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AIR SERVICE PROBLEMS IN UPSTATE NEW YORK (Saratoga Springs, NY)
Monday, September 20, 1999
House of Representatives, Subcommittee on Aviation, Committee on Transportation and Infrastructure, Washington, D.C.
The subcommittee met, pursuant to call, at 9:30 a.m., in the Recital Hall, Filene Music Building, Skidmore College, Saratoga Springs, New York, Hon. John J. Duncan, Jr. [chairman of the subcommittee] Presiding.
Mr. DUNCAN. This hearing is to discuss the air service and other aviation matters effecting upstate New York. It's certainly a pleasure and privilege and honor for us to be here at Skidmore College and I want to say I especially appreciate the invitation from my colleague and Vice Chairman of this Subcommittee Mr. Sweeney. Mr. Sweeney in a short time has become a very good friend of mine and has made a very, very great impression on everyone in Congress on both sides of the aisle as a person who has been able to come to Washington and work with everyone in the administration and in Congress and has made a great record already. John, it is an honor to be here with you.
Before we really start the hearing we are very pleased to have Mrs. Jamienne Studley, the president of Skidmore College. Miss Studley was very cordial to take me around the campus. This is such a beautiful area here in upstate New York. This part of the country reminds me of east Tennessee where I am from. It's all hills and valleys. The people here speak with a little bit of an accent. But I do love this part of the country and we are very pleased to be at your college. Do you have anything you wish to say at this time?
TESTIMONY OF JAMIENNE S. STUDLEY, PRESIDENT, SKIDMORE COLLEGE
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Ms. STUDLEY. I am delighted to have you here, Chairman John Duncan, and, Congressman Sweeney, and also to be participating in this hearing. Skidmore is very, very honored and pleased to have you at the college here today and we are delighted by the cooperation that we can already see developing with Congressman Sweeney and he and I both are relatively new in our positions. In fact, my inauguration is this Saturday. We are both eager to cooperate because of the regional concern and certainly transportation is one of those important issues to all of us. Skidmore prides itself on our interdisciplinary—.
One of the features of this hearing is how many different subjects it raises whether you look at sections of the newspaper or parts of a college catalog, issues of business and economics, government, environmental issues, community participation and engagement.
So we are delighted to be able to share our facilities with you today and hope that some of our students and faculty will be able to drop by and see government in action.
I, having come recently from the executive branch, believe strongly that it is important to hear people who are effected by issues directly and so this hearing is a good example of that. We are pleased that you came here to give people this opportunity. We just want to offer you all of our hospitality and look forward to working with you, Congressman Sweeney, in the future. Thank you very much.
Mr. DUNCAN. Well thank you very much especially for the use of your facilities here. We have already had very warm hospitality and I know it's an extremely difficult job to be president of any college or university. There's another member of Congress who I won't name who was president of a college before he came to Congress. And he told me he was touring Europe one time with fifteen college presidents and he said one of them was talking about a problem with low faculty morale. He said another college president said, well when it comes to faculty morale there's just two types: Low and the lowest its ever been. I'm sure that's not the case here at Skidmore.
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Ms. STUDLEY. No, not here, no.
Mr. DUNCAN. But it does point up that it is a difficult job to be president of a college in this day and age. So I wish you the very best.
John, do you want to say anything?
Mr. SWEENEY Chairman, I just want to thank the President who—I should point out to the audience that President Studley's inaugural will be Saturday here at the school and I expect to be here and you are all welcome to come back for what is an important event.
One of the reasons we are here at Skidmore College is because the president had the foresight to come and see me very early on in my term in Congress to point out the real asset that this college is to the area and what facilities we have, and what great facilities, and I want to thank her for that and thank her for allowing us to use this facility for an important function. So great to be here and thank you.
Ms. STUDLEY. Thank you, Congressman. We look forward to a wonderful partnership together. I just can't resist a footnote. Your counsel, Mr. Chairman, and I have met before. He is laughing, but we both recognized each other. He practiced law with my husband. So it's a very small world. Welcome, Rob, as well.
Mr. DUNCAN. Oh. Thank you very much. We are going to proceed into the hearing at this time. And as I said Congressman Sweeney asked us to come here to discuss air service problems that face Upstate New York. This is an issue that he has spoken to me about on several occasions and I know that it is an exceptionally important issue to Congressman Sweeney. Competition, pricing, air service to upstate New York are problems that both he and you, who are his constituents face every time you fly. Since airline deregulation, the General Accounting Office reports that competition has grown and fares have fallen in most areas that have air service. In fact, they have estimated that in about 70 percent of the country that has been the case. However, studies also indicate that several small and medium sized communities have suffered in terms of air fares and service, and they have been described as ''pockets of pain'' and certainly Albany and several areas in upstate New York have faced that problem as have many other medium sized communities throughout the country. This issue is one that we have tried to do something about in our latest FAA Reauthorization Bill entitled AIR 21. We have tried to enhance competition and pricing by investing significant amounts in aviation infrastructure. This would allow for new facilities and increased capacity for aircraft.
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AIR 21 also creates incentives for airlines to serve new communities or compete in existing communities. While these provisions won't totally solve competition problems we believe that they will certainly help the situation. In addition, a competition study recently was completed by the Transportation Research Board. The Transportation Department is currently studying the report and it's recommendations and is expected to respond in the coming months. We hope that some of the recommendations that came out of the report will help to alleviate some of the air service problems faced by communities like the Saratoga Springs-Albany area.
I might add that almost two years ago—in fact I remember the day. It was November 18th. I went at the request of Congressman Jim Walsh to Syracuse and we had a similar type of meeting and we introduced or we announced the introduction of something that was called the Air Service Improvement Act. Almost all of that legislation was made a part of AIR 21. And it contains things in that legislation like a loan guarantee pool to provide loans for airlines to buy new regional jets if they will serve the smaller or medium sized airports that are presently under served. It contains a marketing fund to help the airports receive grants to help market or advertise new service to the airports. It does many other things that we have included in AIR 21. In fact, the AIR 21 legislation has been described as doing more for small and medium sized airports and communities than any aviation legislation in the history of the Congress. We passed that through the House. It's presently over in the Senate, and they are scheduled to act on it in the next few days and then we will go to conference. And I'm very hopeful that many of these things will be made part of the final legislation. And Congressman Sweeney will be a part of that conference committee and be a very active participant in all that goes on.
And I had better stop there and turn it over to Congressman Sweeney for any statement or opening remark he wishes to make.
Mr. SWEENEY. Thanks, Chairman Duncan, and, again, I want to thank you for coming all the way from Tennessee for this hearing. And I also should point out it's a little bit ironic our colleague, Joe Crowley from Queens, New York is en route. His flight was delayed about half an hour and he should be here any minute.
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So Chairman and I are going to give a little bit of an opening statement in the hopes that Congressman Crowley can be here. He is going to be an important panelist for us here and for many of those of you who are constituents of mine because he is going to be able to give us some real perspective in representing Queens and effectively representing LaGuardia Airport, which is in his district.
I also want to point out that Charles Bass who is a Congressman from New Hampshire was going to come down and, again, it's a little bit of an irony, but getting here was a problem. And it really goes to the heart and substance of why we have this hearing here today. And we are going to hear from a number of witnesses who will talk about their perspective as it relates to airline competition air fares and airline service. I'm confident that at the end of the hearing, having established a record that is specific to upstate New York and the 22nd Congressional District, the Capital District, the North Country, and the Northern Catskills we are going to be able to bring this information back to Washington for review by our colleagues in the Transportation Committee as well as the FAA and the Department of Transportation.
As the Chairman pointed out, there is a bill that passed known as AIR 21, and I think it offers us a real unique opportunity to address some of the issues that we have attended here. It will provide—at a minimum it will provide nearly $30 billion dollars in funding for improvements to service and safety around the nation. And in that vein we assembled a panel of witnesses to look at some of those issues that we may be able to apply some of the questions.
Mike Dikun, for example, the Manager of the Adirondack Regional Airport will be joining us today to testify on what AIR 21 contains for smaller airports like his own. Mike, I will point out, came down to Washington to testify at one of the early authorization hearings on AIR 21, and in his testimony he pointed out that it's no secret that the North Country lags behind the rest of the state in job creation. This is due, in part, because the North Country is a little bit isolated. Mike also will talk about regional airports and what they can afford, what opportunities they can afford us as we look to manage the entire aviation process. The need for the historic AIR 21 legislation follows nearly a tripling of the flying public over the last two decades.
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The Chairman talked a little bit about that. That incredible increase in use has led to a trend that has resulted in the overall drop in air fares, believe it or not. It's hard to say that given what we pay in air fares. While deregulation has produced greater competition in many markets it has had a reverse effect here.
Our nation's four slot controlled airports—of the four, two of them are in New York, LaGuardia and JFK because flights in and out of our state's main hub and spoke connections are limited by slots controlled by only a very few major carriers. Little competition exists in this region. That leads to the air fare issue that we have here as well as some of the consumer complaints that we have here. According to the latest reports air travellers are paying an average of 12.8 cents per mile. Travel at the Albany International Airport, on the other hand, consumers pay nearly double with airlines charging consumers an average of 20.3 cents per mile to fly in and out of Albany International.
Well, Congress is sometimes confronted with issues that break down into one region against another. There's wide consensus in the House that we must do something to ease high air fares in the Northeast, and as Chairman Duncan pointed out in those areas that U.S. D.O.T. has pointed to as ''pockets of pain'' which we are, very substantially so. Chairman Duncan has led the fight to pass AIR 21. His attendance here and his conducting of this hearing is indicative of his commitment nation wide and really in particular in this district, and I also want to thank him at this point in time for ensuring that I be appointed a conferee on the AIR 21 panel. I know that I am not a conferee unless my Chairman submits my name and pushes for me, and I want to publicly thank you because that's going to, I hope, have great benefit to my region and the constituents that I serve. So thank you, Chairman.
As I said, he was a key player. In having him here it will be important that he hears the testimony that we do have, and I will amend my remarks and submit them for the record.
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Mr. SWEENEY. We talk an awful lot about the opportunities in terms of money that will be provided. We have some real opportunities here in regards to our panelists and I will give a brief overview of what we have for panelists.
The first panelist will be the Mayor of Albany, Gerald Jennings, who is known as an economic developer in this region. I having worked as Commissioner of Labor in Governor Pataki's administration and then as a Deputy Secretary overseeing economic development knew Jerry Jennings as one of the premier proactive economic developers. He is going to give us some perspective on the effects of what's happening in this region and the effects on his ability to do his job.
We also have the Vice President of Ahlstrom Machinery Corporation, Brian Greenwood, who will tell us how costly our travel has effected his business.
In addition to Mr. Greenwood, Kevin O'Connor, the President for the Center for Economic Growth is with us, and he will tell us the overall economic picture in the area and what the impact of our aviation circumstances will be.
