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             PRESIDENT CLINTON ANNOUNCES ACTIONS TO IMPROVE
                   AIR TRAVEL FOR AMERICAN CONSUMERS
                            December 7, 2000

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

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

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

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

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

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

Designation of Business and Labor Leaders to Oversee Air Traffic PBO: Secretary of Transportation Rodney E. Slater is designating five distinguished individuals for appointment to the Air Traffic Services Subcommittee of the FAA's Aviation Management Advisory Council. Congress created the five-member Subcommittee in recent legislation. It will function as a board of directors, overseeing the management and budget of the Air Traffic Organization and ensuring that it becomes more customer-driven and performance-based. The designees are:
John J. Cullinane, President, The Cullinane Group
Nancy Kassebaum Baker, former U.S. Senator from Kansas
Leon Lynch, International Vice President, United Steelworkers of America
Sharon Patrick, President and COO, Martha Stewart Living Omnimedia, Inc.
John W. Snow, Chairman, President and CEO, CSX Corporation
DOT/FAA Federal Review of Impediments to Airport Congestion Pricing: The President is directing the Department of Transportation (DOT) and the FAA to review the statutory and regulatory impediments to the use of congestion pricing and other market mechanisms to provide for more efficient use of existing runway capacity and encourage the creation of new capacity. For instance, charging airlines more to land at airports during peak hours could reduce congestion and delays. The FAA is already looking at options for congestion management, including market mechanisms, to reduce delay at LaGuardia Airport. DOT and FAA should expand that effort and seek statutory relief where appropriate.

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

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

Congress should replace the excise tax on passengers with authorization for the Air Traffic Organization to set cost-based charges on commercial users of the air traffic control system. (General aviation should continue to pay the fuel tax.). The Air Traffic Organization must be able to price its services, in order to balance supply and demand in the short run and meet customer demand in the long run.
As soon as the Air Traffic Organization is fully financed by cost-based fees, Congress should allow it to borrow funds from Treasury or on private markets to finance long-term capital investments. Fees would replace direct appropriations for capital, and would enable debt financing of needed capital investment.

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AIR TRAFFIC SERVICES SUBCOMMITTEE DESIGNEES

Nancy Kassebaum Baker
Former U.S. Senator Nancy Kassebaum Baker will be designated for appointment to the Air Traffic Services Subcommittee for a three-year term. She currently serves on the Board of Trustees for the Robert Wood Johnson Foundation and the Kaiser Family Foundation. She also chairs the national advisory committee on rural health to the Secretary of Health and Human Services and is on the Board of Directors of the National Committee on U.S.-China Relations, the African Law Institute Council-ABA, the International Medical Corps and Handgun Control. During her three terms (1979-97) as a U.S. Senator from Kansas, Senator Kassebaum served as chairperson of the Subcommittee on Aviation, the Labor and Human Resources Committee and the Subcommittee on African Affairs. Senator Kassebaum received a bachelor's degree from the University of Kansas and a master's degree from the University of Michigan.

John J. Cullinane
John J. Cullinane will be designated for appointment to the Air Traffic Services Subcommittee for a four-year term. Mr. Cullinane is president of The Cullinane Group, Inc., and was the founder, president, CEO and chairman of the board of Cullinet Software, Inc., a pioneer in the computer software industry. He was a Fellow in the Center for Business and Government at the John F. Kennedy School of Government at Harvard University and also organized and chaired a series of seminars sponsored by Harvard University for CEOs. An investor and board member in a number of emerging software companies, he has worked extensively with the Irish software industry, and has promoted economic development in Northern Ireland. Mr. Cullinane graduated from Northwestern University.

Leon Lynch
Leon Lynch will be designated for appointment to the Air Traffic Services Subcommittee for a five-year term. Mr. Lynch is currently serving his sixth term as international vice president for human affairs for the United Steelworkers of America (USWA). In this position, he oversees the union's civil rights and human rights efforts. Mr. Lynch was elected in 1995 to the AFL-CIO Executive Council. He frequently represents the USWA and the AFL-CIO at conferences of the International Labor Organization and in international labor matters. President Clinton appointed Mr. Lynch to the Advisory Council on Unemployment Compensation, and he is a member of the executive committee of the Democratic National Committee, chair of the A. Philip Randolph Institute, president of the Workers Defense League, a board member of the National Endowment for Democracy and a member of the Labor Roundtable of the National Black Caucus of the State Legislators.

Sharon Patrick
Sharon Patrick will be designated for appointment to the Air Traffic Services Subcommittee for a four-year term. Ms. Patrick is a co-founder and the president and COO of Martha Stewart Living Omnimedia, Inc., as well as a member of the corporation's executive office and board of directors. Prior to her current venture, Ms. Patrick served as president and CEO of Rainbow Programming Holdings, Inc. Previously, she was a partner of McKinsey and Company, an international consulting firm, where she led a team that conducted a comprehensive management review of the U.S. air traffic control system. This team investigated problems underlying the Professional Air Traffic Controllers Organization (PATCO) strike and recommended actions for improvement that were subsequently adopted. Ms. Patrick received a bachelor's degree from Stanford University and a master's degree from Harvard Business School.

John W. Snow
John W. Snow will be designated for appointment to the Air Traffic Services Subcommittee for a three-year term. He is currently chairman, president and CEO of CSX Corporation, a transportation company that provides rail, container-shipping, intermodal and logistics services. He has served in senior executive positions with the company since 1977. Mr. Snow previously served in the U.S. Department of Transportation as Administrator of the National Highway Traffic Safety Administration (1976-77), Deputy Undersecretary (1975-76), Assistant Secretary for Governmental Affairs (1974-75), Deputy Assistant Secretary for Policy, Plans and International Affairs (1973-74), and Assistant General Counsel (1972-73). Mr. Snow received a bachelor's degree from Kenyon College, University of Toledo, a doctorate in economics from the University of Virginia and a law degree from George Washington University Law School.

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