anything's going to last three, four, and five years anymore because of changing times, technologies. Everything else comes so rapidly, changing situations. I have some concerns about that. I know we don't have that legislation up today, but it is introduced and I've given it some thought.
Secretary SLATER. Yes. Well, let me just maybe respond to your question in a general way. We are mindful of a number of pieces of legislation now coming forth from the Congress. I think that it, frankly, underscores a growing appreciation for the need for our transportation again to have international reach. We have to have that kind of system, those kinds of agreements in place, to really take advantage of opportunities made available to access markets around the world. That is something that is central to the President's economic strategy. I've said putting our fiscal house in order, investing in our people, but opening markets for U.S. goods and services around the world, you've got to have a good transportation system to make that possible. It's the tie that binds, as we say.
So as a result of that and dealing with it in a new context, we are having to revisit a lot of these old relations that we established years and years ago to liberalize them, to make them more conducive to the changing environment. I see the Congress very much in sync with that. I can tell you that from the vantage point of the Department what we hope to do, clearly, as we work with our colleagues and the administration, we work very closely with the State Department; we work, also, very closely with the Justice Department on all of these matters, as well as with the National Economic Council and the National Security Council, and others. We also need to work very closely with the Congress. That's why I think this hearing is so important today. It gives us, for the first time, to start to talk openly about these issues. I believe that that discussion should occur very early in the process. So that we, as we go forward, go forward very sensitive to the concerns that you have and that you raise, and can take those into account as we're carrying out our responsibilities. So we welcome what's happening in the Congress and look forward to working with you, and others, and members of the committee in that regard.
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Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you very much.
Mr. DUNCAN. Thank you very much, Ms. Johnson. Ms. Millender-McDonald.
Ms. MILLENDER-MCDONALD. Thank you so much, Mr. Chairman.
Let me first congratulate the Secretary of Transportation for his African aviation initiative. I think this is so innovative, so forthright, in you providing this type of leadership. We applaud you—not just African-American Members of Congress, but all Members—for your steps, your tenacious steps in this initiative.
Given that, we do know that growth and economic growth are the centerpiece for this emerging global market and global economy. So you cannot not bring Africa into this whole plethora of things to be done in terms of this emerging market.
I visit quite often Ghana, Namibia, South Africa. I do know that, in spite of those areas that you have just outlined—Kenya, Walvis Bay and Namibia is another area that we have looked at in terms of improving the aviation there; in addition to that, Ghana—it is so critical that those 30 million people you talk about, many of whom come out of Los Angeles and out of California, want to make sure that we have a direct line into Africa. Because we are looking at Los Angeles expanding with LAX, other airports there, in addition to that tourism, given the Alameda corridor, the expansion of ports in Los Angeles, Long Beach, Oakland, and all the rest. So we are very clear that you are headed in the right direction and that this is very innovative in terms of opening up that emerging economy.
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Democracy is prevailing in a lot of those countries on that continent. Therefore, there should be this type of initiative. I was very much poised to approve the Open Sky Agreement and the agreement that has come forth. So the Safe Skies Agreement is just another one that we should embrace and accept with reference of this opening up the economy. So we recognize, especially in Los Angeles, that aviation is critical to this world economy, and absolutely, aviation is critical to Africa.
So I thank you so much. I thank you for bringing this to us. I will work with you. I am back and forth in those countries, and I will continue to bring information that I think you should need and persons whom I think you should see.
I'm happy that you said Boeing, because Boeing is really in my district, and we want to make sure that Boeing and United Airlines, American, and all the rest of them, understand that Californians wants to venture from California to Africa.
Given that, I sent a letter to you about the Gatwick-San Jose route.
Secretary SLATER. Yes.
Ms. MILLENDER-MCDONALD. You have, and your office has acknowledged receipt of, that letter, but we have not gotten a response on that. We do want to know. I want you to know I'm the lone Californian who sits on Aviation. So as I cover the California front, I will be coming to you and your very able staff with concerns that are endemic to California. So if you don't quite know where that is, please respond to us, so that I can respond to the California delegation on that.
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Again, kudos, I applaud you for the tenacious steps you're taking as we all want to open up this global world. Thank you, Mr. Chairman.
Secretary SLATER. Thank you, Congressman Millender-McDonald, for your leadership on the transportation front and also for mentioning a number of the key projects that we're working on together in California. You mentioned specifically Alameda Quarter and the work with LAX, but we're also working, as you noted, on international relations as relates to Los Angeles in particular. Because for a long time and in many respects, it has been a gateway, not only to Asia, but to other parts of the world.
You touched on really an issue that comes up time and time again when we talk about our new relationship with Africa, and that is, will there be direct U.S. service by U.S. carriers to the continent. And I can tell you that this is something that I have raised in my communications with CEO's representing U.S. airlines. I am also pleased that, as a part of our Africa initiative, in October of last year, we had an aviation delegation to go to the continent to really put us in a posture where we could major announcements like the Sagecosh. And that delegation included the representatives from, I believe, seven of the major airlines here in the United States. So I know that there is the interest. How we will address that concern is still a matter to be worked out.
I mentioned earlier the code-sharing between Northwest and Kenya Airways. I think that we will see more of these kinds of arrangements. You have the American-South African airways relationship now some time—I believe about six years—and I think we're going to see again more of these kinds of relationships that will develop over time.
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Mr. DUNCAN. Thank you very much. Mr. Cummings.
Mr. CUMMINGS. Thank you very much, Mr. Chairman. Mr. Secretary, it's good to see you.
Secretary SLATER. Thank you.
Mr. CUMMINGS. And I want to thank you for all that you've done with regard to our State of Maryland in many, many respects.
On the Safe Skies initiative, I just have a few questions. I note that around the first of December, I was in Zambia, and one of the interesting things that happened is there was a delay in the flight because of some radar concerns. And the flight was delayed about 12 hours. I mean, I know in the United States we don't really realize how fortunate we are to have the freedom, convenience, and opportunities sometimes. And I understand that. But I was just wondering, when we talk about the Safe Skies initiative, how much would you say of the getting to the goal of making the skies safe has to do with equipment and technology? I'm just trying to figure out how is it—what do you see as the obstacles of getting to where you're trying to go with the Safe Skies initiative.
Secretary SLATER. Well, let me just say that a lot of it deals with equipment, a lot of it deals with good aircraft. Fortunately, many of the nation's of Africa actually looked to Boeing to satisfy their aircraft needs. When it comes to maintenance and those kinds of matters, we have companies like Pratt-Whitney and others who are making a strong case on the continent. We also have—and I mentioned this—the issue of human capital development. Because it goes beyond equipment.
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But, I should probably say this about equipment, before I go to the human capital issue, because that's a big issue and I want to address it directly. Beyond aircraft and dealing with questions and maintenance and the like, you also have to have the sophisticated communications equipment that is embodied in our navigation equipment. This equipment is about monitoring the movement of traffic, much like a traffic light that monitors the movement of traffic at the surface level.
And it is all about the power of technology enhancing the capability and the efficiency, and also the safety and security of our transportation system. There we have quite a challenge on the continent. And I've spoken to that, and that's why that is a key part of our Safe Skies initiative. It is our third component to really bring significant improvements as relates to navigation equipment across the continent.
But to also deal with matters of safety and security when it comes to higher levels of safety for the number airports that meet ICAO standards, or when it comes to increasing the number from 8 to 12, the number of airports that meet various security standards. So there you have again an acknowledgment of the importance of equipment in that strategy.