And Chairwoman Debra Martinez from the New York State Consumer Protection Board was going to join us. She has had a health problem, and Joseph Conway, the Deputy Director, will testify on the quality of service in the airline industry. And some of the things that the Consumer Protection Board—some of the things they are hearing from constituents and seeing out there. I think it's very timely that the Consumer Protection Board is here in light of the airline industries announcement this past Thursday to voluntarily adopt a 12 point customer service improvement initiative.
Chairman Duncan held hearings earlier in the year on the issue of passenger rights and consumer protection in Congress. The airline industry has been slow to recognize that there's a lot of unease out there, and, frankly, we have—many of us have been maintaining for quite some time that in the absence of real airline competition we need strong legal protections for consumers which is why I introduced my own bill, that's the Passenger Bill of Rights, earlier this year. So I'm interested to hear from our panelists from the Consumer Protection Board.
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The next panel will include John Egan, who is the C.E.O. Of the Albany County Airport Authority, who will tell us what is offered at the Albany County Airport and the region's largest commercial facility and what he forsees as some of the needs.
Joining him will be State Senator Owen Johnson who made the trip here from Long Island. Senator Johnson works closely with our own State Senator, the Senate Majority Leader, Joe Bruno, on the Senate Aviation Task Force, and he will share with us some of the task force findings and some of their recommendations.
I will point out that Phil Klein from Saratoga County is in the audience. He is on that task force and representative of local government, and I want to thank Phil for coming.
We will also have Mr. John Coleman, the Director of the Office of Aviation Analysis at the U.S. Department of Transportation, who will give us an overview from the national perspective of what the Federal Department of Transportation sees as some of the needs and some of the analysis.
I see my friend Joe Crowley is not here yet. I have taken up enough time. We want to go to our panelists. So I will do that and when Mr. Crowley comes we will turn it over to him. But let me start by introducing our first panelist, the Honorable Gerald D. Jennings, is the 74th mayor of Albany. He is currently serving his second term. He was first elected mayor in November 1993. Prior to this he was a teacher and administrator in the Albany City School District for 21 years and served on the city's Common Council as the Alderman for the 11th ward for 13 years. And Mayor Jennings, who is a dear friend, I welcome you, and as I said earlier you are recognized as one of the proactive economic developers in this state. So welcome and we look forward to your testimony.
TESTIMONY OF GERALD JENNINGS, MAYOR OF THE CITY OF ALBANY, NEW YORK
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Mr. JENNINGS. Thank you. Before I begin I would like to thank Chairman Duncan for making the trip here, and, obviously, my good friend John Sweeney for his work on behalf of not only the Capital District, but with the understanding of the dramatic positive impact it will have on upstate New York.
To my knowledge this is the first hearing of this type that has been held here. At least since I have been involved in politics, and that's quite a while. So it's long overdue, and, again, Chairman Duncan, thank you for being here.
Mr. DUNCAN. Thank you.
Mr. JENNINGS. You know I have been asked by Vice Chairman Sweeney to come here and give some remarks relative to how I view what's been going on here. And I can tell you that 1994 when I became the mayor of this city—mayors travel a little bit. I get on a plane and I get it from the captain and the co-pilot and people that are working, you know, when are you going to modernize this airport, when are you going to do something for this airport, when are we going to stop getting out in 20 below weather after having a nice vacation. How about jetways? I said, believe it or not I don't have a lot to say about the airport. But what's been happening over the past several years since I came into office and other people and John Egan got involved in the airport there is a dramatic change in attitude as well as a dramatic commitment to the airport relative to finances and, you know, now a first impression about this region is a very positive one when someone comes into this city—into the Capital District. You know, my mother always said to me first impressions are very important, and there's no doubt that this airport now is sending a message out now that we are ready to do business. But we are not as competitive as we should be in order to keep businesses here or bring businesses in. I hear that. And as a city's mayor, I have made economic development the keystone of my administration as John has indicated. And really the way Albany City goes the way the rest of this region goes, Schenectady, Troy, a lot of it has an impact on the suburbs. And anything we can do to really turn the attitude around that has been here before not so positive, we are responsible to do. And not just in the world of politics but in the world of business. And Joe Bruno has committed in excess of $50 million to this airport, and I know that there's been another commitment for different jetways. And John Egan has done a great job, but he needs our constant help. We are not competitive.
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You know, John Sweeney is a good friend of mine, and I happened to have to go to Washington D.C. last Thursday with the understanding I would be back in Albany by 10:15. I had to stay over at John Sweeney's house—I don't know what was more expensive, the airline ticket or what he charged me to stay at his apartment. No, it was a great night, John, more interesting morning. And there's a lot of stories that we can all tell, but, you know, Albany is unique. It's a state center of government. It's really a central location with access to all points north, south, east, and west. We are in a great position to bring the center of our upstate revitalization efforts to fruition. And really we have to do this. I keep mentioning upstate because if you take upstate New York and compare it to the 50 other states, if you go from Albany to Buffalo, as far as growth, we are about 48th. Regardless of what people are saying, very, very slow. And a lot of it has to do with travel. A lot of it has to do with travel. Air travel, as well as rail travel. And, you know, Albany does benefit because of a lot of the cultural activities, the overflow of museums, galleries, universities and colleges like this.
We have a wealth of beauty here in the Adirondacks and in the capital region. And we do benefit as a result of that. And it does draw millions of visitors to this area, not just of the City of Albany, but to this area. But we miss many millions more because they can't get here. That's a no-brainer. We are not attracting the number of people that we rightfully should attract to this region. And while the economy of Albany looks great, thanks in part to the stability that the public sector work force provides, there is a golden opportunity ahead of us to make Albany even greater. The current upgrading of rail service is a first step in the right direction. With the newer, faster Amtrak service between Albany and New York it is only a matter of time before people start commuting from Albany to New York City as they do now for their jobs here. This is good, but it is not enough. We need to connect Albany better, not just with New York City but with the rest of the world. Albany and all of upstate New York's future is going to depend on it's ability to move people and products in and out of this region effectively, and at a minimal cost to businesses. Currently this has not been the case. Efforts to attract new businesses in the area are constantly hampered because of the prohibitively high cost of flying in and out of Albany International Airport, and we have made progress under John Egan's administration to lower the cost, but we are still not competitive. As Congressman Sweeney mentioned the average cost of flying is almost double the national average. This has had a major impact on the region's economy. I believe that with changes in the work force and the way people conduct business, the problem will only get worse. Businesses are going to look at the bottom line. That's profit. If they want to consider opening a business here—I know you are going to hear testimony later, we have to be competitive. It's not just about property taxes. It's not just about incentives. It's about the cost of doing business, and travel certainly figures into a lot of the modern companies that we are—technology companies as well as everyone else, to do business here. And we have to make sure we are competitive. It's a fast paced environment. It's only getting faster. A company needs to be able to send it's employees to far places and at a moments notice at reasonable and competitive costs. With the shuttle flight from Albany to Washington sometimes costing close to $700, many businesses think twice about remaining here. You know people say $700—I don't have the luxury, and some people don't have the luxury of planning a trip two weeks in advance to take advantage of some of the lower prices, whether it's to Buffalo, or to Syracuse, to Rochester or to Washington D.C. I know my ticket last week was—I brought it, $688. It's an hour flight. It took me thirty six hours instead of a 12 hour day. But I do want—I guess that's my time.
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Next to the cost of flying is the issue of service. I need not elaborate on this point, but I will simply say that service to and from Albany is substandard at best, and we have to improve it whether it's the number of flights to and from various destinations or how customers are treated, the small number of airlines that operate Albany International need to work harder, and John is certainly holding them to that task. And it's precisely the fact that there are only a small number of airlines operating here that service is poor.
With no competition or minimal competition airlines have no incentives to improve services or lower air fares. We have to be part of the strategy and develop a strategy to create this competitive climate. While past and current improvements have allowed the airport to increase it's capacity we have yet to really see a marked increase in the number of different, and I stress different, carriers competing for customers. Until that happens I believe many problems will remain.
Before I close I want to make the point that our area is in a Catch 22 when it comes to air fares and economic development. While we need better air service and lower fares to continue economic development efforts some airlines are reluctant to begin service where the market may be inadequate. We have to break these inadequacies and, remember, money talks, and by investing now it will help alleviate the problems we have identified now as well as those that we anticipate with the increase in travel in the future.
With that point made I, again, thank the Subcommittee members for having me here today, and I offer you the opportunity to ask me any questions if you would like. Thank you, Chairman.
Mr. DUNCAN. Well, Mayor, thank you very much, and you know you are exactly right. Almost all economic development is tied in one way or the other to good air service with the computers and internet, and the WATS lines, and the fax machines businesses can be located almost any place that they want to be located today. But one of the first things they ask about is the air service, and I know in my home town of Knoxville our airport has had 17 months of record growth and we hit 158,000 passengers in July, and I haven't seen the figures for August, but it will come out to probably around 1.5 million passengers a year, and I notice the figures for Albany are 1.2 million this year. So I'm very familiar with airports of your size. The Albany Primary Passenger Entitlement would rise from 2.1 million to about 6 million under AIR 21. And that's in addition to some of these other programs that I mentioned earlier. And also a tripling of the FAA discretionary funds. So there's a lot of ways that Albany airport could benefit from AIR 21 in addition to improvement in the slot situation.
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John mentioned the great increase in air passenger traffic. We flew 615,000,000 passengers commercially last year, and probably 650, 660 million this year. Air passenger traffic is shooting way up. Air cargo traffic is going up about two-and-a-half times greater increase than air passenger traffic, and yet it is politically impossible to build new airports because of neighborhood opposition and environmental factors and so forth. So we have got to expand and improve the airports that we have if we are going to avoid gridlock in the area, and if we are going to meet the demands that are out there for more and better service.
But thank you very much for being with us, and I will call on John in just a minute to ask any questions, or make any comments he wants to about your testimony. But we are now—we have now been joined by Congressman Crowley, and we are certainly pleased to have Joe with us. He serves on another committee, the Resources Committee on which I serve, and also I read not long ago that he had his first baby not too long ago. So I guess he has not been getting much sleep.
Mr. CROWLEY. Not last night.
Mr. DUNCAN. But we are certainly pleased to have you with us, Joe. So if you want to—I will tell you what we will do. We will give you a chance to catch your breath, and we will let John say anything he wants to about Mayor Jenning's testimony. Then we will call on you for an opening statement if you wish to make one.
Mr. SWEENEY. Thanks, Chairman. Mayor, thank you for the great insight that you gave us in your testimony, and I know from our experience last Thursday that your experience is really a first hand knowledge as it relates to economic development, but also part of this hearing is going to focus on some of the consumer issues and I think really some of the problems that we have had. If you are underserviced generally, the insult to injury part of the equation really relates to how the airlines treat customers. I think it would be valuable for some of us here if we heard a little bit about what your experience was last Thursday aside from when you stayed at my apartment.
