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- CHALLENGES FACING HAWAII'S AIR SERVICE MARKET [Senate Hearing 110-1137] [From the U.S. Government Publishing Office] HAWAII'S AIR SERVICE MARKET ======================================================================= SCIENCE, AND TRANSPORTATION Printed for the use of the Committee on Commerce, Science, and U.S. GOVERNMENT PRINTING OFFICE 74-892 PDF WASHINGTON : 2012 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.

gpo. gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION DANIEL K. INOUYE, Hawaii, Chairman JOHN D.

ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman Virginia JOHN McCAIN, Arizona JOHN F. KERRY, Massachusetts KAY BAILEY HUTCHISON, Texas BYRON L. DORGAN, North Dakota OLYMPIA J.

SNOWE, Maine BARBARA BOXER, California GORDON H. SMITH, Oregon BILL NELSON, Florida JOHN ENSIGN, Nevada MARIA CANTWELL, Washington JOHN E. SUNUNU, New Hampshire FRANK R.

LAUTENBERG, New Jersey JIM DeMINT, South Carolina MARK PRYOR, Arkansas DAVID VITTER, Louisiana THOMAS R. CARPER, Delaware JOHN THUNE, South Dakota CLAIRE McCASKILL, Missouri ROGER F. WICKER, Mississippi Margaret L.

Cummisky, Democratic Staff Director and Chief Counsel Lila Harper Helms, Democratic Deputy Staff Director and Policy Director Christine D. Kurth, Republican Staff Director and General Counsel Paul Nagle, Republican Chief Counsel Hearing held on April 10, 2008................................... 1 Statement of Senator Inouye......................................

1 Prepared statement of Hon. Neil Abercrombie, U.S. Representative from Hawaii................................. 6 Prepared statement of Hon.

Daniel K. Akaka, U.S. Senator from Hawaii..................................................... 5 Statement of Senator Smith.......................................

8 Banmiller, David A. , President and CEO, Aloha Airlines........... 20 Prepared statement...........................................

25 Fukunaga, Barry, Chief of Staff; Office of Governor Linda Lingle, State of Hawaii................................................ 34 Hirono, Hon. Mazie K.

, U.S. Representative from Hawaii........... 3 May, James C. , President and CEO, Air Transport Association of America, Inc...................................................

30 Prepared statement........................................... 32 Reynolds, Michael W. , Acting Assistant Secretary for Aviation and International Affairs, U.S. DOT................................

9 Prepared statement........................................... 10 Snowbarger, Hon. Vincent K.

, Deputy Director for Operations, Pension Benefit Guaranty Corporation........................... 17 Prepared statement........................................... 18 Willis IV, Charles F.

, Owner and Chairman of the Board, Island Air, Honolulu, Hawaii; accompanied by Lesley Kaneshiro, Chief Financial Officer, Island Air.................................. 28 Prepared statement........................................... 30 Response to written questions submitted by Hon.

Daniel K. Inouye to Michael W. Reynolds.........................................

49 Stevens, Hon. Ted, U.S. Senator from Alaska, prepared statement.. 49 HAWAII'S AIR SERVICE MARKET Committee on Commerce, Science, and Transportation, The Committee met, pursuant to notice, at 3:45 p.

m. , in room SR-253, Russell Senate Office Building, Hon. Daniel K.

Inouye, Chairman of the Committee, presiding. OPENING STATEMENT OF HON. DANIEL K.

INOUYE, The Chairman. First, my apologies for being late. As you may be aware, we have had five consecutive votes that held us As an island state, Hawaii is uniquely dependent on commercial aviation.

Our state's economy requires a vibrant air service to connect us within the State, to the rest of the Nation, and to the world. Not only do our air carriers allow us to move passengers and goods in an efficient and timely manner, they help to unite us as a community and as a people. Simply put, aviation is vital to our lives and our citizens.

Unfortunately, the industry, and Hawaii's air carriers in particular, are facing substantial financial challenges. Oil prices have risen to record levels and ruthless competition in Hawaii's air service market has taken its toll. Last week alone, Hawaii's own Aloha Airlines, along with ATA, Skybus, and Champion, declared bankruptcy and ended commercial passenger service.