Now beyond that, I have to tell you that a lot of our discussion with our counterparts on the continent dealt with human capital investment. It dealt with matters like training for pilots, training for air traffic controllers, training for managers and civil aviation officials and the like. When we met in Angola with the prime minister there, that was almost his total discussion—human capital investment, investing in the human skills—the development skills of the people. And we shared with them that we could be helpful in that regard.
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That's why the announcement of the simulator—the Boeing simulator—was so important in Ethiopia. And Ethiopian Airways has told us that when they look at their schedule for people to be trained on that equipment, that 40 percent of the time is being used by people other than individuals from countries other than Ethiopia. And so that it is a good investment.
Let me close on the issue of human capital investment by saying to them that we talked about the possibility of getting our private sector involved in working with them in this regard, especially those companies that are doing business there that are also committed to being good corporate citizens. But we also talked to them about exchange programs that we might be able facilitate with institutions of higher education here in the United States, and also various training facilities in the United States. So we had those discussions with them.
And then I close with this point. We also told them that the matter of human capital investment is a challenge that we face. And many of you know that we've got this effort underway within the Department of Transportation, that we call our Garrett Morgan Technology and Transportation Futures Program, that's designed to reach a million youth and to encourage them to consider professions in transportation.
Because we've got that cycle that we have to meet, and that challenge that we have to address, when it comes to so many people within the Department who've found a career working here, but who are now about to transition to some other profession or line of work. But in any event, leave the Department of Transportation. We want to be the employer of choice for the best and the brightest in the years to come, because of the importance of transportation. And we shared those kinds of concerns and efforts with them as well.
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Mr. CUMMINGS. Mr. Secretary, just one other question. I think that when one sits in these seats, and attempts to address issues like the ones the Safe Skies initiative, you can't help but sort of try to project 5 or 10 years from now. You'll probably be in another job, doing something else.
I'm trying to figure out how do we make sure—I'm worried about the African Growth Opportunity Act. You know the history of that—the recent history. And I'm trying to figure out—and when I was in Africa, I said to myself, I hope 10-15 years from now, Africa's not going through the same things as we're going through right now. I mean, I know it's on a upward swing, but it can also go down quickly.
And I'm just wondering, how do you try to make sure your efforts now are continued on—in other words, maintained. I know one way is, of course, the human capital situation. I was just wondering, what do you see in trying to make that—so that we're not just going through an exercise and then we look 10 years from now, and it's the same thing or worse.
Secretary SLATER. Right. Let me, Congressman Cummings, respond to that question in two ways. Because not only have I had that concern, as relates to our Africa initiative, I can tell you that I had that concern from the very first day of becoming Secretary of the Department of Transportation.
At this very critical time in our Nation's history—we're about to go into a new century, a new millennium. We've got 100,000 people at the Department, and I've made mention of the fact that many of them have devoted their lives—their professional lives to the work of that Department. And because of that, we are the most mobile society in the world, working with our partners in the private sectors, and States, and transit authorities, and others all across the United States and the world. But we also face a very important challenge. And that is, how do we put in place a strategy, a course of action, an action plan, that will ensure we build from strength to strength.
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And so the first day, I asked the staff to join me in creating a truly visionary and vigilant Department of Transportation. And it went beyond just the individuals who are a part of that staff because of appointment by the President—those of us who were knew to the family. I asked that of those who were there when we got there, who will be there after we're gone. And I can tell you that the response has been great.
Now that aside, when it comes to the Africa initiative, let me tell you how I've resolved that question in my own mind. Almost at every stop, someone asks us about Ron Brown. And for those of you who really stop to kind of think about it from time to time, it's been a little while now since he left our presence. But before, he made a number of trips all across the world. And you now see, not just in the case of Africa, but the United States dealing with those emerging markets that he helped us to identify—whether it's China, or India, or Africa, or Latin America, and the like.
And I think it was Niebuhr who said that, ''nothing truly great can ever be accomplished in a lifetime, but the seed can definitely be planted.'' And I think that in the final analysis, that's all we can hope for, and hope that that seed is powerful enough that it will inspire and grab the attention of other people who are willing to devote that which we have—a life to live—to a cause that is good and significant.
Mr. DUNCAN. Thank you very much, Mr. Cummings. Mr. Davis.
Mr. DAVIS. I just have one question. Mr. Secretary, we understand that the Department is working with George Washington University and George Mason University to develop a comprehensive training for foreign civil aviation officials whose countries are having difficulty complying with the ICAO and the FAA safety standards. I'm hopeful this will be part of your Africa initiative and would endorse that. This is the kind of public-private partnership that I think's cost effective and necessary to really improve aviation safety. Are you planning to incorporate into your African initiative?
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Secretary SLATER. Congressman, we are. And you're talking about really two very fine institutions of higher education. I would say that one other institution that's working with them is Howard University, as well. And I think that we're very fortunate to have these three institutions here in our Nation's Capitol who are committed to providing this kind of assistance in this effort. So we're excited about this particular initiative.
Mr. DAVIS. Thank you. I'm going to quit while I'm ahead. Thank you. I yield back.
Mr. DUNCAN. Thank you very much, Mr. Davis. Mr. Oberstar. And let me say, before Mr. Oberstar begins, Mr. Lipinski asked that I offer his apology. He had a very severe headache. And this is, I think, about the first time that he's left a hearing early. But he was not feeling well, Mr. Secretary, and so we'll go now to Mr. Oberstar.
Mr. OBERSTAR. Yes, thank you very much for those remarks. And Mr. Lipinski had asked me to make the same comment. Mr. Secretary, I've got a number of questions that I do not think require long discursive answers.
Secretary SLATER. Yes, sir.
Mr. OBERSTAR. The General Accounting Office and European Commission have both concluded that the constraints at Heathrow will deny consumers in the U.S. and the U.K. the benefits of lower fares and better service that we usually get with open skies agreements, unless there is substantial new entry for other competitors through transfer of slots and other initiatives. Do you agree with that?
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Secretary SLATER. My understanding is that that is the case. And clearly, in our negotiations, not only do we want the access and the opportunity, but you have to have the slots, you have to have the ability to land, and that's what you're speaking to.
Mr. OBERSTAR. You understand the magnitude of the problem.
Secretary SLATER. I do.
Mr. OBERSTAR. And the seriousness of it.
Secretary SLATER. Yes, sir.
Mr. OBERSTAR. Now the British suspended their talks with us on open skies in early 1996.
Secretary SLATER. Yes.
Mr. OBERSTAR. We have said we don't want to approve the AA-BA alliance without an open skies agreement.
Secretary SLATER. That's right.
Mr. OBERSTAR. How do we get the British back to talk seriously about this matter? What is in their interest, what's going to bring them back?
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Secretary SLATER. I think the benefits of open skies.
Mr. OBERSTAR. You really think they believe in open skies?
Secretary SLATER. I do. I think that they believe in taking advantage of economic opportunity. We have a great market here, and they do as well, and they know that the restrictive agreement under which we're operating now is not beneficial to either of us.
Mr. OBERSTAR. It serves them very well, Mr. Secretary. That's the way they look at it. They're doing fine. Their carriers are making profit. They've got almost 60 percent of that U.S.-U.K. market. What's the incentive for them to give that up?