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Mr. JENNINGS. We are going to leave that out, John.
Mr. SWEENEY. What your experience was and how frustrating it had been for you in getting out of Washington.
Mr. JENNINGS. I am glad to see, number one, Congressman, that there is a Bill of Rights for passengers. I think one of the most frustrating things—a lot of travellers are first time travellers on these flights, and if they don't get correct information, you know, right away, it's frustrating for them. And the day in question last Thursday, we had a 9:00 o'clock flight out which is return—I left at 6:30 in the morning here, called the airlines at 7:30. I know someone booked a seat on that flight at 7:30, got to the airport at 8:30, and there were 500 people there. The flight had been cancelled long before that. I called the Customer Service. I called Reservations from the airport and said how is the flight from Reagan to Albany, and they said it's on time. And I said, oh, really. Let me talk to a supervisor. Oh, wait a minute, it isn't on time. You know, so I mean just the mis-information and a lot of the problems, and then it was, okay, come back here tomorrow morning for a 7:00 o'clock flight. So I got up nice and early, went to the airport again, got there, and the flight was delayed until 7:20. It's not leaving until 8:15, but we can route you through Boston. We can go through Syracuse. I'm talking an hour flight versus a couple, three, four, five hours now. So it became very frustrating for me as well as many other people, and I went to the counter and said is there a way for me to get near Albany, you know, one way or another I can—well, no, there's not anyway for you for you to do that. We have to route you through Boston. Then the flight crew arrives. The flight crew arrived at about 8:15, but the flight was in Dulles, and then they were informed that in Dulles the crew in Dulles couldn't fly the plane to Reagan because they had exceeded their hours or they were up to their limit. So they had to take the crew from there, drive them to Dulles to bring that plane back. Now I'm looking at 3:00, 4:00, 5:00 o'clock in the afternoon the way I was interpreting it. But, I mean, it was—you know, I feel very bad for the ticket counter people. I mean, they take a lot of abuse, and it's unjustified. I really do. They sit there and people are frustrated when they are travelling, and for first time travellers, it's equally frustrating.
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I know one woman, they were out on the runway from 3:00 o'clock until 6:30 before they cancelled the flight that same day. It was three-and-a-half-hours on a flight, fully loaded, before they decided to cancel it. Now whether it was questionable, if it was iffy, I'm not into that. But just making better decisions, quicker decisions, giving the information to the public to let them know that we are having some difficulties, would help a lot as far as the attitude toward service. We don't mind paying if we get the service. And that's what I'm hearing from people, John. So that was just one little bit of an incident.
Mr. SWEENEY. And as you pointed out, I think the key to it is increasing competition where there are great opportunities that are available to us, low fare carriers are coming on to the scene in the market, and I would conclude by asking you a favor, and that is, as you know, last week Jet Blue was given slot exemptions—afforded slot exemptions from the Secretary of Transportation. I note that Steven Mann from Senator Schumer's office is here, and the Senator has submitted testimony. The Senator is not here because it is indeed a holiday, Yom Kippur holiday, but we worked to get the Secretary to move forward with the Jet Blue approval. Jet Blue now has to make some decisions as to where they are going to service, and they have indicated that Albany may not be a preference. So I'm going to ask the Mayor of Albany and my dear friend to work hard with me and with your colleagues on that side of the aisle to see that we get Jet Blue to consider more favorably the Albany market and other low fare carriers. There are other slot exemptions to be had out there for lower fare carriers, and John Egan when he comes on can address it a little more specifically and how we can on how we can get them in to Albany. But we need to all work together on this one. Albany needs more competition.
Mr. JENNINGS. John, you have got my assurance. You know yourself and Congressman Crowley certainly know this state and understand it as well as anyone. Chuck Schumer certainly knows it, as well as Mike McNulty. I would be more than happy, and what I think would be important is for us to get support from the Mayor of Buffalo, Rochester, Syracuse, and Utica, and other places here in the state, to go on the record saying, you know, it's long overdue. Let's bring the focus that we have to on air travel in the state so that we are competitive. We are losing business. We are not bringing in business. As a result, it's not—the incentive isn't there right now to turn the economic climate around for some businesses to come into the state. And that's what it's all about. So, again, thank you for the opportunity and, Chairman, once again thank you.
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Mr. DUNCAN. Well, Mayor, thank you very much for being with us. We do have to cover a technicality in allowing Congressman Crowley to participate in the hearing since he is not formally a member of the Subcommittee and I ask to have this consent. Hearing no objection, we are very pleased to have Congressman Crowley with us today. Joe, you can give any opening statement or make any remarks or comments that you wish to make.
Mr. CROWLEY. I will be very brief. Thank you, John, Congressman Duncan, for this hearing this morning, and I will just start off by saying, yes, I was delayed at LaGuardia Airport getting up here. So I don't know if it was intentional by anyone down at—the powers that be at LaGuardia, but it is true, and that's probably indicative of one of the problems we have in terms of air transportation as it pertains to New York City, in particular. I have the distinction, I won't say dubious, but I have the distinction of having LaGuardia Airport in my district as well. It's been a great convenience for me at times getting back and forth. Especially now, in light of the fact that I have a new son tying me to New York City. At the same time it presents a myriad of problems for us taking into consideration also the needs for upstate cities to have more and better access to New York City and larger cities, and at the same time balancing that with the needs of my constituents to maintain a resemblance to a quality of life as it pertains to air noise, air safety, and traffic in general. That's a problem that we face in New York City. Particularly the desire to want to increase accessibility to upstate New York and at the same time recognize that we may be at capacity as it pertains to LaGuardia Airport. I'm not speaking for JFK Airport, but I look forward to hearing the testimony and I want to be as helpful as I can be. And I want to applaud my good friend John Sweeney, another example of being able to communicate and work with both sides of the aisle. I think John and I do that fairly well, and I applaud his efforts and his work on the Subcommittee and on the Transportation Committee as the tireless worker for his constituents here in the northern region of New York. And I look forward to many, many years of working with John, and you, Congressman Duncan, and the members of the committee. So thank you very much.
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Mr. DUNCAN. Thank you very much, Congressman Crowley. I will then ask the witnesses who are here with us to take a seat at the table there. We are very honored and pleased to have a distinguished panel of witnesses starting with Mr. John Coleman, who is Director of the Office of Aviation Analysis in the Department of Transportation. We also have Mr. Mike Dikun, who is the Manager of the Adirondack Regional Airport. The Honorable Owen Johnson, who is a State Senator and represents the Fourth Senate District, Suffolk County, New York in the New York State Senate. Mr. John Egan, who is the C.E.O. of the Albany County Airport Authority. Mr. Joseph Conway, who is Deputy Director of the New York State Consumer Protection Board. Mr. Brian Greenwood, who is the Vice President of Ahlstrom. And Mr. Kevin O'Connor, who is the President for the Center for Economic Growth. And we thank each of you for being with us today, and I think what we will do is, we will simply proceed right in line down the table there, and I think that's basically the way I called out the witnesses.
TESTIMONY OF JOHN COLEMAN, DIRECTOR, OFFICE OF AVIATION ANALYSIS, U.S. DEPARTMENT OF TRANSPORTATION; MICHAEL DIKUN, AIRPORT MANAGER, ADIRONDACK REGIONAL AIRPORT; HON. OWEN H. JOHNSON, STATE SENATOR, FOURTH SENATE DISTRICT, SUFFOLK COUNTY, NEW YORK; JOHN C. EGAN, CEO, ALBANY INTERNATIONAL AIRPORT; JOSEPH CONWAY, VICE CHAIR AND GENERAL COUNSEL, NEW YORK STATE CONSUMER PROTECTION BOARD; BRIAN F. GREENWOOD, VICE PRESIDENT, OPERATIONS, AHLSTROM MACHINERY, INC.; AND KEVIN O'CONNOR, PRESIDENT, CENTER FOR ECONOMIC GROWTH
Mr. COLEMAN. Thank you, Mr. Chairman, Members of the Subcommittee. I was pleased to be offered the opportunity this morning to discuss the Department of Transportation views on airline competition. Most observers continue to agree that airline deregulation, despite a few rough spots, has been enormously beneficial for the American public. Policymakers, in short, want to make the current system better, not to re-regulate the airline industry. At the Department of Transportation we believe the best way to preserve the benefits of airline deregulation is to create an environment that provides all air carriers with a fair chance to compete and prosper. New competitors with low fare strategies are absolutely necessary to discipline pricing behavior. Although average prices for the country as a whole have gone down since the airlines were deregulated in 1978, prices are higher in regions where one major airline is dominant. This unevenness in prices is due to a lack of competition at dominated hub airports. Let me use Albany as an example. Overall Albany passengers pay 11 percent more on average than passengers nationwide in markets of comparable distance. In 1998 the average one way fare between Albany and Chicago, market dominated by American Airlines and United airlines, was $274. One way trip in a similar sized market from Buffalo to Atlanta with nearly identical mileage was $130, less than half. The difference, the low fare airline Air Tran serves the Buffalo-Atlanta market. On the other hand in some markets Albany has benefitted. In response to competition provided by low fare carriers, particularly in regional markets several major network carriers have created low fare subsidiaries. Albany benefits from the presence of two such carriers, Metro Jet and Delta Express, both of which offer low fare service to Orlando. In addition, Shuttle America, a new start-up airline, brought it's concept of a low fare airline offering a high frequency of direct and nonstop flights to Albany on April 6th of this year when it began service to Buffalo with fares reportedly as much as 70 percent below those of the dominant incumbent carrier in the market.
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Because of the importance of this low fare service, the Department has, over the last three years, been more active in promoting new entry and competition than at any time since airline deregulation 20 years ago. Since 1996 using our statutory powers to prevent unfair methods of competition, which are similar to but somewhat broader than the antitrust laws, we investigated several complaints about major airlines responses to new entry. We subsequently published a proposed enforcement policy on unfair exclusionary behavior. The proposed policy made it clear that matching the low fare of a new competitor at a hub was perfectly legitimate. However, in some cases major airlines dumped so many low fare seats into the market that their apparent objective was not to maximize profits in the face of competition, but to eliminate competition. This behavior would make it impossible for the new entrant to remain in the market. And when the new competitor is forced out of the market, fares often return, in fact almost always return, to their previous high levels or even higher levels. The Department continues to work on this competition policy. We are considering the concerns raised by over 5000 commenters as well as the observations of the Transportation Research Board, which Chairman Duncan mentioned a few minutes ago. Let me mention a number of other D.O.T. initiatives that I describe in more detail in my written testimony that I'm submitting.
