WASHINGTON, DC -- Senate Commerce Committee Chairman Ted Stevens today gave the keynote luncheon address at the Federal Aviation Administration's 30th Annual Forecast Conference. Following is a transcript of his remarks:

Thank you very much, Marion (Blakey). She’s a great fisherman so I told her that (referring to Marion's introduction) bought her another salmon.

I’m glad to have a chance to be with you and I thank you for the warm introduction. Actually, just as an aside, your industry has great interest in what we did yesterday (referring to vote on ANWR). I was told that the price of aviation fuel has gone up three times since 1999. And, with the Chinese buying as much petroleum as they are now – they’re buying now so much that they are the second largest consumer in the world of petroleum products. Five years ago only five percent of their people used petroleum energy. Today it’s fifteen percent. If they use the same amount over the next five years as I just told my friend from the New York Times, they will pass us in consumption and only twenty percent of their people will be using petroleum products. The price of energy is going up in the world in ways that are really going to impact all of us, particularly aviation.

But, I’m not here for that today. I think this is the first audience that I’ve spoken to in the aviation field since I became Chairman of the Senate Commerce Committee. I’ve been on that Committee longer than any member of my party now. And, I have the honor to serve with the Senator that you know from Hawaii, Senator Inouye. We’re both from offshore states. We’ve traveled together now for over 35 years and we are so close we literally call each other brother and mean it. And, he’s a Democrat and I’m a Republican – we’ve helped each other raise money for reelection. So, this is a relationship that I think is going to benefit everyone. He has a great advantage though – he can get you to come to Hawaii any time of the year. I have trouble getting you to come to my State except during fishing season.

As Marion said, aviation is a way of life for us. It has been a dream of mine since I watched the air shows where they flew around the pylons at Los Angeles International Airport in the 1930s. And, it was my dream to become a pilot and I was able to become a pilot in World War II. But, in Alaska, I think that’s why I felt at home there the minute I got there, as you probably know we have very few roads. Our taxis, our buses, and our ambulances are almost all are aircraft. Seventy percent of our communities are not connected to the outside world or to each other by roads. They are accessible only by air and in some instances by water. We have now over 500 airports in Alaska. We’re one State that’s one-fifth the size of the United States in size, as you know.

And we’re the testing ground for the next generation of safety and air traffic management technology. It’s been my privilege to be able to work closely with FAA over the years. Alaskans now are testing the Capstone program. I hope you’re all familiar with it. It provides pilots with –

· A multi-functional display of navigation, terrain, traffic, and flight information;

· Automatic dependent surveillance-broadcast, or A.D.S.B., capability; and

· A global positioning system backed up by the wide area augmentation system.

I remember trying it out once, two years ago at Christmas time, flying into Bethel. It is a magnificent system for any pilot. We have had the highest air accident rate in the nation, but we are reversing this trend thanks to Capstone and other industry-supported efforts like the Medallion Program, which I hope you’re familiar with. These programs have done more for safety in our State than all the federal mandates we have seen in the last ten years. They’re industry sponsored and they’re industry developed.

Our Western Alaska region used to have the highest accident rate within our State, which said had the highest accident rate of any State. From 2000 to 2003, the accident rate for Capstone-equipped aircraft in Western Alaska dropped forty percent. The accident rate for that region now is the lowest level since 1990.

In villages with Capstone instrument approaches, weather-related delays have been reduced by fifty percent. And, Capstone now to us is a proven safety tool.

Capstone is also demonstrating a cost-saving solution to the FAA by transitioning away from ground-based systems over several years, not several decades. Capstone will provide a model for quick transition to a modern national airspace system for the whole country. I do hope that that will happen.

I mention Capstone because I think the FAA can no longer afford not to modernize its infrastructure and urge industry to do the same thing.

The air traffic control system is sort of like another subject – Social Security. It’s really sort of a third rail for us. Both systems were created decades ago to help a lot fewer users than exist today. Since their inception, both systems have been updated but not modernized for the 21st century. Both systems will fail in the near future if we don’t insist on modernizing them. And the political debate around modernizing each of those systems is heated and will become more so.