Secretary SLATER. Well, they are also very interested in the AA-BA alliance. And we have said that, as a precondition to dealing with that issue, we have to have open skies that includes access—quality access—to Heathrow.
Mr. OBERSTAR. Well, let me preface what I'm going to say next with a couple of observations. First, I did my graduate studies in Europe—the College of Europe—at the time before the formation of the European common market, and have continued to follow very closely all the economic developments within the community, and several times traveled to Europe, met with leaders in the EC.
In 1989, my first year as Chairman of the Aviation Subcommittee, and again in 1991—in a speech at an international conference in Munich, and secondly in 1991, in a conference in Brussels—I told the gathered international aviation community that the EU ought to negotiate—first, resolve it's internal problems on deciding what would be cabotage, and what would be international surface, and how they're going to negotiate with other countries internally. But if they don't, and if they do not negotiate as a unit with the United States, then it is in our interest to single them out, one by one, and negotiate the best agreements that we can. And the first of those was the U.S.-Netherlands agreement. Others followed. I take a little bit of satisfaction and understanding that I pushed that process ahead, but it was in the works.
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Now, the EC does sort of have its act together. And Karl-Van Miert, whom I knew many years in various capacities in the commission, is now the head of the competition office within the EC. And he has initiated a lawsuit in the European court against the member states who've signed individual open skies agreements with the United States, attempting to assert supremacy of the EC on those matters, and on the competition secretary of the EC on those matters, and has already taken action against those alliances that have anti-trust immunity, such as Northwest, KLM, United, and Lufthansa. I think they're dead serious about this. They have been snubbed by the carriers and by some of the individual States, but this is a new arena now. This is a new era for the EC. The court has real power, and can compel its members to concur with the decisions of the EC.
So, what position do you take on the EC's conditions on alliances that DOT has already negotiated, approved, for which we have given concessions, and what actions do you intend to take to address those matters?
Secretary SLATER. Well, first of all, we take the position that the alliances that we have concluded and that are in existence, are valid. And we clearly have interest at stake there, as do the countries with whom we have associated. And many of those countries, and I believe most, frankly, have also expressed their concern about this process in that regard.
We will continue to hold fast to protecting U.S. interest as relates to valid agreements that already exist. We are open to discussions about how we go forward and also entertaining discussions about how the European union, as a body, might interface with the United States in the future. But, as it stands now, we are clear and unequivocal in our position that the agreements that we've entered into are valid, and we expect those agreements to be honored.
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Mr. OBERSTAR. I'm very encouraged to hear that, and I strongly support that position. I encourage you to stand firm. The stakes are big. This is a $15 billion market for the United States and the European community. We cannot tolerate them going back in time and undermining agreements we've already negotiated. If they want to go forward from here and say all future agreements negotiations will be on U.S.-EU basis, that's something they're going to decide. But they cannot undermine previous agreements. We cannot allow them to do that.
Now the commission has put out a draft ruling for approving the AA-BA alliance, an issue which has them very greatly concerned, or has the commission concerned, I should say. Their proposal includes restrictions on frequencies on certain routes, on divestiture of slots, frequent flyer program conditions, CRS and display, and travel commission overrides.
What's your view of those conditions? What do you think those conditions—what effect do you think those conditions will have? And how will they play into your evaluation of the AA-BA proposal?
Secretary SLATER. Well, clearly we will go forward with our independent analysis, mindful of what the EU—what the EC has done here. But we will make our own independent analysis. And we will soon announce a schedule, a process, for doing that, and will proceed accordingly.
Mr. OBERSTAR. If the EC proceeds to a next step of imposing these conditions that they have enunciated in their draft ruling, and purports to establish those as conditions for an AA-BA alliance, what will be the Department's response? Will it be your view to continue negotiating with the British, or will you have to negotiate with the EU, or will you allow that to be a matter to be resolved between the U.K. and the EU?
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Secretary SLATER. I think that that's a matter to be resolved between the U.K. and the EU, as to how they relate one to another. Our negotiations are currently with the U.K. It is a bilateral relationship that we are focused on here, and that is where our focus is, and will remain. Now, to the degree that the EC has a comment and it's own assessment of this proposed alliance, so be it. But it is independent of any analysis that we will make.
Mr. OBERSTAR. Have you, Mr. Secretary, had discussions with your counterpart in the European community?
Secretary SLATER. I should say that we have not talked about this enough.
Mr. OBERSTAR. May I encourage to pursue this yourself.
Secretary SLATER. I understand. Yes, sir.
Mr. OBERSTAR. Thank you. Thank you very much. You've got a rough road ahead on this matter, Mr. Secretary.
Secretary SLATER. Thank you.
Mr. DUNCAN. Well, thank you very much, Mr. Oberstar. And I think Mr. Oberstar has touched on many very important points here. Mr. Secretary, I have several questions although we do need to get onto other witnesses. But let me ask you this. Do you think that the European Commission has the right to require or force American air carriers to give up routes and slots and things—rights that we have negotiated with other sovereign nations?
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Secretary SLATER. No.
Mr. DUNCAN. And you know there are some proposals along that line. Do you think that the Europeans are—for instance, we bargain with Germany and get an open skies bilateral agreement, and then we have to bargain again with the European Commission to preserve the rights that we thought we won for our carriers in that same agreement? Do you feel that they're attempting to get two bites out of the apple, so to speak?
Secretary SLATER. Well, Mr. Chairman, let me answer that one by saying that we believe that the agreement that we have with Germany and with the Germans is a valid agreement, as is the case with all of the other European countries with whom we have new and existing bilateral agreements.
Mr. DUNCAN. Along that line, do you think, would it cause the Department difficulty in negotiating additional open skies agreements if you have to submit those agreements to the Congress afterwards?
Secretary SLATER. In all honesty, I'd have to say yes to that question. Because number one, it denies us frankly the benefit of knowing at step number one in this kind of process, the interests and concerns of the Congress. It is much better to have that understanding going into the process, and actually, as a part of the discussions and deliberations throughout the process. But for the Congress to come in sort of at the end of the day, having then the responsibility of approving or disapproving an agreement that has been negotiated, that could frustrate the process.
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I'll give you a few examples here. We've actually negotiated, as I said, about 60 agreements, 30 of them open skies. That's a lot of time commitment; that's a lot of effort. We're moving forward now, enjoying the benefit of those agreements. Were it necessary for there to be a second independent review, that could either slow down or, in some respects, frustrate efforts to move forward. But that stated, if there is the involvement early on in the process, and if there is an appreciation for interests of the Congress, then that can be factored in with involvement by the Congress as we go forward. So that at the end of day, we have an agreement that reflects those kinds of concerns.
Mr. DUNCAN. With hearings—For instance, in this subcommittee, as you go through the process and things like that. Is that what you mean?
Secretary SLATER. Yes, sir. Much like we're doing today.
Mr. DUNCAN. Right.
Secretary SLATER. Yes, sir.
Mr. DUNCAN. Let me just ask you one last question. You mentioned in your statement about the Safe Skies initiative that the host nations—the host African nations—would bear most of the primary responsibility for funding. Does the Department have a budget set up at this time for this program, or do you know—do you have—some rough idea as to the cost of this program, for say the first three years?
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Secretary SLATER. Yes. Well, the President, in Dakar, announced that we would commit a think $1.2 million to the effort. Clearly—
Mr. DUNCAN. How much?
Secretary SLATER. One point two million dollars.
Mr. DUNCAN. I see.