We are doing an extensive review of the competitive implications of computer reservation systems. We are doing a study of the effects on market shares and fares resulting from recently formed alliances among the six largest U.S. airlines. We have done a study of airport business practices that may impair new entrants fair access to gates, ticket counters, baggage handling, and other critical facilities and services at major airports. The Department plans to issue this report soon, and as we have discussed elements of it with effected industry groups. We have used our exemption authority to give new entrant carriers landing and take off slots at slot controlled airports. Just last week, as you know others have mentioned, the Secretary announced the award of 75 slot exemptions at New York's Kennedy Airport, to Jet Blue Airways, which is planning to begin service early next year, early in the year 2000, to bring low fare service between New York and approximately thirty cities by the year 2003. Legislatively we are working with Congress on ideas such as relaxing and eliminating the high density rule and other means of enhancing responsive air service for all Americans. We are confident that these efforts are beginning to reap benefits for the travelling public. Some of the low fare airlines that struggled to hang on are now starting to make money and a few new airlines are again entering the industry. Access Air started in March flying from the midwest to both coasts. National Airlines started service from Las Vegas in the spring, and as we mentioned Jet Blue will begin operations early next year with new air craft giving New York consumers and consumers throughout the east coast area significant new low fare options. I believe we are making progress, and enhancing service and competition, but as you can see, there's a lot more that we intend to do. And Chairman, Members of the Subcommittee, we certainly look forward to working with you on these mutually important items. And thank you for inviting me.
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Mr. DUNCAN. Thank you very much, Mr. Coleman, and I have had a request that we proceed opposite from what I said a moment ago. And so we will go to Mr. O'Connor and let him testify at this point in time. Then we can come down the other way. Mr. O'Connor.
Mr. O'CONNOR. Thank you. Good morning, Mr. Chairman, Congressman Sweeney, Congressman Crowley, the rest of the staff. First I would like to start off by lauding your activities on AIR 21. If passed, I think that will have a tremendous impact on air travel in this region. We have—we hope that goes, and we will pledge any support that we can.
My name is Kevin O'Connor. I'm the President of the Center for Economic Growth, which is a private business, and local government, and university sponsored economic development organization in New York's capital region, headquartered in Albany, New York. We are a membership organization comprised of about 225 private business C.E.O.s, local government elected officials, and university presidents representing about 65,000 employees throughout this region. The Center for Economic Growth supports and manages the activities of the Chief Executives Network for Manufacturering, which is a group of approximately 80 C.E.O.s, of locally based, small and medium sized manufacturers who employ another 5000 capital region residents. We also support the Capital Region Software Alliance, a network of some 120 software companies employing another 2000 people throughout the region. On behalf of the companies, local governments, universities, and the people that work for them, I would like to provide the Aviation Subcommittee with their sentiments on air fares throughout the capital region and the rest of upstate New York. But first a quick look at the economic picture of our region. After some trying times in the early 1990s, the capital region economy is now recovering. Employment in the region is strong in all sectors. Umemployment is running at about 3 percent, and it's the lowest in upstate New York. Business and consumer confidence is at an all time high. Now, the region's economy is not growing as fast as the rest of the nation, but is doing very well relative to it's performance over the past 10 years, and relative to the rest of the Northeast. We believe this is a product of a more conducive business climate and the significant investment in the region's infrastructure. Perhaps the most notable being the redevelopment of the Albany International Airport, one of the best developed and managed public-private partnerships in the region, and Senator Bruno, Governor Pataki, and of course, John Egan, who runs that, deserve a lot of credit for that.
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Just quickly on our competitive position, in attracting and retaining economic activity for the capital region, we look at our strengths and weaknesses. Our strengths include a well developed and integrated transportation infrastructure, highly skilled and affordable work force, and a concentration of colleges and research universities, a strategic location, and competitively priced industrial and commercial real estate. In talking to business and government leaders about the region's competitive challenges, the cost of air fare is frequently cited as one of the three burrs under everyone's saddle going hand in hand with the cost of energy and property taxes.
Their are different estimates on how overpriced air fares are in the capital region, (as we just heard a little bit earlier from the Department of Transportation) but there is a consensus that air fares are too high and inhibit travel sensitive economic activity. Estimates of the capital region air fare comparisons that I have seen run from 12 percent above the industry bench marks as noted by the Albany County Airport Authority to two to three times higher than the average quoted in the United States Department of Transportation's Consumer Report.
The Advanced Upstate New York Coalition comprised of business groups from Buffalo, Rochester, and Syracuse have associated air fare costs with influencing business location decisions towards geographic locations outside the region and the state, and with discouraging the attraction of conventions, conferences, events, and tourism in general, and I have attached their position paper to my remarks here today.
Right here in the capital region I personally experienced the ill effect of high air fares in attracting business to our region. The cost and quality of air service in our region has been cited as a reason for relocating a local financial service company headquarters out of this region into the Cleveland area, who has more competitively priced air travel. I would be happy to refer the names of specific companies to the Members or the Staff of the Aviation Subcommittee for follow-up in the future. Unfortunately, due to the time constraints leading up to this hearing, I was unable to ask for their approval to use their names in my testimony this morning.
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However, I assure you that manufacturers, the service sector, governments and academic institutions alike share the concern over air fare prices. Regardless of the actual percentage of how much we pay for air travel in upstate New York, there is without doubt a widely held belief among business, government, and academic institutions that air fares are prohibitively high. In turn, these beliefs are negatively influencing decisions on business attraction, retention, conventions, and conferences, and tourism in general. On behalf of the Center for Economic Growth's business, government, and academic members, and the 72,000 people they employee, I respectfully urge the Aviation Subcommittee to help us resolve the non-competitive element of this region's cost structure--air travel!
Mr. DUNCAN. Thank you very much Mr. O'Connor, and next we will hear from Mr. Greenwood.
Mr. GREENWOOD. Mr. Chairman, Congressman, ladies and gentlemen, my name is Brian Greenwood, and I'm Vice President of Operations of Ahlstrom Machinery with an office based in Glens Falls, New York. We are an engineering and research organization serving the pulp and paper industry world wide. And as a consequence we do a lot of travel, both here in the U.S. and Canada, and we have just recently, in the last three years, carried out projects in Japan, Indonesia, New Zealand, Chili and Brazil. In addition we are a part of a global organization with it's headquarters in Finland. So as a sequence, we do a lot of travel for business and technical support reasons to Europe. In 1998 our total, what's called SGNA, overhead costs in our Glens Falls operation was $13.5 million. Of that, we spent $1.7 million on travel with $1.2 million going to the airlines. So for a group that's only 170 people, we are a pretty heavy user of the airlines. Now the issue of transport in this region is a particular interest to us right now because we are in the midst of a merger with another organization, and there's—of course, any time that happens, there's a big issue of, well where is the right place for your organization to be located. And we have this issue of determining the location as a big factor is the air cost, air travel cost and convenience coming in and out of the Albany Airport. We are competing with locations that are based in either Charlotte, North Carolina or Atlanta, Georgia.
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I would like to share with you just a couple of air fare examples that come from our experience that I think are relevant. One of the frequent destinations we had during 1998 and continuing into this year was going to Tokyo, Japan. And some of our engineers travelling there as they were working with our travel agent discovered that instead of what might be a very logical trip to go from Glens Falls, a 45 minute drive to Albany, and then fly from Albany to Chicago, and catch a nonstop to Tokyo. They found that they could save approximately 30 percent on the round trip business class ticket if they drove three hours north to Montreal, flew from Montreal to Chicago, and then to Tokyo, on the very same flight they would have caught coming from Albany. It's a difference of almost—let's see, just under $2000 on the round trip business ticket. Pretty significant.
Another example that we have had is that we do a lot of commuting down to the southeastern part of the United States, and frequently traveling from Albany to Atlanta. And when we compare the ticket prices, we looked at several alternatives. One is Albany. One is using the Hartford Airport over in Connecticut. And there's approximately a 40 percent premium if we fly out of Albany going to Atlanta, and the miles are identical, and that's, of course, if you are using full fare coach tickets, which our business normally demands because of the short planning time for most of the trips we do.
Another example I would like to share with you is an issue of service into Albany. And many of our senior managers traveling back and forth to Europe, including our executives coming from Europe, have to come into JFK, and the service from JFK to Albany is particularly poor, particularly from a convenience point of view. Normally the flights from Europe arrive at JFK during the afternoon, most of them coming in by 4:00 o'clock. And when we try to make a connection, a commuter connection to Albany, typically there's a three or four hour wait to make a connection. This generally forces us to try to arrange some other form of transportation to come up to this region. It's particularly noticeable to those people that are trying to make decisions about where we should be located in North America, and issues like that. So it's sort of a high profile issue for us.
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So in closing I would just like to say that we have a lot of good reasons to be in this region. We have an extremely good work force, very stable work force. It's a beautiful region. Lots of natural beauty. And it's a great place to raise families. And we would like you to help us with this issue of the airline costs coming into Albany so we have one more good reason to stay here and not some issue that we have to debate with our senior executives every time the subject of relocation comes up. So thank you.
Mr. DUNCAN. Thank you very much, Mr. Greenwood, and next we will hear from Mr. Conway.
Mr. CONWAY. Good morning, Chairman Duncan, Congressman Sweeney, Congressman Crowley. My name is Joe Conway and I am the Vice Chair and General Counsel of the New York State Consumer Protection Board. Governor Pataki appointed me to this position in 1996 and elevated me to Vice Chair earlier this year, and it's given me—the time in the position has given me the opportunity to see how his administration is fully committed to the forceful advocacy on behalf of consumers, airfare flyers in New York State. What I would like to do is just very briefly provide you with a background on Chairman Martinez, who is unfortunately unable to be here because of a serious back injury today. She has herself had a long time professional interest in transportation issues. Prior to joining the Pataki administration, she served as Director of Traffic Checking Operations and Operations Planning for the New York Metropolitan Transportation Authority, and also held other senior management positions with the New York City Department of Ports and Terminals.
Now how does the New York State Consumer Protection Board get involved in this issue? Back in 1996 Governor Pataki signed Executive Order #45 which defines the Director of the Consumer Protection Board as the governor's chief representative in matters involving consumer protection. One of these duties as set forth by the governor is to represent the interests of air fare consumers before the federal and state legislative bodies. Obviously the deregulation of the airline industry in the 1970's and 80's produced an undeniable benefit to consumers in the industry in the form of reduced air fares and increased numbers of annual flyers. However these benefits have largely been seen in established major markets in competitive travel routes. For instance, New York City to Orlando, Florida. The deregulation has produced even more uneven results in smaller markets such as those primarily served by New York's upstate regional airports. Many smaller regional airports have effectively been divided among the major carriers and their subsidiaries decreasing competition, decreasing the amount of choice that New York's upstate consumers have, and relaxing the drive to lower prices that those consumers can benefit by. Once dominance is established, the carrier uses these higher prices on these upstate routes to finance their flights on more competitive routes. This is nothing new to the Committee, as I'm sure you know. In upstate, markets such as New York's smaller air markets are used as a source of operational revenue for many carriers. We at the Board view every New Yorker as an air fare consumer. And the consumers of New York just as consumers wherever they are, Nashville, Florida, are understandably perplexed by the large and sometimes inexplicable variations that we see in air fares at different airports. And this is especially so in some of the smaller regional airports you have here in New York State. The availability of reasonably priced airline travel can enhance the quality of life for our citizens in numerous ways.
