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Statement of the Honorable John W. Douglass

President and Chief Executive Officer

Aerospace Industries Association of America, Inc.

Before the

Committee on Transportation & Infrastructure

U.S. House of Representatives

Hearing on

Aviation Security and the Future of the Aviation Industry

September 25, 2001

Washington, D.C.

            Chaiman Mica, Ranking Member Lipinski, and members of the Committee, on behalf of the manufacturers of the world's leading aerospace products I would like to thank you for holding these hearings and for inviting me to present our views at this critical time in our nation's history. I would also like to take a moment to express our sympathy and condolences to those among us who have suffered the loss of loved ones or injury at the hands of a brutal and implacable enemy. Our thoughts are truly with them.

            Mr. Chairman, there is no question that the events of September 11, 2001, are a watershed for this country and for the aviation industry not only in the United States, but around the world. On September 19, thirty five stakeholder organizations of the aviation and space industries wrote to President Bush to express our support for our government's determination to defeat terrorism and ensure a safe transportation system for the American people. A copy of that letter is attached for the information of this Committee.

Impact on the U.S. Manufacturing  Industry

            The effects of the terrorist attack on the U.S. aviation industry were immediate, and will be long lasting. In addition to the loss of business due to the total shutdown of our national airspace, our airline customers are having to deal with a catastrophic decline in passenger boardings since the resumption of service. Eventually, there will be renewed growth in the air transportation industry, but the immediate outlook is bleak. The reduction in airline operations and the accompanying free fall of revenues are already having an effect on industries that support the airlines, including suppliers and maintenance providers.

            Every day the press carries new reports of airlines meeting with suppliers to negotiate deferrals or cancellations of aircraft deliveries and orders. In addition, cutbacks of flight operations on the order of 20 percent will mean a drop in orders for replacement parts and a reduction in the volume of maintenance performed as aircraft are parked.

            At AIA, we have revised our estimate for aerospace industry sales based on revised delivery projections of our manufacturers in the wake of the September 11 terrorist attacks.  Commercial aircraft and parts sales are expected to decline this year by approximately $2 billion from our previous estimate. Prior to the events of September 11, we had predicted industry sales of $145 billion, a $1.6 billion sales increase this year from 2000. We now expect total industry sales to decline by $400 million, to $143 billion--from the $143.4 billion in sales in 2000.

For 2002, AIA projects that industry sales could decline as much as $5.6 billion, and by $6.7 billion in 2003. Increased sales in space and defense markets may offset to some extent the decline in commercial sales, depending on the way the administration responds to the crisis. 

In addition, our helicopter manufacturers have been virtually grounded since September 11. Almost all helicopters are designed to operate under visual flight rules (VFR). The FAA is bringing various types of operations on line through a series of Notices to Airmen (NOTAMs). As of September 24, 2001, it was unclear whether VFR flight tests on production and developmental aircraft within "enhanced Class B" airspace remains prohibited. VFR flight training restrictions have been eased, but only with respect to non-turbine powered aircraft less than 6000 pounds certificated maximum gross take-off weight. Thus, our manufacturers that are located in enhanced class B airspace- Bell, Boeing, MD Helicopter, Robinson, and Sikorsky, may not be able to conduct VFR test flights that are required prior to delivery of the aircraft to the customer, and Bell, Boeing, MD Helicopter, Kaman and Sikorsky cannot conduct any VFR flight training. The sole exceptions are aircraft destined for the U.S. military or the few that are equipped for Instrument Flight Rule operations. We have not yet calculated the financial impact of this situation on our helicopter industry, but customers are threatening to cancel orders in favor of our European competitors that can deliver aircraft and training.

Members of the Committee, in some ways what I have just described could even be a "best case" scenario, because it assumes that the operators will be able to pay the suppliers of goods and services. However, our members are seeing requests by the operators to negotiate changes in payment terms and conditions. Fears in the stock market, whether founded or not, have caused a dramatic drop in the stock prices of many of these manufacturers that have a business base that is predominantly commercial, rather than defense. This pressure could increase if there is a perception that the suppliers will not be paid promptly by their customers. The impact could be especially severe on smaller suppliers that do not necessarily have the financial resources to compensate for delayed or non-payment.