Secretary SLATER. Yes, sir. Clearly, that is not enough to do all that needs to be done. And so, we have been clear from the very beginning that the countries themselves will have to come forward with resources to support this effort. And we shared with them ways of bringing to bear those resources.
Mr. DUNCAN. Well, you certainly couldn't do very much with that kind of money in an area that big.
Secretary SLATER. Right.
Mr. DUNCAN. Well, listen, thank you very much. You've been a very fine witness here today, and made a very good presentation, and we appreciate your taking time to spend with us this afternoon.
Secretary SLATER. Thank you very much, Mr. Chairman.
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Mr. OBERSTAR. Mr. Chairman?
Mr. DUNCAN. Yes, Mr. Oberstar.
Mr. OBERSTAR. May I make just a one minute observation?
Mr. DUNCAN. Yes, sure.
Mr. OBERSTAR. On the point that you raised with the Secretary about congressional review of international aviation trade agreements, I think there are two dangers to the U.S. supremacy—which I would say is the best way to characterize our relationship in international aviation trade. One is, putting the negotiating authority in the hands of the U.S. trade representative, where aviation gets traded off against eucalyptus oil; and the other is to put it into the hands of the Congress. Every agreement will become a hostage for the other body. You will never get one of these agreements through. They will hold you up for the least little local problem in their State. Believe me, you are right to oppose it.
I must conclude, however, by saying that I differ in this respect with my very dear friend, the ranking member of the subcommittee, Mr. Lipinski, who feels in the other direction. We will gently discuss this matter over the coming months.
[Laughter.]
Mr. DUNCAN. That's a good way to put it.
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[Laughter.]
Thank you very much. Thank you, Mr. Slater.
Secretary SLATER. Thank you, Mr. Chairman.
Mr. DUNCAN. We'll next call up the second panel. And we're very pleased to have in the second panel, Mr. Cyrill D. Murphy, who has been with us on several occasions. Mr. Murphy is Vice President for International and Regulatory Affairs with United Airlines. We also are pleased to have with us Mr. Will K. Ris, who is the Vice President for Government Affairs for American Airlines; Mr. Parker McClellan, who is Assistant Director of Airports for the Greater Orlando Aviation Authority; and, Mr. David M. O'Connor, who is Director of U.S. International Air Transport Association.
And certainly we appreciate all of you gentleman being here with us today. And, as those of you have been at our hearings before know, we proceed in the order listed on the call of the hearing. And so that means that, Mr. Murphy, you will go first. And you may begin your statement.
TESTIMONY OF CYRIL D. MURPHY, VICE PRESIDENT, INTERNATIONAL AND REGULATORY AFFAIRS, UNITED AIRLINES, INC.; WILLIAM K. RIS, JR., VICE PRESIDENT FOR GOVERNMENT AFFAIRS, AMERICAN AIRLINES; PARKER MCCLELLAN, ASSISTANT DIRECTOR OF AIRPORTS ON BEHALF OF C. W.''BILL'' JENNINGS, SENIOR DIRECTOR OF AIRPORTS, GREATER ORLANDO AVIATION AUTHORITY, ORLANDO INTERNATIONAL AIRPORT; AND DAVID M. O'CONNOR, REGIONAL DIRECTOR FOR THE UNITED STATES, INTERNATIONAL AIR TRANSPORT ASSOCIATION
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Mr. MURPHY. Thank you, Mr. Chairman. Mr. Chairman, and Ranking Member Oberstar, and other distinguished members of the subcommittee, thank you for the opportunity to speak with you today on several aviation issues of importance to the United Airlines.
Before proceeding further, however, let me add united support to Secretary Slater's hard work to enhance aviation safety and security in Africa. As we pointed out in our written testimony, the Secretary's important initiative also illustrates the key role played by global aviation alliances in opening up and expanding service where U.S. carriers might find it otherwise difficult to serve individually.
The same issue of international alliances and recent European Commission efforts to constrain their transatlantic operations are a key issue today. Indeed, we congratulate you on the timeliness of this hearing. Just this week, the EC published a plan that would handicap the operations of the transatlantic alliances, the same entities that our Government carefully reviewed and approved more than two years ago, finding them to be both pro-competitive and pro-consumer.
Implementation of the EC actions would effect us commercially, potentially requiring considerable disruption of operations and processes that have been in place for years. And let me add, that while this week's decision out of Brussels initially targets United and it's European partners Lufthansa and SAS, the commission has made it clear that we'll also soon pursue the other two operating transatlantic alliances, those of Northwest and Delta.
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But we are even more troubled that these EC actions would effectively nullify key bilateral rights of U.S. carriers expressly provided for in U.S. open skies agreements with individual European countries. Specifically, the commission declared that we must be prepared conditionally to freeze or cut our flights on key pipeline routes—Chicago to Frankfurt and Washington to Frankfurt—and to surrender large numbers of takeoff and landing slots. In addition, our marketing and pricing freedom will be limited through various constraints on corporate discounts, travel agents' incentives, and combined frequent flyer programs.
These EC demands or proposed conditions on EC regulatory approval of the alliances fly in the face of clear bilateral aviation rights that our country bargained for, and won, in our open skies agreements with European countries. The relevant agreements expressly provide, for example, that carriers may really enter into cooperative marking arrangements, and determine frequency and capacity of operations, based on commercial considerations in the marketplace.
The U.S. plainly cannot countenance attempts by the EC to veto, after the fact, our Nation's solemn agreements with individual European countries. Were we to permit that to happen, the Department of Transportation might as well go back to the battle days of tit for tat, flight for flight, route for route, aviation negotiations.
This would amount to a huge step backwards from the real success of the Administration, with the support of this subcommittee, in opening up aviation markets around the world. This success has been especially evident in Europe, where the U.S. has achieved a dozen open skies agreements, with more likely on the way. Both competition and consumers are clearly best served when decisions about how often and where to fly, and at what price or discount, are dictated by free market considerations; not by regulators in Brussels, or in Washington for that matter.
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Mr. Chairman, the EC seeks to justify these new conditions on fully operating transatlantic alliances as somehow needed to advance competition. Yet these alliances were long ago carefully reviewed and approved by the U.S. authorities. And the European Commission has identified no actual existing competition problem associated with our alliance.
In fact, the EC's own commitment to free market competition is open to serious question. Just last week, for example, it continued approval of a huge French Government subsidy to Air France, even though an European court had found the market distorting payment illegal. The EC's aviation policy would seem to be to penalize the efficient with restrictions, and reward the inefficient with subsidies.
What is really motivating the commission in the U.S. alliance case, we believe, is not any bona fide competition concern. Rather, it is the political in-fighting in Brussels over the long standing commission frustration with it's own member countries who have chosen to negotiate open skies agreements with the United States directly and on their own, rather than cede collective negotiating authority to the EC. The commission attack on the U.S. carrier alliances with the carriers of EC member countries appears to be at least as much an effort to pressure those countries to acquiesce to an EC negotiating mandate, as with any really competition concerns.
Mr. Chairman, we have tried to work this out with the Europeans. Our Department of Transportation has expressed strong disapproval of the EC approach, and has repeatedly sent officials to try and dissuade the EC from it's ill-advised course. Secretary Slater, even when in Africa, and again, here today, properly called upon the EC to respect the U.S. open skies bilateral agreements with EC countries. Other high level DOT officials have written to the commission, clearly warning that the EC action would reduce competition and service to the public. Even the British newspaper, the Financial Times, criticized the EC in a lead editorial as not acting in the interest of air travelers.