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Congressman Duncan, you have now seen Skidmore, for example, one of what I believe to be one of the finest liberal arts institutions on the eastern sea board. Now President Studley can do all that she can to attract the finest tenured professors, the finest students, but how do we compete against universities, say Vanderbilt University, when it's cheaper to fly from LaGuardia into Nashville than it would be to fly from LaGuardia up here on average? How do we attract that quality of student that we need to keep an institution like this viable?
And I can bring up a number of consumer complaints that we have received on the Board, and would be happy to share them with the panel.
Mr. Chairman, I would like you to know that Governor Pataki wants to do all that he can to foster and stimulate greater airline competition in New York and supply New York's airports with the resources they need to meet the needs of airline passengers, and stimulate growth in our economy to keep his program continuing forward on behalf of all New Yorkers.
Again, to go back to specific consumer examples, there's no reason why it should cost more to fly between Albany and LaGuardia than it does to fly all the way across the Atlantic Ocean. And we know that President Egan and the Albany Authority are doing all that they can. But there's only so much that we can do at the state level, and we need committed federal assistance such as the program that you have done with AIR 21, and such as the programming that Congressman Sweeney has done with the Passengers Bill of Rights. At the Board we can only do so much. We can do voluntary mediation with the large airlines that are established at the airport, but without a stick, such as the Passengers Bill of Rights, that Congressman Sweeney is advocating, we can't truly help New York's consumers. Governor Pataki is also actively communicating these concerns to the Subcommittee and Congress. For example, in a letter last May to Senator McCain, who is the Chairman of the Senate Committee on Commerce, Science and Transportation, Governor Pataki urged the Senator to address the needs to support programs that promote air service in medium sized and small communities. In addition he suggested that if the slots at the nation's four high density airports are to be increased, first priority to these slots should be given to flights from airports located in the same state. This is particularly important to New York as two of the four airports are, of course, JFK and La Guardia. Priority for new slots, the Governor also recommended, should then be given to under served airports. Governor Pataki also urged Senator McCain to address the needs for support programs that promote air services in medium sized and small communities. Governor Pataki's approach, I believe, is the right one because he is working with people such as you, Chairman, Congressman Sweeney, and Senator McCain, Representative Crowley as well in enlisting your assistance as we identify practical solutions to the problem of sky high air fares.
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As a direct result of the economic development initiative supported or advanced by the Governor, New York's consumers are beginning to find a fresh new array of options at upstate airports, but we need now to continue that push.
We are seeing more flights by low fare commuter airlines at a number of the smaller but still important hubs that are vital to New York's transportation infrastructure. The airports of Albany, Syracuse, Buffalo, Rochester and even Stewart now. Just consider the Albany County International Airport where a $160 million expansion project was completed this year in Albany in April. Albany received another shot in the arm when our State Senate Majority Leader Joseph Bruno committed another $6.2 million in state funds to construct additional terminal wings and make other improvements necessary to bring one of the nation's premier low fare air carriers, Southwest Air to Albany's airport. Clearly Governor Pataki's and Representative Sweeney's strategy is working. Prices on some important routes are beginning to drop now that such regional airlines as Shuttle America have been attracted to enter the New York market. For instance, at the Consumer Protection Board we received data that until recently only U.S. Airways offered service between Islip and Albany. However, in July Shuttle America began flying from McArthur Airport in Islip to Albany and Buffalo offering steeply discounted fares.
Since my time is rapidly concluding, what I will do is, I will submit this testimony to the record, and I'm available for any questions that you may have.
Mr. DUNCAN. Well, thank you very much, Mr. Conway. Mr. Egan.
Mr. EGAN. Congressman Duncan, it must have been painful indeed to leave the beautiful mountains, and valleys and rivers of Tennessee, but I hope that pain is diminished by coming to this beautiful and extraordinary part of New York State. Congressman Crowley, I note that it's halfway through the calendar year to St. Patrick's Day, and Congressman Sweeney, thank you so much. You truly have been—.
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Mr. CROWLEY. Excuse me, is that Congressman Sweeney?
Mr. EGAN. A great supporter of the Albany International Airport and this entire region, and we really are grateful to have a treasure such as yourself in public office.
There's three things that I would like to talk about and depart from my testimony because I think the issues are so important and have been so well addressed, frankly, in AIR 21, Congressman Duncan, I'm grateful for that. Especially the emphasis on safety. At Albany we start out with that being the watchword. Safety followed by efficiency, and followed by affordable fares, and we are getting better in each one of those. Especially with AIR 21 support. Safety is going to be enhanced throughout the nation. And I think that's an outstanding move. At Albany one of our major efforts is on the capital improvement of our runways. We have requests in to the Federal government for runway extensions, overrun preparation areas. We have a new ARF Station, an air rescue and fire fighting facility. Our air traffic control tower is on line now, it's brand new, but the equipment in it is recycled equipment. So we are looking at AIR 21 as being a way to enhance safety at Albany even though I remind everyone that it's outstanding now. And finally I think in AIR 21 a little known fact is the increase in funding for research and development, and we think that's a great step forward in terms of promoting safety, but also promoting the efficiency of the air industry. In terms of efficiency, in Albany we have decided that one of the best things we can do for the traveling public is to become more efficient, and that's been done frankly by adding our new terminal, a $72 million facility which allows travellers to move through our airport in a much friendlier way, a much more efficient way, but also our new control tower, our new cargo facilities. We believe that our job is not only to move passengers but to move cargo more efficiently and by doing that we do the one thing we think is important for the business community, and that is to facilitate their business practices to make it better for them to do business in the capital region. So we are doing that. Our new parking garage, I think, is an outstanding example of what can be done to make it more comfortable for travellers. But the one thing we think will add to their comfort more than any other is to reduce cost. And we are doing that in kind of an old fashioned way. It's called the free market.
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We subscribe to the notion that the free market place must work if we are going to drive air fares down. Especially in areas such as the capital region. How have we done that? After we finished enhancing the airport with all of the new facilities, we campaigned and worked very hard to attract lower fare carriers. We were very successful. We made strong commitments to Delta to bring Delta Express to Albany. We made strong commitments to Metro Jet, U.S. Airways, they have come to Albany. Why did we pick those two airlines? We picked them because 24.5 percent of our people travel to Florida. So the fares to Florida have been reduced. We also have attracted additional carriers for the metropolitan New York area. We have 19 flights a day to metropolitan New York, to Newark, Kennedy, and LaGuardia. Those flights by Trans State Airlines and Trans International have also served to give better service, but also to reduce fares. Finally one of the big victories we were able to achieve was by bringing Shuttle America to a very expensive route of ours, Albany to Buffalo. When we brought Shuttle America to Albany, they started their fares at $49 against a major carrier's fares of $250. Clearly dramatic things occurred. Immediately the major carrier lowered their fares on some seats to match the low fare carriers fare. Now I have two charts here, and I wanted to hold them up so that I could hide my own face, but I think you can see from way over there the difference in ''before competition'' and ''after competition''. That's what it looks like. I have got another chart that shows the same situation. This is Orlando. The same situation upstate. I believe you heard that in other testimony this morning, and you know competition will drive fares.
Finally what have we done in terms of the big leagues? We have managed to accomplish what we wanted to accomplish on selected routes, but we must hit a home run, and that home run must be to attract a major low fare carrier to the capital region. We have been assisted in this. I just can't tell you how immeasurably we are beholden to Senator Joseph Bruno because when we embarked on this whole rebuilding program of the Albany International Airport, he provided us over $40 million start-up money. When we approached him about the need for a low fare carrier on major routes throughout the country, it took 24 hours for him to make the decision to provide us the money to build the additional jet ways and additional space costing some $6.2 million. I'm happy to say that that work is under way, and in a few short four months we have accomplished what we promised the Senator that we would do. So that space is now coming on line in October. It will be ready for a low fare carrier. We are discussing the possibilities of Albany in a very delicate negotiation with a number of airlines. Some have been mentioned in other testimony, but let me assure you we are going to win having a major low fare carrier in the capital region.
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But I have to say to you Congressman Duncan, Congressman Sweeney, Congressman Crowley, it is due to the support we have received from virtually every business person in this region. They are anxious to see this happen. Every elected official, and most of all, the people of the capital region. So I thank you for giving us an opportunity to talk with you this morning. I would be very happy to answer any questions later. Thank you.
Mr. DUNCAN. Mr. Egan, thank you, and I am pleased that you emphasized safety, and that you mentioned that. We were very proud of the 615,000,000 passengers that I mentioned earlier that flew commercially in this country last year. There was not a single commercial fatality, and we hope we can keep that up for a long, long time. And it's an amazing statistic that not many people know, but unfortunately more people are killed in four months on our nation's highways than have been killed in all U.S. aviation accidents combined since the Wright brothers flight in 1903. And most of those have been killed in the smaller general aviation planes, but even there we are doing so much better. And people are hundreds of times safer flying than they are driving to a meeting like this morning's. But it's a great record, but we also need to—we all need to work on it and try to make it even better. But thank you very much.
We now are pleased to have Senator Owen Johnson with us. Senator Johnson.
Mr. JOHNSON. Thank you, Chairman Duncan, and, of course, Congressman Sweeney, my good friend John Sweeney, and Joe Crowley. We miss you all in Albany, but you are doing a great job and we appreciate you inviting us here today.
I'm Senator Owen Johnson. My district is the 4th Senate District. It's in the towns of Babylon and Islip on Long Island--the home of Long Island MacArthur Airport where, until recent competition arose, you could fly to Ireland for the weekend cheaper than you can fly to Albany and back; or fly to Las Vegas and save a little money. But, of course, that doesn't count going to Las Vegas because we weren't allowed to do that. Not unless we drive three, four, five hours each way, each of our members, because it's cheaper to drive up than use the convenience of an airline because of the cost.
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In the Senate, I serve as the Vice President Pro Tempore, and among my appointments by Majority Leader Joe Bruno, the most famous graduate, I think, or in my estimation, of Skidmore College, is membership on the Task Force on Upstate Airports, which is chaired by Senator Ron Stafford who, unfortunately, couldn't be with us this morning. Also I am a member of the Senate Transportation Committee and have served as its Chairman.