The effects of this crisis in the civil aviation industry are obviously manifest in aerospace employment. Boeing has already announced the possibility that as many as 30,000 workers will be laid off over the course of the next year as a result of airline retrenchment. Our helicopter manufacturers are struggling to avoid layoffs, but if they cannot deliver aircraft, employment could be affected. The rest of the civil aviation industry is also suffering. It is important to emphasize that steps can be taken to ensure that the damage to our manufacturing industry is as limited as possible. AIA fully supports government assistance to our airlines to maintain a viable air transport sector in this extraordinary time. An important component of that assistance should be assurances that manufacturers will receive prompt and full payment so that we can, in turn, pay our employees and suppliers and maintain our ability to provide the products that the airlines must have in order to operate.

Airplane Security

            The Aerospace Industries Association strongly supports the measures announced by Transportation Secretary Mineta to improve aviation security since the September 11 attacks, and we stand ready to make further improvements if and when it is determined they are needed.  We are also supporting the work of the two Rapid Response Teams that Secretary Mineta has chartered on airport security and aircraft security.  Retired Boeing Vice President for Engineering, Robert Davis was personally selected by the Secretary to be one of four members of the aircraft security team.

            The Rapid Response Team may well come to the conclusion that changes to aircraft designs are a part of the solution to the problem of airborne terrorism.  But we believe that the role of aircraft design in resolving the threats to aviation security needs to placed into the overall context of what is needed to adequately address the threat from terrorists.  The security chain of protection has five broad elements that must be met in order to stop terrorists from being successful. Aircraft design, particularly that affecting the security of the cockpit, is crucially important, but it makes a difference only when the other links of the chain have not effectively held.

            Effective aviation security begins with effective intelligence and use of information about who wants to get on the airplane and whether they might be a threat. Then effective airport security is needed, particularly at the passenger screening checkpoints.  Effective aircraft cabin security is necessary, and the Secretary of Transportation has concluded that in light of September 11, we need much wider use of air marshals.  If a flying aircraft still has a security problem, then the effective cockpit security must be put in place.  And as the President eloquently indicated last Thursday evening, effective security finally requires an effective series of responses to acts of terrorism.

            Secretary Mineta's Aircraft Security Rapid Response Team is focused on the issues surrounding cockpit security, the last line of defense, if you will.  Issues of how to make the cockpit door stronger or even impenetrable, whether stronger locks can make difference, along with procedures associated with opening the door as well as aircraft maneuvering are the subject matter of this Team. 

            We are all prone to look for a technological or mechanical fix to problems, and we can certainly take actions to strengthen doors.  But we must do so knowing and understanding that there may be tradeoffs in doing so.  For instance, if there is a significant cabin air differential between the cabin and the cockpit resulting from a rapid decompression and the cockpit door cannot open or be adequately vented, this, in and of itself, could cause structural damage that could result in the aircraft being lost. 

Rather than seizing quickly on what seems like a simple fix, we need to examine all of these ideas to improve cockpit security with open eyes and clear understanding.  There are very few simple ideas embodied in modern aircraft design. We need to be mindful that some proposals may require changes to the Federal Aviation Regulations, while we may be able to implement others on a voluntary basis. We need to consider how best to allocate our resources to get the greatest improvement in security. That is why we are in complete support of Secretary Mineta's Rapid Response Team on these issues relating to aircraft security.

Conclusion

            To summarize our position, AIA applauds the willingness of Congress and the Administration to address the difficult issues confronting the aviation industry in the aftermath of the terrorist attack on our soil. We support efforts to ensure the continued viability of our airline industry. It is important to recognize that virtually every segment of our industry has been and is being severely affected as a result of actions by our enemies. Airline losses translate into lost business for suppliers and service providers. Having ensured the continued viability of the carriers, we will have to address the impact on the rest of the industry: flight schools, fixed base operators, air tour operators . the list of devastated businesses is a long one. We urge Congress and the Administration to continue to monitor all segments of the entire industry closely and be prepared to take the necessary steps to ensure the economic recovery of an industry that is a key element of our nation's economic and national security.

            We are encouraged that the aircraft rapid response team will enable a careful examination of options to improve aircraft security, both through aircraft configuration measures and operational measures. No doubt a key element in improving aviation security will be the recommendations of the airport security team. We need to beware of the siren song of the seemingly simple solution. Aviation, more than any other endeavor, requires care to ensure that one "solution" doesn't create new problems. That is why we applaud and support Secretary Mineta's Rapid Response Team initiative, which will help ensure that all proposals have been carefully analyzed and the best brought forward for implementation. As we create more robust links in the security chain, we will improve aviation security and the safety that we provide to the American public.

            Thank you for your attention, and I would be pleased to answer any questions you might have.