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Despite these strong criticisms from various quarters, the commission has determined to proceed with it's ill-conceived plan, as shown by it's formal issuance of it's proposed new alliance conditions only two days ago. We have accordingly filed a formal IOCTA complaint with DOT, asking that it take swift and decisive action to sanction the European Commission over it's plan that would violate bilateral rights under the relevant U.S. open skies agreements.
The Department of Transportation has long recognize the competition and consumer benefits of the operating alliances, and has been clear in it's support for them. We hope and expect that it will act promptly to ensure not only that U.S. carriers are treated fairly, but that the U.S. open skies policy continues to move forward, unhindered by political maturation in Brussels.
Thank you, Mr. Chairman.
Mr. DUNCAN. Thank you very much, Mr. Murphy.
Mr. Ris.
Mr. RIS. Thank you, Chairman Duncan, Mr. Oberstar, Congresswoman Johnson. It's a pleasure to be here today. Notwithstanding my great respect for you, Mr. Chairman, I refuse to read my written statement, no matter how much you beg me.
[Laughter.]
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I would just like to comment on the three areas that the committee is dealing with today. And begin really by echoing a lot of what you have said about the Secretary's comments on Africa. We think the Secretary is absolutely right on the mark here.
One of the things about developing areas of the world is that there has to be a coordination between the time that the economies of those countries are strong enough to provide viable service opportunities—nonstop service opportunities—and the time that the infrastructure is adequate to meet that demand.
I've had the pleasure of reading Mr. Oberstar's trip report on your trip to China, and I think there's a lot of lessons to be learned there for Africa. Because the fact is, we now have a situation there where the economy is booming, but the infrastructure has not been brought up to speed. As a result, there is a massive investment, as you point out, in trying to catch up.
I think what the Secretary's doing in Africa is beginning the process exactly where it needs to begin—and that is, by working with these countries to develop all the infrastructure and security apparatuses necessary, so that, at the same that their economies are finally in a position of allowing the service, the infrastructure will be there. I think that's very astute.
One of the great lessons is Latin America where, not too many years ago, folks thought this wasn't going to be a very viable area of the world to compete. Now it's probably the hottest area of the world in terms of airline competition.
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I would also just note in relationship to some of the questions that were raised, there is a tremendous amount of private sector-public sector partnership in dealing with the security and safety concerns in a lot of these areas.
What is the proper role of Congress? I was thinking about something that happened earlier in this year in which Mr. Oberstar was extremely helpful in, with respect to a safety situation in Haiti. In this case, we identified a problem, we needed some coordination between the Defense Department and the FAA to get it done, but we needed a little bit of push. This was a wonderful example of private sector cooperation, Federal cooperation, Congressional cooperation, to solve a safety issue in a part of the world where it's desperately needed. I think it's a great model, I think we can duplicate that in Africa.
American participates in Africa, and has for the last 16 years, through general sales agents, where we try to sell our product on an airline basis. But more recently, as the Secretary pointed out, we've had a very fine relationship with South African Airways that has numerous benefits, including learning a whole lot more about the African continent.
We would like to participate even more and we hope to do so, with approval of the alliance with British Air, because British Air, of course, has an historic long term presence in Africa in some 12 countries and 15 cities. Subject to agreements that are subsequently negotiated through a code-share basis, American Airlines will be selling online tickets in Africa via London, our British Air connection. So we are very much looking forward to that, and think that we may be closer to nonstop possibilities than many think.
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While the benefits of serving Africa, the Middle East, and the Indian subcontinent are really part and parcel of what we're hoping to achieve with the AA–BA transaction, you're quite right though, this goes to the issue of what the role of the European community should be.
Let me just remind the committee that this has been a long and excruciating process, and is continuing for American. In contrast to United-Lufthansa alliance, which was approved, start to finish, in less than 90 days. We are now on our 678th day—I'm feeling like Cal Ripken here on the aviation front—since we announced our deal. And it continues to go. We are actually pleased in one sense with what the Commission has just done. This is the 97-page document that they delivered to us yesterday, which we have not obviously fully digested. But at least we're pleased the process is moving. Needless to say, there's a lot in here that we do not subscribe to, and we are hoping will be changed through the process.
With respect to the issue of retroactive application of some these conditions, we are not as sympathetic with some of our fellow carriers complaints, largely because we think that a lot of what the Commission has done was stimulated by these same U.S. carriers going to Brussels, asking for conditions, several conditions, to be imposed on AA–BA. This was done at a time when carriers were on notice, and have been for two years, that the Commission intended to apply all standards equally to all of these alliances. We're not saying the standards are good by any means, and our preference would be to have no restrictive conditions on any alliances. What we are very unhappy about would be a situation in which three out of four alliances had no conditions, only one did conditions that were basically aided and abetted by our competitors who have encouraged the Commission to get involved in this area.
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I must say to my colleague, Mr. Murphy, I think United understood this long before some of their other carriers that this is a two-way street. But I'm reminded of the arsonist who gleefully set fire to his neighbor's house, then forgot that he lived in a duplex. The fact is this has come to backfire a little bit.
With that said, as I repeated, we do not think that the restrictions, particularly the capacity restrictions in these agreements are in the public interest. And if you read nothing else in my testimony, at least I hope you will read on pages 8 and 9 the statement of Charles Hunnicutt from DOT, who I think eloquently stated what the Secretary also stated here today—and that's opposition to these capacity constraints.
I'm sorry. I've gone over. I just wanted one brief word about H.R. 3741. We've talked about that in our written testimony. We are concerned about the process implications, and think we need to look through this carefully. If, by way of example, the Secretary has talked about trying to negotiate an open skies agreement with the U.K., and if, in fact, lightning struck, and the agreement was negotiated, say, at the end of October, under this bill, as we understand it, it could not be submitted to Congress until January, when the new Congress convenes. It would sit another 60 days for consideration by the committee, and potentially another 30 days for consideration by both Houses. If one wanted to drag it out, it wouldn't be until April of next year that an agreement negotiated in November could even be approved, and then you've missed the whole scheduling season for the summer. So the fact is there would be a substantial amount of potential delay. And that's just for a big one. Most of the deals that are done are much smaller and are implemented very quickly and have great opportunities for carriers to get going very quickly.
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So I apologize for going over, but I just wanted to make a note with respect to the process issues.
Thank you.
Mr. DUNCAN. Well, thank you very much.
You said if we read nothing else, read Mr. Hunnicutt's statement. Do you think that we don't read every word of your statement?
[Laughter.]
Mr. RIS. I am sure that you do, which is why I didn't repeat a word. I know your staff memorizes it.
Mr. DUNCAN. All right, next we'll have the statement by Mr. McClellan.
Mr. MCCLELLAN. Thank you, sir.
Chairman Duncan, distinguished member of the Committee, I am here today for Bill Jennings, who's our senior director of airports, who has taken the initiative probably about six years in the safe skies following—or behind Secretary Slater. We've done this outreach program for the last six years and been very successful. He was unable to attend today due to a family emergency.
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I'm extremely pleased to submit a written testimony on behalf of the Greater Orlando Aviation Authority, and appreciate this opportunity to present the Authority's views regarding Secretary Slater's African Aviation Initiative. We, in our discussions, we talk about the economy in Africa. I think today we've spoken a lot about that, and I'll just move on through the presentation.