The purpose of the Task Force on Upstate Airports created in 1997 was to seek ways in which to make travel to and from upstate airports more competitive. Anyone who has ever tried to fly out of airports in this region of New York knows that it's substantially more expensive compared with the cost of similar destinations out of airports in the metropolitan region. This is borne out by the U.S. Department of Transportation figures, as well as our own experiences, which show that flights to and from airports across upstate New York carry some of the highest air fares in the country.
Upstate New York has a history of losing major businesses due, in large measure, to service inadequacies and costs involved in air travel to and from the region. Consequently, the Task Force is charged with the responsibility to investigate why it costs so much more for flights to and from upstate airports; what action we could take to make these fares more competitive for flights of similar duration at other airports around the country. By finding ways to attract more air carriers to upstate airports, we can create more competition, bring ticket prices down, increase air travel, and retain and create more jobs in the region. Other issues under the jurisdiction of the Task Force involve airline safety, service and consumer satisfaction, and recommending funding for airport improvements to promote economic development opportunities.
Since its inception, the Task Force held a series of meetings, including major industry representatives, airport managers, officials of small low-fare airlines, the State Attorney General, and the Executive Director of the Port Authority of New York and New Jersey. While gaining much insight into the problems and potentials of New York's upstate airports, two general themes constantly emerged Competition is a key factor in ticket pricing, and more flight availability from upstate airports to the metropolitan New York City area would encourage the location of more airlines and greater competition in the region. Access to gates and other facilities in major cities is critical to the survival of start-up air carriers. Smaller airlines have complained of being frozen out of major hubs because of high fees, problems getting gate slots, and claim they are subject to frequent reassignments to inconvenient gate locations. Also, there's evidence that some major airlines are engaging in unfair competitive practices.
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We are pleased that these issues are currently being addressed by the Subcommittee, the FAA and the U.S. Department of Transportation. It is also encouraging that airlines, such as Southwest and JetBlue Airways, with assistance from federal, state, and local elected officials, are getting closer to setting up operations in upstate New York; and it was mentioned Shuttle America just started flying from the metropolitan area including Long Island MacArthur, which should be very helpful to people on Long Island.
We on the Task Force applaud the efforts of Congressman Sweeney and others to promote solutions to these problems on behalf of our mutual constituents and the State of New York. Also we wholeheartedly support the enactment of the Aviation Investment and Reform Act for the 21st Century to ensure more federal funding for aviation related projects.
You will be pleased to know that the New York State Senate Task Force is doing its part to enhance service and lower the cost of doing business in New York. The Aviation Investment and Reform Act would complement a budget initiative I helped develop with the Senate Majority that creates the Airport Improvement and Revitalization Program within the Department of Transportation to provide capital and technical assistance for airports through grants and loans. The program will receive start-up funding of $2.5 million for state fiscal year 1999-2000. In addition, Senator Bruno has provided funding in the state budget to help finance a $17 million terminal and parking expansion, which you have heard about, at Albany International Airport designed to provide room for new carriers. Also, the enacted 1999-2000 tax cut plan reduces the airline allocation factors used in determining airline net income allocable to New York. This adjustment will result in an anticipated tax savings for the airline industry in New York of $3 million beginning in 2001.
In addition the Senate continues to be a strong advocate for eliminating New York's petroleum business tax on jet fuel to further reduce the cost of doing business in the state and lowering air fares. This tax, which is unique to New York State, directly impacts one of the airline industry's major expenses--kero jet fuel.
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On behalf of Senate Majority Leader Joe Bruno and the Task Force members, it is our collective hope that this hearing, appropriately held in upstate New York, will result in positive action on the part of Congress, the Department of Transportation, the FAA, the airlines, and the major cities and hub airports. It should be our mutual goal to improve competition, lower air fares, and enhance safety and service on behalf of those who live in and around the smaller cities in Upstate New York and the passengers who, for business or pleasure, seek reasonably priced air travel.
Thank you all very much for having me here and any questions you would like answered, I would be happy to answer later.
Mr. DUNCAN. Senator Johnson, thank you very much for being with us. I understand that you have been in the State Senate for about 27 years now, and I have to tell you that I have tremendous respect and admiration for anyone who, in this day and age, can stay in elective office that long. That is becoming very rare. I know a couple of years ago about 60 percent of the U.S. House was new just within the last four years, and there is—I don't know what that percentage would be today, but there's more turnover in elected office today—greater turnover than at any time in our history. Yet many people do not realize that. I think you must be doing a lot of things right. But we are pleased to have you with us today.
Mr. JOHNSON. Chairman Duncan, I understand you have only two dozen years in your position, is that correct? Well you'll catch up. Thank you.
Mr. DUNCAN. Mr. Dikun.
Mr. DIKUN. Thank you, Mr. Chairman, Mr. Sweeney and Mr. Crowley. I would like to thank you for conducting this hearing on the issues concerning air service to Upstate New York. When I was asked to testify before you, I conducted an informal survey of the prominent airline users in the area served by Adirondack Regional Airport. The information I obtained in preparing for this hearing was most enlightening, and the statements I received from the travel and business community of the northern Adirondacks were consistent. You can't get here from there, and if you can, it costs too much.
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Before I expand on the issue we are here to discuss, I need to make two corrections to my written statement. The first correction has to do with passenger enplanement at the Adirondack Regional Airport. Our enplanements for the first eight months of 1999 were 3,603 and not the 2,912 as reported in my statement. This indicates a downward trend of 4 percent and not the 19 percent I compared it to. The second correction has to do with my statement concerning cancelled flights. I provided the station manager for Commute Air at Adirondack Regional a copy of my statement and she forwarded it to Mr. Andrew Price, the President of Commute Air, the only airline serving Adirondack Regional. Mr. Price telephoned me to correct the statement that cancelled flights were also a major cause of reduced service. Mr. Price informed me the number of Commute Air cancelled flights for air traffic control, weather, and mechanical problems actually declined since 1998. The implication of cancelled flights is understandably a sensitive issue to airlines, and I do not wish to imply Commute Air is unreliable in any way.
As a new residence of what is referred to as the North Country, I'm always amused with the perception that upstate New York is anything north of Poughkeepsie. I drove a hundred miles to get to this ''upstate''—a hundred miles south to get to this ''upstate'' community where we are holding this hearing.
The issue of air service in upstate New York takes on a whole new meaning when you are talking about the sparsely populated northern Adirondack region. It's interesting to note in my written statement I use Albany as my comparison base to indicate the high cost of flying in Upstate New York. To put things in perspective Adirondack Regional Airport loses a majority of our potential traffic to Albany. And that's because of fares.
After my discussions with the major area businesses that would like to utilize Adirondack Regional more, I am convinced we are missing the opportunity to provide a convenient and affordable alternative to the current air travel situation. The question we are here to address is can we improve air service and reduce costs while preserving a reasonable profit for the carrier. I believe we can, and the solution may lie in two totally different directions. The first direction may be to work hard to help Commute Air the airline serving Adirondack Regional to expand to the metropolitan New York market with slots to LaGuardia or Kennedy on a daily basis.
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Mr. Mitchell Smith, the Vice President of Finance for the American Management Association in Saranac Lake has indicated the number one deficiency in regional air service in northern New York is the lack of direct New York City flights. It is my understanding Commute Air has requested government assistance to obtain slots into LaGuardia, and I fully support this request. According to Mr. Price when Commute Air operated weekend flights to LaGuardia, the airline saw average air craft load factors in excess of 75 percent. Mr. Price indicated these load factors are three times the load factors generated on Commute Air flights to Newark. Obviously, direct access to New York City airports is what the airline customer in northern New York wants. Hopefully if Commute Airlines gains access to the New York City market and operates it's aircraft at high load factors, the price will come down. With profitable load factors it would benefit Commute Air to direct additional resources to the upstate New York market. Commuter access to LaGuardia or Kennedy may help with two of the three problems I have identified, flight availability and cost. It will do very little for the third problem which has to do with seat availability and larger aircraft.
The second direction to investigate is competition, as everyone else has indicated. The hidden key to improved air service in northern New York may well be the demand influenced by the Olympic Association of the Lake Placid region. The travel needs of athletes, officials, spectators and trainees coming to the Lake Placid region are unique to such a small airport. Large numbers of people wanting to travel at the same time to the same destination is not a difficulty for metropolitan airports. But it does create unique problems for Adirondack Regional. I believe the question is whether an airline can profitably operate into Adirondack Regional year round with service that is capable of meeting the special demands of the events scheduled for Lake Placid. It may be possible, especially if the airline can provide the factors now in question. If a flight schedule allowing the business traveller and tourist alike to make necessary connections through a major hub such as LaGuardia, Kennedy or Dulles International. The second factor is air craft of sufficient size to transport 30 or more passengers and their baggage at the same time. A job well suited to the regional jet. And ticket pricing that allows people to fly directly to the Lake Placid region, rather than flying to destinations two or more hours away by ground transportation. Adirondack Regional loses traffic to Albany International, loses traffic to Burlington, and it loses traffic to Montreal's Duval all because of fares. People are willing to drive that extra distance just to save $200 to $500 to $600 depending on where you are going and how early you purchase your ticket.
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The solution seems very straight forward, but it is a classic case of the chicken and egg. The current market is small due to the problems that I have identified. The market has the potential to expand, but at what rate? If a competitive market exists, but the expansion is too slow, the airline may not be able to afford to maintain service in anticipation of this increased traffic.
Can the airline begin service with the schedule, pricing and seats necessary to recover the market that has disappeared? Or will it need to slowly cultivate the market? Market studies may help influence the airline decision. Introductory offers may lure customers from other markets. In the end we all know it will be the bottom line that decides if airline service in northern New York can meet the demands of the market while maintaining profitability for the airlines. I strongly support any efforts to bring improved, affordable air service to upstate New York, and will assist in any way I can make it possible.
I would like to thank you for your time, and especially for your efforts on behalf of America's air service with the AIR 21 bill. And I welcome any questions that you may have.
Mr. DUNCAN. Well, Mr. Dikun, thank you very much, and I do appreciate that several of you have made favorable comments about AIR 21. And I did mention before Congressman Crowley came in and possibly some others that AIR 21 probably does more for small or medium sized airports than any legislation in the history of the Congress. And I would say that that's going to be taken up some time either this week or next by the Senate. And I know that everyone in here knows people who know senators either from this state or even from other states, or you know people in this industry in other states, and you should encourage them to contact their U.S. Senators about this legislation, if you do support it.
I have several questions I could ask but I will ask just a couple because I primarily want to turn to Mr. Sweeney and Mr. Crowley.