Towers now are 30 years old on the average. TRACON facilities are 34 years old on the average. Primary en route radars are 27 years old. Secondary radars are 26 years old. En route control centers are 40 years old. I’ve been here about 37 years and I was a State House Majority Leader in Juneau when the average en route control center was built. You know, it’s the same thing throughout our economy, we’re an aging infrastructure and we have to find some way to finance modernization or to let some future generations pay part of the cost.

It will cost tens of billions of dollars to upgrade the entire air traffic control system – and that’s far more than any FAA budget could hope to provide in any one year.

We are just a few years away from something – I don’t know if many people think about it, I do often – from the advent of small four, six, nine passenger jets, which will enlarge the private jet fleet to a degree that’s unheard of and they’re going to demand service from the air traffic control system that is already so burdened it cannot really stand much more of an increase.

Capital financing has been suggested as a way to kick-start the modernization process, and I congratulate Marion (Blakey) for being willing to explore that. Someone – the FAA or another entity created by Congress for the purpose under this plan – would issue bonds to raise the cash needed to purchase major equipment upgrades now and the bonds would be secured by a future cash flow, such as a ticket tax or another revenue stream on an agreed basis that could not be changed.

We’ve had a series of conversations with the FAA and industry officials about this concept. I hope we all get ready to get serious about the prospect. I just left the Coast Guard and their problems, the Deepwater program we started in 1996 for a twenty year period. Because of 9-11, they have a forty percent depreciation in their assets. They’ve diverted more than fifty percent of the money we put up for modernization and now they’re coming out next week or the week after next with a new plan of how they can do it in the next twenty years. Some of their vessels, the one in Alaska for instance, is almost as old as I am, not quite, but almost. And, it has really outlived its lifestyle, but it keeps being brought back into service. I think that can’t happen with the air traffic control system. We have to modernize this. These proposals have to be, I think, developed in a way that relieves some of the other problems of the FAA – there is a revenue shortfall and cost control problems. The revenue shortfall, so I am told, is the result of rapidly declining receipts from the ticket tax. As ticket prices have fallen in recent years so has revenue to the aviation trust fund. And, the trust fund’s uncommitted balance is decreasing rapidly – almost 50 percent over the last 3 years alone.

With federal budget deficits looming, it seems unlikely we’ll see much of a general fund contribution to increase the FAA’s budget so it can start the system. We have to develop a new approach.

The terrible events of 9-11 temporarily reversed the rapid growth of air traffic in the United States. In 2002, the levels of commercial carrier traffic, total airplane traffic, and system delays were very close to 1998 levels. But by 2004, I’m telling you statistics you know, those key statistics were close to or higher than the years before.

Congestion is back, and, unfortunately, it seems it will increase. The national airspace system was close to a congestion crisis in 2000 and early 2001. Congress responded by working on a number of legislative provisions designed to ease congestion. To promote capacity, we proposed streamlining the environmental permitting process for new runway construction.

To ease congestion at airports we discussed rush hour pricing and partial antitrust waivers to promote smoother scheduling. Some of these provisions made it into the so-called Vision 100 legislation we passed in 2003.

To date, I am told the FAA has only been able to use this authority once and that was to United and American to reduce flights into Chicago’s O’Hare Airport. Given this new congestion crisis, we need to find ways to get more done on capacity issues and get it done very soon. I have great confidence in the FAA’s leadership – and I consider Marion not only a great Administrator, but her chief who is sitting here, too, Russ Chew, people that have the ability to take these issues on head on. But, they have to have help and we on our Committee look forward to working with them and many of you as we modernize this air traffic control system and help set the agency’s fiscal house in order. It’s just one of a myriad of issue we face on the Commerce Committee. We have such enormous jurisdiction, you can’t believe it – oceans, atmosphere, NASA, global climate change, aviation, surface transportation. Many of those issues have been neglected in years gone by, but we’re going to try to tackle them all. Our first thing is we’re going to try to listen to the industry. Unfortunately, I’ve been speaking to you. I should be listening to you today and I hope our Committee members will listen to you today – get your ideas and get your suggestions on how we may be able to work better with the FAA and meet these challenges.

Thank you very much.