African airports are essential national assets, often providing the only link to the global economy in the international trade, investments, tourism. The cost in lost opportunities of not having an airport is astronomically high. It would mean geographic and economic isolation, and could shut off most avenues of potential economic growth. If experience of economic growth in other regions teaches us anything, it is that in an increasingly globalized economy, the travel sector is the first to benefit; and Africa will be no exception. But Africa's airports will not benefit to the fullest extent if they are not prepared.
To this end, the Authority several years ago began an outreach program to assist African airports enhance safety and security in such areas as checked baggage screening, cargo, development and training exercises, and airport design. Our focus in Orlando has been to assist African airports in attaining a level of aviation expertise that will facilitate the participation in the global marketplace.
This training is offered to representatives of African airports in collaboration with the Airports Council International, the International Civil Aviation Organization, and the Federal Aviation Administration. Some of the topics included in the discussion are crisis management principles, at both the local and higher government levels; the role of planning in crisis management; maintenance planning for safety; operational stability; and investment preservation. Additional benefits of the training include technical assistance provided to airports in developing nations and the establishment of long-term aviation relationship in Africa.
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The training sessions are interactive, allowing the participants to interface with each other as well as with different staff members of an American airport. This effort provides all the parties with a unique perspective that can only be accomplished through these training initiatives.
We have tried to take a grassroots approach by building a strong foundation through the utilization of existing resources and focusing on procedural aspects as compared to the systems approach. The idea is to establish a benchmark for each airport and to allow them to determine how far they need to go to ensure the safety and security of their facilities. The program is designed to be flexible, addressing individual airport needs and concerns. An example of this is recent identification of training challenges in Haiti. With the cooperation of the FAA, we have included several participants from Haiti in our training sessions. This is possible through our commitment to safety and security and our ability to adapt training as the needs arise.
As we move toward the 21st century, the Authority remains committed to continue its program with out African partners. We feel that any contribution made to assist the African continent in the area of aviation safety and security will have a positive impact on the entire global community.
Finally, over the last several years, we have received many comments from African airports, and outside that community, on the positive impacts of our training.
In conclusion, the Greater Orlando Aviation Authority supports Secretary Slater's ''Safe Skies for Africa'' Initiative. We feel that the efforts of American airports to facilitate the improvement—improved safety and security of airports in Africa, will not only benefit airports on the African continent, but the entire aviation community.
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Thank you for taking—for setting up this hearing, sir.
Mr. DUNCAN. All right, thank you very much, Mr. McClellan.
Mr. O'Connor?
Mr. O'CONNOR. Thank you, Mr. Chairman, and Congresswoman Johnson.
I am very grateful, grateful and honored to have the opportunity to testify on behalf of the Association in support of the United States Government Safe Skies for Africa Initiative. And I hope that you will indulge me a bit. Unlike Mr. Ris, I don't take any money for reading my statement into the record, but it will be mercifully short.
The Administation's safe skies initiative, we refer to in foreign countries as a U.S. Government initiative. I hope that's not presumptuous, and from the tenor of this hearing, I think it is something that will have Congress' support. It's something that in our Association, although we have many different airlines with many different views on a lots of subjects, as you heard from the dialogue at the end of the table, the one thing we do agree on is safe skies. And we do all support that.
And our trade association includes the membership of more than 260 airlines. Together, they provide 98 percent of the world's scheduled international service. The membership includes 14 of the largest U.S. airlines; 33 African airlines; and almost all of the airlines from other continents that provide service to and from Africa.
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When I first learned of the administration's Safe Skies for Africa initiative, my first reaction, partly tongue in cheek, was ''wait a minute. They are hijacking IATA's initiative.'' We have been pressing for improved safety for air travel in Africa and elsewhere for years. However, a bit of experience with the program, and of the support and cooperation that we have had from the Department and from the FAA, and of their willingness to use our information about Africa's aviation needs, convinced me that this initiative actually shows the most promise of making a difference in African aviation of anything that we, the operators, have tried in years.
IATA has been trying to improve the safety of air transportation all over the world, but especially in the developing world. It is our principal mission. We have qualified technical staff in Nairobi and Dakar that work with our airlines to identify deficiencies in facilities, in training, and in operational procedures for all of Africa. IATA works with the International Civil Aviation Organization, which also has people in Africa, and with the governments directly responsible, to plan and implement remedies for identified deficiencies at airports and in air traffic services. It is slow and frustrating work.
IATA will also work with States to design and implement a system of charges for air traffic and airport services. We have a program to deliver invoices, collect the charges, and turn over the revenues as directed. In some cases, all or a portion of the revenues can be directed to a bank or other financial organization that has lent funds in anticipation of future revenues. There is no reason why a well-run air traffic control operation, or airport, would be unable to secure construction or equipment financing if it has a sound business plan, can offer lenders security for their loans, and a sound plan for repayment.
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IATA's ATC Enhancement and Financing program is already in place in eight African states—Angola, Cape Verde, the Democratic Republic of the Congo, Roberts FIR, the Seychelles, Somalia, Uganda, and Zambia.
These are just tools, however. True progress in improving aviation safety in Africa requires the political will to change and a long-term commitment to sustaining improvements that have been introduced. And this is where Secretary Slater and his Department have been most helpful. U.S. economic performance has been the envy of the world. Secretary Slater has emphasized the role of air transportation as an engine of economic growth. He has carefully delivered the message that a safe and secure air transportation system is a necessary predicate for the increasing trade and tourism on which a growing economy depends. He has conducted discussions with senior African Ministers and clarified the work that needs to be done and the services available to help them carry out that work. In short, he has elevated the importance of a reliable aviation system, and the need for constant vigilance to keep the system safe.
The ministers of many African states face extraordinary distractions. At times, it has been difficult for them to remain focused and committed to aviation improvements. The Secretary's time and attention provide powerful support for those who chose to remain committed to improving aviation in the face of these distractions. The expanded trade that he, and we, hope will materialize once the aviation infrastructure is improved will be the immediate reward for that commitment. It goes without saying that new services between the U.S. and Africa and routes will benefit the populations at both ends of the new route.
And I know that I speak for Pierre Jeanniot, IATA's Director General, and IATA's old ''Africa Hands,'' Trevor Fox, who is our Director of Operations and Infrastructure for Africa, and Sassy N'Diaye, who is our Director of Government Affairs for Africa, when I repeat their observation that seldom, if ever, has the U.S. had a more eloquent and gracious spokesman for interests in Africa than the Secretary of Transportation Rodney Slater. IATA is delighted to have the support of the U.S. Government for the cause of improving safety of aviation in Africa. We are hopeful that that support may prove the catalyst that finally helps the countries of sub-Saharan Africa achieve a higher standard and become fully integrated into the global economy.
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Thank you.
Mr. DUNCAN. Thank you very much, and we'll go first to Ms. Johnson for questions.
Ms. EDDIE BERNICE JOHNSON OF TEXAS. Thank you very much, Mr. Chairman. Let me thank the witnesses. I don't have any questions at this time.
Mr. DUNCAN. Thank you very much.
Mr. Cummings?
AlL right. Thank you very much, Mr. Cummings.
Let me start off, first, by asking Mr. McClellan or Mr. O'Connor what kinds of resources your members might be willing to commit to help toward the Secretary's African Safe Skies imitative. Mr. O'Connor, have you discussed that with some of our members? Are they willing to participate in some significant ways, do you think?