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Mr. Coleman, we are going to hold a hearing some time probably in late October about competition within the industry. We have looked into that some in the past, but in this hearing we are going to focus particularly on the problems of the new or low cost start-up airlines. You mentioned that the Department is still working on the competition guidelines. I was told at one time that those would be coming out about the first of October or something like that. Are those guidelines close? Can you tell us what the status is and also along with that it seems that in most industries everything is going to the big giants and we are consolidating and the big keep getting bigger, and the small go by the wayside. Are we tilting at a windmill? You know, I told you flying up I think it would be good if we had twice as many airlines as we do, but do you think that 10 or 20 years from now, are we going to have fewer airlines than we do now? Are we fighting an impossible battle?
Mr. COLEMAN. Let me take your second question first. The issue of the new alliances among the major airlines is something that we are very much concerned with, and I think both the Department of Transportation and the Department of Justice are already in the process of looking at the long term consequences of those alliances. We will be—I can say for the Department of Transportation, we are looking at that issue very closely.
The underlying premise of looking at that issue is that without a growing number of airlines we are not going to have price competition. We just have boundless empirical evidence of that already, and that's what a lot of the testimony is about this morning.
The first issue on where we are on the competition guidelines with the Transportation Research Board's report contains a great deal of very informative commentary including an outline of their views on problems that are impairing the competitiveness of the whole industry. And we are in the process of preparing a response to the Transportation Research Board's report. That will be done very shortly, and then when that is concluded, we, the Department, will be turning to taking final action on the guidelines.
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Mr. DUNCAN. When you say very shortly, do you have any rough guess as to the time? Are you talking about a few days, few weeks, few months?
Mr. COLEMAN. I think that the response to the Transportation Research Board's report actually was required to be done within 60 days following it's issuance. So by the end of this month I believe we should have a response to that.
Mr. DUNCAN. Mr. Egan, you said competition works and in the free markets, obviously, all over the world it's been proven that the free market is the best thing in regard to anything. I know that in the few places where we have competition in the cable t.v. industry, prices are probably half of what they are where there's no competition. I know in Washington we pay a quarter for the newspapers, and most cities where there's not a second daily newspapers, it's 50 or 60 cents.
But you said that you have been working very hard to get other airlines and get competition here in Albany. What have you been doing along that line, and what has enabled you to succeed where you have succeeded, and what have been the biggest problems or road blocks you have run into where you haven't been able to attract a new airline?
Mr. EGAN. I think one of the most difficult things, Congressman, is the predatory practices that have occurred by some of the major carriers when we do encourage a small start-up carrier in particular to come into the region. The thing that we have done is gotten ambitious with our marketing, and we talked about all of the passengers that are out there that are not flying now but will fly if the fares are reasonable. We believe that in the capital region there's another 10 percent increase in our enplanement possible if we offer more attractive fares. People will go see Aunt Helen or Uncle Joe 500 miles away, if the fares are reasonable, for a weekend.
So we think that what we have to do is do a better job of marketing and a better job of selling. We also think that in selling the carriers on the advantages of some of the new aircraft servicing Albany. We anticipate our first regional jet here by Continental Airlines in November. That is going to make it pleasanter and more efficient for people to fly. We think that that particular airplane is going to have a strong impact on the industry in general. So the things we are doing are just out there in the trenches and slugging it out and showing them that this capital region has a latent passenger base that we have to provide the service for.
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Mr. DUNCAN. Well, Continental Airlines has recently announced they were going to put their new regional jet maintenance facility in Knoxville. So I hope that service does well. Mr. Sweeney.
Mr. SWEENEY. Thank you, Mr. Chairman, and I want to thank all of the panelists for their fine testimony, and you really are lending a service in terms of providing perspective. To my friend Mike Dikun who travelled a hundred miles to be here from the north country, all I have to say to you, Mike, is travel about 170 miles south and that's the end of this district. So welcome to the 22nd.
While I'm having this conversation with Mike and John Egan, I want to in part make a point, and in part ask a question. And the point is that we have been in—each of the panelists have actually been very important in my development as an aviation person in Congress. And Mr. Egan just talked about the predatory pricing practices as a major concern and a problem. We have had that conversation at length. That's why I introduced HR 1678 which is the Predatory Pricing Bill, which will forbid or ban the major airlines from doing so.
We spoke as AIR 21 was being discussed and marked up in the House Transportation Committee about some of the needs for the region. Both Mike Dikun and John Egan pointed out that regional jets offered us an opportunity for almost immediate competition options. I know my friend and colleague Joe Crowley had a real concern about slot exemptions and it's effect on his district and LaGuardia Airport. And also made the great point to me that LaGuardia already has some pretty inordinate delays. And, therefore, extending slots to LaGuardia or JFK, frankly, wasn't the simple answer to our problems here in upstate New York, and that regional jets may afford an opportunity. So language relating to regional jets was included in. I know, John, you just spoke a little bit about the affect of regional jets and how it will diversify the operations.
Mike, I would like to know, and you briefly touched on it's effect, the opening up of unlimited slots for regional jets, what it's effect and opportunities will afford for the smaller airports in upstate, and in particular in this region. And, John, maybe just talk a little bit about what's the very near future and the opportunities that would exist?
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Mr. DIKUN. The regional jet is an aircraft that—for Adirondack Regional because we are so far up north, the speed of the aircraft benefits the more distant legs that are now served by turboprops because after visiting with Market Analysts for Atlantic Coast Airlines, they indicated that when you reach a leg of travel that is about what Saranac Lake is from Dulles International, they are reaching an economy of leg that equals or actually betters the turboprop services. So depending on where your destination is, the distance of the leg indicates that the regional jet is the aircraft of choice. Not only is it faster and more efficient for that length of travel, it also carries more people. And the one thing that I consistently heard from especially the Lake Placid region in my interviews, was that they have the need for numerous seats, not 19 at a time, three times a day. They need 30 or 40 at a time because of team travel, conventions, meetings, fairly large groups that want to come to the area. And if those seats aren't available, they are going to go elsewhere.
Mr. SWEENEY. Is it not true that the opportunity that will really be afforded with the expansion of the regional jets or access to, is that we can have an immediate impact on regional competition, or else the opportunity for a an immediate impact?
Mr. DIKUN. I don't think there can be any doubt about the fact that the regional jet offers the opportunity to expand a service to a great many markets that currently are suffering for the lack of seats, the lack of flight availability, and the time involved in travel. If you can get some place quicker, we have the option of many more connections as compared to what exists right now.
Mr. SWEENEY. And that would be same for you, Mr. Egan, as well?
Mr. EGAN. Yes.
Mr. SWEENEY. Let me move on because we do have a limited time and I have a lot of questions.
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One of the other areas we spoke about in this discussion is AIR 21 being debated. Chairman Duncan was incredibly helpful in making sure this occurred. We had, essentially, the definition for underserviced airports changed. And that afforded us the opportunity to access and to accrue about $45 million annually earmarked for underserviced airports by Mr. Coleman's Department of Transportation. That came from conversations we each had.
Can you tell me, Mr. Egan, and, Mr. Dikun, what plans have you begun—how has that effected your planning and what opportunity will that afford the Albany Airport and the Adirondack Regional and some of the other smaller airports because my understanding is many of the airports now, the regional airports in the district will receive an increase in aid annually.
Mr. EGAN. I think in terms of Albany, Congressman, the big thing it will let us accelerate our capital plan for safety improvements and also facilities. And I can't discount the need for the facilities. Safety improvements are critical to us, but the facilities that are necessary to accommodate a diversity of aircraft are going to be very, very important to us, and we are talking to a carrier, and Continental is a good example. To attract their regional jet we constructed a jetway specifically for them and that was the difference but the facilities that are necessary to accommodate the diversity of the aircraft are going to be very, very important to us. When we are talking to a carrier, and Continental is a good example. To attract their regional jet, we constructed a jetway specifically for them. And that was the difference between their bringing their regional jet in and not bringing it in. I hasten to add, we don't kid ourselves. We are never going to be an Atlanta, Chicago, New York City. We are always going to be putting as many passengers on aircraft as we can, but that's going to be driven by the economy of this region. And if the economy improves, we are going to improve our enplanements. We are five-and-a-half percent this year. I think that's an indication of what you have been striving for. That is a healthy, vital economy here.
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Mr. DIKUN. To echo Mr. Egan, I would like to reiterate that the safety and facilities are extremely expensive, infrastructure, capital improvements at airports. For Adirondack Regional we have in the past six months to eight months received two very important grants from the Federal Aviation Administration AIP Fund. The first was for an aircraft rescue and fire fighting vehicle the size and capability to prepare us for regional jets. The second was for new snow removal equipment to help maintain our airport to a level of safety that would benefit the regional jets.
You asked what other aspects of the underserved airports could benefit us. Again, to echo Mr. Egan, the first would be runways and ramp space. Our runway at Adirondack Regional is—the instrument approach is 6,573 feet long. Regional jets basically require at least 7,000 feet. I would prefer to see about 7,200 feet to add an additional margin of safety. That allows them year round, all weather capabilities to allow them to depart out of the airport. The other aspect, again, is if you have the larger aircraft, how do you meet their needs at the terminal? And that requires specific facilities that are not designed for the commuters that we have now. So if you can find the funding, I won't have any trouble spending it.
Mr. SWEENEY. I'm going to ask one more question, and then let Mr. Crowley and the Chairman ask their questions. And if it comes back, I will have others because I have many of them for each of you.
Let me just say this. When you asked us to continue the work and help you with your problems, you have my commitment that you are a great priority, and Ulster is an important part of this region. We don't want to lose you. We want to give you all the resources that you can possibly have to not only stay here, but to grow here.
Senator Johnson, you and Senator Bruno have been unusually important to this region. I have heard from a number of folks resulting in effect what it's meant to the Albany International. I know that my colleagues Jack Quinn and others—Jim Walsh, all understand that the Senate has been a real leader, and I thank you. We are going to continue to work with each other.
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Let me ask one very quick question of Mr. Coleman, and then I will pass it on, and hopefully it will come my way. For the—for those in attendance here who may not understand the function of slots, if you could very succinctly and briefly just give us an oversight on that. And my fundamental question is, I understand that there are more unused slots out there. Two parts to the question. If there are, how many are there? And what are the determinations that would go into the Secretary releasing those slots? Number two, as I understand it as well, some of the major airline carriers are in possession of slots allocations and they don't use them. Is there anything that can be done to alter that state of affairs so that we could possibly bring in low fare carriers?