Two of these airlines, Aloha and ATA, provided a substantial share of Hawaii's air service. Despite these challenges, we must ensure that the air transportation system continues to serve our state effectively. At the same time, we must understand the impact airline instability has on our local communities and the economy.

Aloha Airlines, for example, has been an important institution in Hawaii for more than 60 years. Aloha provided transportation for nearly 4 million passengers annually in our State, with about 100 inter-island flights daily. Aloha also has served as one of Hawaii's largest employers, with more than 3,500 workers and an annual payroll exceeding $100 million.

Nearly everyone who lives in Hawaii has flown Aloha's inter-island flights for business or to visit friends or family. Many of us know people who work for Aloha. As a matter of fact, I worked for TransPacific Airlines for a time early in my career before it became Aloha Airlines.

The Aloha workforce has served all the citizens of Hawaii in a very dedicated fashion for a very long time. Now many of these employees face uncertain futures, and naturally I am deeply saddened by this unfortunate turn of events. At this time it is critical we take action to support these loyal Aloha employees.

In particular, it is my hope that local lending and financial institutions will recognize the difficult position in which the employees find themselves. I call on these institutions to consider the unique circumstances of what may well be the largest layoff in Hawaii's history and to provide whatever flexibility they can to customers in good standing.

Providing temporary relief from penalties or late fees is just one way that former Aloha workers may be helped through this difficult time. Aggressively looking at the possibility of hiring segments of a well-trained workforce is another option I hope many businesses in Hawaii will seriously consider.

On the Federal level, we have been working to ensure that the modernization of the Nation's air traffic control system results in efficiencies that will increase safety and effectiveness to benefit both the industry and citizens who depend upon that system. However, this is clearly a long-term solution to some of the problems that impact not only Hawaii, but also our Nation's air carriers.

In the near term, this Congress must determine what we can do at the Federal level to help the airline industry make it through what has become an increasingly difficult period.

Unfortunately, some solutions that have been put forward may provide only temporary relief, as our weakening national economy and high fuel prices threaten to overwhelm any Federal We must also recognize that deregulation has dramatically altered the playing field for our Nation's air carriers.

While deregulation has created substantial benefits for a number of communities, others have been less fortunate and do not have the same air transportation opportunities that were once provided. In Hawaii, these challenges are amplified as we have numerous small communities in a market that is geographically Finally, I would note that new entrants into Hawaii's markets have made survival impossible for some.

Aloha is the most obvious example of the impact of overly aggressive pricing in the marketplace. Congress must deliver on the promise of providing affordable, secure, and quality air service to all Americans regardless of geographic location. This is the promise of deregulation and we must find a way to deliver on This afternoon we have a panel of experts that should help tell us why we came across this problem.

On this panel we have the Acting Assistant Secretary of Transportation for Aviation and International Affairs, Michael Reynolds; the Deputy Director for Operations, Pension Benefit Guaranty Corporation, the Honorable Vince K.

Snowbarger; the Chief Executive Officer of Aloha Airlines, Mr. David Banmiller; the Owner and Chairman, Island Air, Mr. Charles Willis; accompanied by Ms. Lesley Kaneshiro, Chief Financial Officer of Island Air; the President and Chief Executive Officer of Air Transport Association, Mr. James C. May; and the Chief of Staff of Governor Linda Lingle of Hawaii, Mr. Barry Fukunaga.

May I first call upon our illustrious and distinguished Member of the House, the Honorable Mazie Hirono. STATEMENT OF HON. MAZIE K.

HIRONO, U.S. REPRESENTATIVE FROM HAWAII Representative Hirono. Thank you, Mr. Chairman. It is always good to see you.

Senator Smith. Thank you for holding this important hearing on air service in Hawaii and for this opportunity for me to express my concerns. Like so many others in Hawaii, I was shocked to learn that Aloha Airlines was ending passenger operations after 61 years serving our public.

Aloha had sought bankruptcy protections in the past, as have many other airlines over the years, but to completely shut down its passenger service with no resurrection on the horizon brought home the precariousness of Hawaii's situation and her reliance on stable air service. My immediate concern, as is yours, is of course for the 2,050 employees who have lost their jobs, as well as for the travelers who have been adversely affected.