Mr. O'CONNOR. Well, let me—There's sort of—the short answer to that is yes. But I think it's a more complicated answer that that question deserves. As I said, the operators, that is, the airline operators, that provide service to and from Africa are willing to pay for any reasonable improvement in the aviation infrastructure. And I give you an example of one thing we've done recently, and you have to understand that in certain regions, the services and facilities available are quite primitive. But in the Southern African cone region one of the problems they had was communication—communication between flight information regions, or FIRs. We developed a program, the acronym is VSAT, which I won't translate it for you, but it's basically a method of satellite communication which permits these FIRs to communicate with each other. We, as operators, produced a financing plan and said, we will pay for this new communications service. All you have to do is dedicate that the monies collected to the equipment that's purchased and the training of the people to use and maintain that communications gear.
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So, as a general proposition, we're certainly willing as operators to be responsible for reasonable improvements. I can say that from Washington. I can say that from the perspective of the developed nations' airlines. It's obviously harder when we are talking about African airlines. They have the most service. They have to be sometimes persuaded to provide the funds. But we're all in this together in terms of promoting safe skies. And with that sort of common purpose, I think we are able to get what needs to be done financed properly.
Mr. DUNCAN. Well, we had an article in the Wall Street Journal just this week that—and the headlines say ''FAA Data Deficiencies Hamper Effort to Spot Airline Safety Hazards. Incomplete Incident Reports Allow Patterns to Escape the Agency's Attention.'' We still have a lot of problems and difficulties in this country with obtaining the information that we need to discover the causes of some of our airline accidents and to come up with ways that we need to—or the things that we really need to do to improve things here. It's a constant effort that all of us are making, but it's certainly very difficult in that I would assume it's going to be even much more difficult in Africa, where some of the conditions, as you say, are primitive in certain areas as far as airports and the facilities that are available. But certainly, it's something that we need to start working on if we are going to open up Africa in the way that all of us would like to see it done.
Mr. McClellan do you have any comments?
Mr. MCCLELLAN. Just from the Orlando standpoint, we intend to continue our program on an annual basis, where we dedicate staff resources as well as some other financial support too, in partnership with the African airports. They pay for the transportation over, and we basically pick up the rest. And we intend to do that in coordination with ACI Geneva, who works with their partners in ACI Afrique.
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Mr. DUNCAN. Is there any certain action or are there any certain actions that either of you gentlemen feel would be the most significant that the Department of Transportation could do at this time in promoting safer air traffic in Africa? Anything in particular or anything that stands out in your mind or that you've heard your people mention to you?
Mr. O'CONNOR. We have a long list of projects and deficiencies, remedies that we've shared with the FAA, and invited them to comment and provide support, especially when it comes to, for example, satellite navigation, where the United States FAA is considered the leader in the training of controllers to use that new navigation form. And so, yes, they could be very useful in providing that kind of support, and we also have training centers—in fact, we just opened one in Johannesburg, in which we hope to be able to use some of their expertise to provide that sort of training where the countries are willing to make available their controllers for that sort of support. But it's going to be a long, hard pull, and there's obviously a lot of things we have been willing to share with them, and they with us. And I wouldn't want to single out one thing—you know, there isn't any panacea. It's more a relationship, and I think Secretary's Slater's intervention at the senior levels is probably one of the most useful things he could have done, because we often find there is great willingness at the working levels—the controllers even the civil aviation—deputy ministers in charge of civil aviation. It's just that things get pretty hectic in some countries when you go above that level.
I'll share an anecdote. We had a delegation a few years ago that was going to call on the Ministry of Transport. The meeting was canceled because the Ministry was taking artillery fire. So that's how bad it is in some places.
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On the other hand, there are some States that are very modern.
Mr. DUNCAN. Right. Mr. Murphy, the European Commission has said that in regard to your alliance with Lufthansa that you should have known, that you should have checked with them, that you should have known that it might violate the Treaty of Rome, the 1957 Treaty of Rome. Did you know, did United know that that was a possibility when you entered into your alliance? Do you ever—did you think that the European Commission might undo your alliance in some way?
Mr. MURPHY. I guess there's two answers to that.
The first one is that rights in aviation are defined by bilateral agreements. We have no other rights. Unlike most trade areas, we don't start up with a premise that we're entitled to do something unless restricted from doing it. We start out with a premise that we have no rights to do anything unless there's an agreement that specifically provides for it. So, we, as private parties, are subject to the creation of rights between governments. And the only governments that allege to have the authority to create such rights have been European governments and the U.S. Government. And those governments have entered into these agreements under which we now operate these agreements. So even the EEU acknowledges it does not have a negotiating mandate from its own members. By virtue of that, it has no ability to create rights.
We believe, by the same token, if it can't create rights, it can't destroy rights. So, in terms of the legal structure of this industry that we rely on the rights that are created by the governments that we can have the sovereign rights to establish those.
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I guess the second answer is that we never anticipated, given the direction of European aviation, that, in effect, we would suddenly be moving backwards. When we first met with the EEU back in January and heard their description of what they proposed to do in our alliance, frankly, I hadn't heard such descriptions of how markets worked since the 1950's. It was a complete shock to us that they see a marketplace that, if you look at their condition, seemed to work best only where you have a pervasive scheme of regulation. But if you look at their conditions that they are intending to regulate virtually every aspect of our interaction with our customers, with our travel agents, even with inter-line partners. In effect, there is no part of our activity that wouldn't be subject to their kind of regulation. That is not something we ever anticipated, nor have we yet to this day hear any justification for moving the world back 50 years.
Mr. DUNCAN. If the European Union was taking a different approach, if the EC was supporting less regulation rather than more, do you think it would be a better system to have the EC negotiate one large open skies agreement with the U.S.? Or do you think it's better to have these bilateral agreements negotiated as they are now, on a country by country basis, and not have the EC involved or looking over your shoulders, or reworking these agreements after you've entered into them?
Mr. MURPHY. I think that commercially we have been moving for some time to looking at marketplaces not on a bilateral basis, but on a regional basis. And so consistent with the way we are already operating commercially, we have been generally supportive of the idea that we need to move away from bilateral mechanisms to multilateral or regional kinds of mechanisms so that we can align our regulatory structures with our commercial structures that area already in the marketplace.
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But, frankly, that also assumes that the authorities involved have a knowledge and understanding of what it takes to operate efficiently in such a regional marketplace. And we've been very disappointed by that lack of knowledge and understanding on the part of the EC.
Mr. DUNCAN. How many countries does United Airlines fly into at this time?
Mr. MURPHY. I think we operate to 29 countries.
Mr. DUNCAN. Twenty-nine? Mr. Ris, what about American?
Mr. RIS. I—you know, I will have to provide that for the record. I would guess it's about the same.
Mr. DUNCAN. In the past, as a result of bilateral or international alliance negotiations have airlines ever been required to give up slots or other facilities, such as gates that you either, either Mr. Ris or Mr. Murphy, that either of you know about?
Mr. MURPHY. Yes, there has been some instances. In fact, the Lufthansa-SAS situation was conditioned by the Commission when it was first entered into. Of course, that was an arrangement within the EC, and the EC had clear jurisdiction over that. And frankly, evidently, that arrangement did not work out the way the EC expected it to. In fact, they told us that they were very unhappy about the conditions they imposed on that agreement, because in their view, they weren't restrictive enough, i.e., they did not produce the results that they wanted.