Mr. COLEMAN. I will try to be as brief as I can. A slot is a time that's reserved for take off and landing. There are four slot controlled airports in the United States. LaGuardia and Kennedy, O'Hare in Chicago, and Reagan National in Washington. The gist of a high density rule places a limit, but this is a rule that goes back thirty years, places a limit on the total number of slots per hour that may be operated in any of these airports. There have been, of course, enormous technological advances over the past couple of decades. So that the premises and study that went into creating this high density rule in the first place have to some extent been alleviated. And there is more room now at slot controlled airports for operations. But the high density rule does exist. In 1994 Congress gave us—gave the Department of Transportation the power to exempt—to make exemptions from the high density rule and we have done that. But there's a limit to the extent that we can do that as well, and that is primarily because of environmental concerns which we also have to be very sensitive to the environmental concerns including noise and quality of air. And so we have done environmental assessments at the three major—two airports in New York and Chicago O'Hare, and have concluded that at Chicago a total number of 60 additional operations a day; at LaGuardia a total of 30 additional operations a day; and at Kennedy 75 additional operations per day would not have, technically, would not have an adverse effect on the human environment.
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That's not to say you could not go give exemptions higher than those levels, but in order to do so, we would have to do, at some time, an environmental assessment.
Those numbers we have already hit. We have issued exemptions to airlines to operate those total numbers of operations. So there, at this time, are no additional slot exemptions available to be given. Unless either there is further legislation, or we do issue an additional number.
Mr. DUNCAN. Thank you, Mr. Coleman. What we have gone to is—-- Stage 3 aircraft in this country. So actually you have more flights now, but less noise than you did 30 years ago or so when some of these studies were first made. We have been told at other times that as far as Mr. Sweeney mentioned the slots are not all being used. Some of the major airlines have, let's say they had for example, slots one through five, let's say, and they would use one, two, three and five one day; one, two, three and four another day. And so they can claim that they are using all their slots, but they weren't using them all on every day. So it's some of that that's come out, is that correct?
Mr. COLEMAN. Yes, it is and that's another very valid concern. We have talked with Robert Kelly of the New York Port Authority, for example, about what the slots are being used for, whether or not some of them are being held by many airlines, are being babysat and not effectively used. We have done some internal study of that as well. I'm not in a position to give you numbers, but our conclusion is that that is an issue and there should be some room for more effective use of slots being held and that's an issue we should continue to look at more closely.
Mr. DUNCAN. I'm going to give the remaining time to Congressman Crowley.
Mr. CROWLEY. Thank you, Chairman Duncan. And I don't know how much of the time I will use. I know Mr. Sweeney wants to ask some additional questions.
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First of all, let me say that, again, I'm very happy to be here. Having been elected in November of last year it was my desire to be on the Transportation and Infrastructure Committee, and to quite possibly serve on the Subcommittee. Needless to say that didn't pan out, although—but here I am today at a Subcommittee hearing asking these questions anyway.
One of the reasons why I wanted the appointment was because I mentioned earlier, I represent LaGuardia Airport in my district. And you have talked about—you have touched upon, Mr. Coleman, just a number of issues that are of concern to people in my district. We have the most densely populated area where an airport exists in the United States at LaGuardia Airport, in the City of New York. And the concerns of people who live around that vicinity, including myself, I live near Runway, in the path of, I think, its Runway 4. There are only two runways at LaGuardia as opposed to a number of runways at Kennedy Airport. And I don't want to spend all my time talking about the concerns and problems of people who live within the region and the area of LaGuardia Airport, but just to make a point, despite the fact that technology has gotten better, and that things are moving forward in terms of Stage 3, and there's a movement that myself and a number of other members are moving towards pushing the envelope toward Stage 4, whatever that maybe. When you live in the path of a runway, no one wants to hear about whether it's Stage 3, Stage 4, Stage 5, or Stage 20. It's never going to be good enough. And so part of my responsibility is to represent my constituents and at the same time recognize the need for people in upstate New York to have access to the City of New York. And to bridge the divide that I think has been sorely sustained—created and sustained over the years of upstate-downstate New York, that I think this problem most recently has widely divided, I think, in terms of upstate towards New York City.
I can't speak for JFK Airport. I dare not. I may be representing that area some day as well depending on how these districts change in the future. But there is, I'm told, less of a concern, more access possibly to JFK to have the ability to handle a little more. And I think that may be the move by which we open up the City of New York to upstate regions. The fact that I have been told that LaGuardia is, if not at it's capacity, then close to it's capacity. Theoretically you can have as many slots as you want. We will just still have people on the ground at LaGuardia Airport or in the air circling, waiting to land at LaGuardia.
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What happened to me today this morning in my attempt to get to Albany on time. We stayed on the runway—departed from the gate, but stayed on the runway for quite a few minutes before taking off. Additionally, in my experience leaving from National Airport in Washington flying to LaGuardia is that we can circle around Philadelphia for an hour or two hours sometimes before we land—before there is an opening at LaGuardia Airport. The compromise that I think that was reached with AIR 21 with Chairman Shuster, and I think having taken into consideration the needs of upstate New York and the needs for downstate in terms of New York in my district particularly was to open and have access to regional airports—regional jets.
And, Mr. Dikun, I just want to ask you. You mentioned Commute Air? What type of airplanes are they using right now or jets are they using right now?
Mr. DIKUN. Commute Air flies Beech 1900 twin engine turboprops, 19 seat Beechcraft.
Mr. CROWLEY. What is the size of a regional jet?
Mr. DIKUN. It depends on the aircraft. They range from 32 seat Dornier's up to 70 seat Canadair regional jets.
Mr. CROWLEY. Do you believe that the use of regional jets would suffice in terms of your access to New York City given the fact that in this AIR 21 bill there is basically open access for the regional jets into LaGuardia Airport?
Mr. DIKUN. I believe that regional jet access to New York City would be a tremendous boon to upstate New York. Especially the northern Adirondacks.
Mr. CROWLEY. Do you think the market exists to sustain that?
Mr. DIKUN. Well that's a little dicey in the sense that it is a sparsely populated area. The key to the northern Adirondacks is the Lake Placid region and the events and special events that the Lake Placid region not only hopes but hopes to host. I spoke to Mr. Jim Goff(sic) who is the Director of Events for Lake Placid, and he says—he told me if we could find a way to guarantee accessible, affordable air service of 30 to 40 seat aircraft to within 15 miles of the Lake Placid region, he could plan the venues of Lake Placid almost year round. He said people love to come to Lake Placid. They simple can't get there. And so with improved air service to that region, there is a very good chance that the market could support it, and actually be profitable. Again, it's a kind of the chicken and the egg. Which comes first, the market or the service. But it needs to start somewhere, and regional jets would—I mean that would be a God send.
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Mr. CROWLEY. Mr. Egan, would you agree with that?
Mr. EGAN. Yes. Also something you mentioned, Congressman, the noise factor. Especially in a place like LaGuardia, the turboprops require more maintenance. We maintain them at night, we run them up at night, we constantly hear from our neighbors. But by using regional jet, we lessen the impact in terms of the immediate neighborhood.
Mr. CROWLEY. Let me just ask you this one last question. Can you indicate to me whether you would support or not support AIR 21 as—the House version right now? Are you supporting AIR 21? It's just a House version right now?
Mr. EGAN. We are supporting the House version and we think the House version is much stronger than the Senate version. We believe that it is far more helpful and productive to the smaller and mid-sized airports.
Mr. CROWLEY. Is that universal?
Mr. DIKUN. I'm totally in agreement with that. It's a critical issue. Funding for smaller airports is a constant battle. We oftentimes don't have the municipal support that's necessary to maintain an airport to the level that it needs to be maintained. And AIR 21 takes great steps towards alleviating some of the problem.
Mr. CROWLEY. If I could just make one final comment, and that is, no one is 100 percent happy in my district with the way which AIR 21 came about and with the end result; although I think it was a victory for my district. And I know that John in his discussion with me shared that no one in this area was 100 percent happy with the nonlifting of the high density rule. At the same time I have to think and I think John would probably concur, all in all this is a good bill and I think will go a long way to helping bridge the divide again between upstate and downstate New York, and connecting—Mr. Greenwood spoke about his business up here, not only with New York City but to the entire world.
So I thank you all for your presence this morning and for your presentation.
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Mr. DUNCAN. Thank you very much, Congressman Crowley. I think that we have time for one more question. I'm going to let Mr. Sweeney take it.
Mr. SWEENEY. Thank you, Chairman. Just let me concur with my colleague Mr. Crowley and make this one quick point, and then one quick question to Kevin O'Connor, if I could. And that is that at a time when people don't think there is a lot of work going on in Washington, and certainly not any bipartisanship, I think this is a good example of what happened when AIR 21—what was happening, I think, in the strengthening of the air delegation, people and our colleagues were willing to give up a day off, essentially, although in Congress we never have a day off, to come to a region to participate in this hearing because we recognize the economic future of both downstate and upstate are linked. And this is one of the ways they are linked. And we were able to work out what, I think, is a fair and equitable compromise that potentially gets us exactly where we both need to be.
Kevin O'Connor, I know you mentioned in your testimony that there were a number of your members of your association who you had talked to. I know one in particular because you and I had this conversation. It's a major employer in this area, who some people think I'm too close to, or not too close to, but who have in the recent past moved jobs out of this area. You had a number of delicate, direct conversations with that employer about the issues attendant to why they were leaving the area. And maybe you could relate as a concluding thought those conversations.
Mr. O'CONNOR. Well, John—Congressman, as you know, those conversation are similar conversations that we would have with many other businesses as well. And particularly the businesses that we believe are the future of the capital region, and those are the technology—emerging base, technology companies, manufacturing related technology companies, and that is that their markets are increasingly more global, that they have to have access to points around the world. They don't have the luxury, as Mr. Greenwood suggested, of being able to book travel a month, two months in advance, and we are just simply losing out to other places that have better quality, lower cost air fares, and they are moving to the hubs. Atlanta has become very popular for many of our international companies to look towards. Cleveland, Chicago, and I think that is placing the issue of quality and cost—air service places a glass ceiling on the economic development of this region. And the rather significant investment that we have made in our infrastructure in this region, not the least of which, Congressman, you were with the Governor's office in the Department of Labor, you were very involved with, are going to be somewhat less effective if we do not tackle this issue and do something about it.
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I think John Egan from the Albany County Airport Authority has done some great work. We are trying to introduce competition into this market, but we are not there yet. We need a major discounter here, and we need that to place price competition on other airlines in this market, or we just simply will not grow the economy of this region. And we will continue to be a primarily public sector dominated region.
Mr. SWEENEY. Thank you. Thank you, Mr. Chairman. I especially wanted to thank you for conducting this hearing in this district and allowing us to focus the needs of this region into the Congressional record. As we know, the conference on AIR 21, I'm very confident that with this information added to it, there will be a greater effort to help bring competition to this area. I thank you very much for your time and efforts here.
Mr. DUNCAN. Well, thank you. I had a very nice time. I always learn a lot when I get out of Washington and come to other parts of the country and hear firsthand the problems and the needs. I want to thank each of the witnesses. You have made this a very informative hearing and very, very helpful to us. And that will conclude this hearing. Thank you very much.
[Whereupon, the subcommittee was adjourned.]
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