I know that we will work together to provide all available assistance to these workers and their families. While intrastate air travel is important throughout the United States, Hawaii with seven inhabited islands, all of my district, does face some unique challenges. Residents of and visitors to Hawaii cannot simply drive or take a train to another island.

Hawaii's economy, which is powered in large part by our visitor industry, with over 7 million visitors yearly, depends on reliable air passenger service between all our islands. Our residents, meanwhile, are worried about being able to get inter-island flights for business needs and to visit family members on other islands.

With Aloha gone from the scene, this is both an availability and affordability issue for The State of Hawaii's Department of Business, Economic Development, and Tourism has estimated recently that the Aloha- related job losses could push the state's unemployment rate up almost a full percentage point to 3. 8 percent compared to 3. 0 percent in February of 2008.

We have heard a number of reasons for the failure of Aloha, including predatory pricing by a new competitor, high and rapidly increasing fuel costs, and the ups and downs of the local, national, and international economy. Airlines throughout the country are struggling to deal with rapidly rising fuel costs.

My staff recently met with representatives of United Airlines who reported that each increase of $1 in the price of oil translates into an increase of $60 million in expenses on an annual basis for that airline. United paid an average of $72 a barrel for oil in 2007. Today the price is around $105 per barrel which translates to another $1.

98 billion in additional fuel costs. More than 20 U.S. airlines have filed for Chapter 11 protection between 2001 and 2006, including four of the six largest network carriers.

How will the industry deal with these higher fuel costs as well as with all of the other challenges One factor that played an important role in driving Aloha Airlines again into bankruptcy was the fare war generated by the entry of Go Airlines into the Hawaii market. Go offered air fares as low as $1, and its standard one-way inter-island airfare was about half that charged by Aloha and Hawaiian Airlines.

Aloha and Hawaiian felt compelled to match the lower fares. Aloha lost $81 million in 2007 and $11 million in January 2008. Go Airlines lost $20 million in its first 16 months of operations in Hawaii.

I understand that the Department of Transportation has jurisdiction over competition in the airline industry and has the authority to require that carriers refrain from unfair pricing practices. I would be very interested in Assistant Secretary Reynolds' views on what role he feels the DOT should play in preventing predatory pricing, ruinous competition, or pricing below the cost of service in this industry.

Does the DOT monitor airline prices and investigate in cases where prices appear to be designed to drive a competitor out of business, or does it only react if there is a specific I would be very interested in seeing a survey of pricing practices in the airline industry and wonder if DOT currently monitors and evaluates these practices.

There is currently a proposal in the Hawaii State legislature to establish a regulatory scheme for the regulation of Hawaii inter-island air carriers. While this bill raises significant legal and Constitutional issues, I certainly understand the desire to exercise control over what has been a very unstable situation in Hawaii's airline industry.

In the context of the ongoing turmoil in the aviation industry and 25 years of deregulation, one wonders whether increased regulation at the national level is now warranted. The Airline Deregulation Act of 1978 made substantial changes to the economic regulatory environment of the U.S. commercial aviation industry.

The Civil Aeronautics Board, CAB, awarded a certificate of public convenience and necessity before an airline could begin regular commercial service. Airlines could not add or abandon any route without CAB approval. The CAB set fares to prevent carriers from engaging in damaging price competition.

In making fare decisions, they determined what would be fair for the industry. Competition among airlines was based on the number of flights offered on the various routes, as well as amenities offered, such as free drinks and the quality of meals. Those days are long gone.

After deregulation, airlines have to compete in a completely different environment. Fares went down on many of the popular routes, but often went up for routes serving smaller communities. The primary form of competition seems to have settled on fare wars, which places pressure on the airlines to reduce costs wherever possible.

In a hearing held in the House Transportation and Infrastructure Committee last week, we heard of some disturbing failures in safety protocols by both the airlines and the Federal Aviation Administration. I worry about to what extent these safety violations were inspired, at least in part, by cost-cutting considerations.

We also know that a good deal of airline maintenance work is being done in facilities outside of Hawaii's remaining major inter-island carrier, Hawaiian Airlines, has moved its reservations operations offshore.