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So, it seems clear that their experience with the restrictions is if a little won't do, a lot more will maybe produce the results that they want.
Mr. RIS. My memory is that prior to the EC intervention the irony is that the only time that slots were taken away was historically when foreign carriers wanted to come to the United States, slots were taken away from us in order to facilitate that. And we thank you for ending that practice via legislation. But I think the answer is, up until this point, no.
Mr. DUNCAN. Mr. Ris, let me ask you—I'm sure you've seen the GAO report on the British Airways-American alliance. How do you respond? What would you say about their contentions that it would decrease competition and so forth?
Mr. RIS. Well, we're under no illusion that there have to be slots made available in order to facilitate this alliance. We've agreed with that, and I think what we're about right now is—
Mr. DUNCAN. Trying to determine the number?
Mr. RIS. Yes, that's right, both in the United States, at the United Kingdom competition authorities, and the European Commission, are to trying to get a reasonable amount of slots to be made available in order to facilitate the kind of competition that Mr. Oberstar referred to earlier. We don't inherently agree—disagree, excuse me, with anything that Mr. Oberstar articulated. We absolutely agree there needs to be full open skies, and that there needs to be adequate access. We happen to believe that a lot of carriers already have plenty of slots available, and we've made these arguments before this committee before. Part of being an immunized alliance is being allowed to operate as one airline. And, therefore, the slots that are owned collectively by the individual members of the alliances are available for the alliance use. Every European carrier has slots at Heathrow Airport that could be used for anything they want to use. And so we think that there are lot of slots available out there. But with that said, we know that we're going to have to make some available to our competitors. And that's okay. We want that process to move forward. Where I think we're in very clear agreement with Mr. Murphy and with the Secretary and Mr. Hunnicutt and so on are not wanting to move back to eras that didn't work. We've tried out capacity controls in the United States, and that's one of the reasons why we have deregulation. They don't work. They're not in the public interest. And we don't want to move in that direction.
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Mr. DUNCAN. Look, we've got a vote that just started. So let me go to Mr. Oberstar.
Mr. OBERSTAR. Thank you, Mr. Chairman. That's a very probing and thoughtful line of questioning produced today. Very good, intriguing responses. And I thank the panel for their testimony. I'm sorry I had to step out while the Orlando and IATA representatives were testifying. I had to attend to another transportation matter—surface.
But I'm intrigued by something that Mr. Murphy said just a moment ago. The EU clearly is trying to get its hands on international aviation trade agreements and to consolidate them all within its ambit, and to override the previously agreed upon arrangements—negotiated MOUs, or treaties between the United States and other countries. Mr. Murphy, you suggested that dealing with a single entity is really better than dealing country by country. Is that? Did I understand you rightly?
Mr. MURPHY. Yes, sir. Ultimately, I think we head in the same directions as, for instance, moving from the Articles of Confederation to the Constitution. It was predicated on the same premise: that economic efficiency was enhanced if we didn't have multiple authorities regulating the Commerce between individual States.
Mr. OBERSTAR. Do you have any ''but-for's''? Or ''if's'' in that? If you're for—if it doesn't restructure the United-Lufthansa agreement?
Mr. MURPHY. Well, I think that it—
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Mr. OBERSTAR. Or the U.S.-Germany—
Mr. MURPHY. I think I suggested that wisdom is a necessary ingredient of moving from one to the other. You don't want to move backwards, which gives us real thought about what direction we're moving it. I think we're moving in the right directions in terms of regionalizing our approach to services. We obviously are moving in the wrong direction when we're dealing with the EEC on regulatory issues.
Mr. OBERSTAR. Mr. Ris, do you have a thought on that subject?
Mr. RIS. Well, I think it's really—it's an interesting one. We probably don't know enough, I think you all know far more than we, about the structure of the European Commission. And part of our problem is that, of course, this is the direction that the European nations have chosen to move in. This is a fledgling federation that the intent of which is to become a single economic unit at some point in time. There's obviously been some very intriguing debate within the European Community about air transportation in particular and how far they want to move.
One of the things that I think is fascinating is that the lawsuit that you referred to earlier actually, as I understand it, wasn't brought by Mr. Van Miert, but it was brought by Mr. Kinnock on the behalf of DG–7, which is, I mean, that's an interesting sort of dynamic, because now not only do you have the competition authority within the Commission, arguing for supremacy, but you also have the transportation component saying, we think we should be doing this.
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Mr. OBERSTAR. Yes, it was Van Miert's inspiration and stimulus.
Mr. RIS. Oh, no question about it. Absolutely. But there seems to be—
Mr. OBERSTAR. He's really the author of it. You look at the market, though. The U.S.-UK market is roughly 12,000,000 passengers. It's twice the size of the U.S.-Germany market, and probably three times the size of the U.S.-France market. But the domestic market within the EU is vastly smaller than the domestic market in the United States.
Now if a principle of negotiation that has an aviation trade that has inspired all of our international aviation trade agreements over the last 30 years is value for value, right for right, access for access. We're giving them a whole lot more if they get access to the United States domestic market than we get in access to the European market, keeping in mind that 94 percent of all paid inter-city traveled in the U.S. is by air; and roughly 40 or 45 percent of paid inter-city travel in Europe is by air. And they haven't fully resolved, although they're moving in that direction, whether service between France and Belgium and elsewhere is cabotage or international service. They're moving in the direction of saying it's a single market. The Euro is going to be real. They'll have a single currency. They are moving in that direction, but there are serious consequences for us, and in the—at Heathrow, the British Airport Authority owns Heathrow. It says there are very few slots available and even fewer for transatlantic flights. So if they continue to be an independent entity, not directed by the British government, how ever are we going to get the resolution of slots and access if there is the AA-BA agreement?
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Mr. RIS. Well, regrettably, from our point of view, they're going to require us to make available some of those slots as a result of the agreement. I go back to saying, however, that there are no slots at Heathrow that are dedicated to any special service, including transatlantic service. So the amount of transatlantic service provided is a function of the authority to provide it, which is restricted between the U.S. and the U.K., and but once that's gone, it's by the economics of the people who hold those particular slots.
But, you know, your point is really insightful in the sense that how we define the market depends on what we're talking about in terms of reciprocity. And if we're talking about things that we do from time to time, such as cabotage or inward investment, you're quite right when one looks at potentially negotiating multilateral agreement with the European Commission that you have to make those comparisons, whether it's the European market versus the U.S., are we getting enough out of this?
With respect to alliances, for all of us, I think the value of these alliances in Europe goes way beyond Europe. And this, as we've talked about before, is our only way that we're going to get the Middle East, or get to Africa, or get to India. And I think all of us, I mean, part of it is just physics—we can't fly that far. But also, we're all partnered with foreign carriers that have developed these routes. And so we want to take advantage of that. So in that context, then, maybe we're talking about a much bigger universe.
Mr. OBERSTAR. This is the first step in a long, continuing dialogue, Mr. Chairman, that I'm very pleased you have launched. And we only touched the surface of it here today. These are very thoughtful comments from this panel, from the Secretary, a very constructive beginning and a deep inquiry into this subject, and I look forward to continuing the dialogue.
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Mr. DUNCAN. Well, we've got to break because of our vote. But thank you very much, gentlemen. You've been very helpful witnesses. That will conclude this hearing.
[Whereupon, at 3:58 p.m., the subcommittee adjourned subject to the call of the Chair.]
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