Outsourcing of jobs is a concern not only in the airline industry, of course, but affects many other industries in this Faced with the loss of jobs caused by Aloha's passenger operations, the danger this closure brings to our state's economy, and the precarious financial situation faced by virtually all of our Nation's airlines, I am frustrated by the lack of apparent solutions.

I know that some will say that the market will correct the situation, but how can we expect businesses to plan for the tremendous increases in fuel costs we have faced in the past year? How can we make sure that there is fair competition?

What can we do to protect the thousands of consumers who are affected when an airline like Aloha or ATA abruptly stops flying, not to mention the recent groundings of flights for safety inspections, including today the grounding of 900 American Airlines flights?

The very complex nature of the industry and the high standards of safety expected and required lead me to question the wisdom of leaving so much in the airline industry to the vagaries of the free market system.

I am hopeful that this hearing, as well as others to follow, will provide Congress with the critical information necessary to take appropriate action to protect the public and ensure air service in a Thank you very much, Mr. Chairman. The Chairman. I thank you very much, Congresslady.

Your statement is a painful one, but very necessary. I appreciate your participation. And I am sorry we had to make you wait this Representative Hirono.

Not at all. It was a pleasure to be The Chairman. The Committee has received two testimonies from Senator Akaka and Congressman Abercrombie.

Without objection, they will be made part of the record. [The prepared statements of Senator Akaka and Representative Abercrombie follow:] Prepared Statement of Hon. Daniel K.

Akaka, U.S. Senator from Hawaii Thank you, Mr. Chairman. I appreciate your conducting this hearing today. The termination of Aloha Airlines' passenger service and the subsequent layoffs of employees deeply saddens me.

Aloha Airlines provided essential transportation services and employment opportunities in Hawaii for more than 61 years.

We must all work together to assist employees who have lost their jobs and to try to preserve vital As you know, Mr. Chairman, the people of Hawaii are dependent on inter-island air travel, which provides residents and visitors with access to commercial opportunities, medical care, and allows them to see their families.

Tourism remains a vital component of Hawaii's economy and inter-island flights continue to be important in helping visitors enjoy the unique experiences found on each of the islands. The loss of 88,000 seats per week for inter-island flights presents a great difficulty for island residents. Although the other airlines will add approximately 56,000 seats a week, there will still be reduced capacity for inter-island travel.

For our residents, this could present additional barriers to health care, educational opportunities, and For Aloha pilots and other pilots whose pensions have been terminated, my bill, S. 1270, the Pension Benefit Guaranty Corporation (PBGC) Pilots Equitable Treatment Act, could help provide some financial relief. Mr. Chairman, I have greatly appreciated your tremendous support of this legislation.

S. 1270 will lower the age requirement to receive the maximum pension benefits allowed by the PBGC to age 60 for pilots, who were mandated by the Federal Aviation Administration to retire before age 65. Retired pilots whose pensions are administered by the PBGC do not receive the maximum pension guaranty because they were forced to retire at age 60.

My legislation ensures that pilots are able to obtain the maximum PBGC benefit without being unfairly penalized for having retired at 60, before the age limit was raised to age 65. I will continue to work with you, the Health, Education, Labor, and Pensions Committee, and other members to bring about enactment of this important legislation. Thank you again for conducting this hearing, Mr. Chairman.

I look forward to continuing to work with you on this vital issue. Mahalo again for your tremendous leadership on this issue and for all of your efforts to improve the lives of people in Hawaii. Prepared Statement of Hon.

Neil Abercrombie, U.S. Representative from Hawaii Chairman Inouye and Vice Chairman Ted Stevens, thank you for the opportunity to provide testimony before you today. As a member of Hawaii's Congressional delegation, I am exceptionally concerned with the effects of Aloha Airlines ceasing operations in our small island state and the continuing reverberations that will be felt for months, and most likely years, to come.

In the days leading up to Aloha's announcement, I spoke with many employees and officials for Aloha. One thing that particularly struck me was that although the airline was struggling in an inter-island market with two major competitors, it was sharply increased fuel costs that finally drove the airline to decide it had to cease operations. Similar explanations have been given by ATA which also ceased operations the same week as Aloha.

Smaller airlines such as Aloha, which tend to serve geographically isolated areas like Hawaii, are the ones that will feel the squeeze from increased fuel costs first. The larger airlines can cut costs by reducing or eliminating partnerships with smaller airlines. Larger airlines can more easily absorb fuel costs by grounding planes and adding fuel surcharges, which would be smaller per person for larger aircraft.

This leaves smaller airlines with higher ticket prices because of higher fuel surcharges and they cannot afford to ground As a result, I have written to the President, (please see attached letter) to request a temporary release of crude oil from the Strategic Petroleum Reserve for the airline and cargo shipping industries.

Although this would be a short term solution, I believe that the industry needs the relief now, because the airlines are in an emergency situation. The bankruptcy of Aloha, ATA and Skybus, almost in the same week, have shown the dire state that these small carriers are in. In the long term, our country must look toward the future of sustainable domestic energy production to ensure we are not fleeced by skyrocketing imports.

Environmentally sustainable exploration must occur to ensure our domestic supplies remain stable and as unaffected as possible by market speculation and international market forces for I regret that these efforts occur too late to assist Aloha Airlines.

But I hope they will assist other small airlines, particularly those still operating in Hawaii and other isolated areas where profit margins are thin and passengers can't afford to pay more for Essential Air Service. In Hawaii, the only way for people who live on the neighbor islands to get to hospitals, VA hospitals or specialty clinics in Honolulu is by air.

This vital and life saving transportation truly is essential service for the people of Hawaii. The closure of Aloha Airlines not only limits transportation options among the main islands and to the U.S. mainland, it is affecting our people in Hawaii in their daily lives. Former Aloha Airlines employees call my office, not knowing how they are going to make their payments on their bills.

Financial institutions, have, so far, been unwilling to work with them. That is why I have written a letter (attached) to the financial institutions, asking them to try to work with the now unemployed workers to structure payment plans so that they can afford to keep up with their bills.

It is my hope that this hearing will provide more ideas for assisting the people and businesses directly and indirectly affected by the closure of one of the oldest airline carriers in Hawaii. These efforts will not only assist Hawaii but hopefully forestall future closures by other airlines and ensure options for all people who fly.

Thank you, Chairman Inouye and Vice Chairman Stevens, for examining this situation and accepting my testimony today. Congress of the United States, House of Representatives Washington, DC, April 9, 2008 I am certain that you aware of the financial crises that have forced Aloha and ATA Airlines into bankruptcy, and shattered the lives of thousands of their employees in Hawaii.

Their job loss came very suddenly, and most face the prospect of losing, not only their livelihoods, but their health benefits, after years with their employers. Many of these laid-off employees have contacted my office, some in tears, asking for help and not knowing what they were going to do. Many have contacted their financial institutions to ask for payment extensions or some other way of working out payment of their bills.

But, so far, they report being denied any opportunity to restructure payments and remain current. While I understand that their financial obligations are voluntary contracts between a company and an individual, I am writing to inquire about any flexibility that might be offered to these people, who are suddenly unemployed and struggling to make ends meet.

As our community faces continued economic uncertainties, many families in Hawaii find themselves in difficult straits. I believe that such times should bring out the best in all of us--individuals and businesses. It is important that we all take the time to show each other the understanding and aloha needed to keep our families and communities together and out of financial ruin.

I hope you share my belief, and my commitment to our ohana; to our community. I would love to hear from very soon about any assistance you Congress of the United States, House of Representatives Washington, DC, March 31, 2008 President of the United States, Right now--today--our nation is reeling from the impact of an energy crisis on a U.S. economy already in or on the verge of recession. Retail sales are down.

Unemployment is up. Home sales are down. Mortgage foreclosures are at an historic high, and the Federal Reserve intervened last week to keep Wall Street giant Bear Stearns front potential catastrophe.

Add to this the highest fuel prices in history, now more than $110 a barrel for crude oil and an average price at the pump of more than $3. 30 a gallon for regular gas, and the impact on a petroleum-fueled I met last weekend with officials of Aloha Airlines in Honolulu, trying to find a way for one of Hawaii's leading corporate citizens, with 3,400 employees, to buy time to restructure debt and stay in business.

Tragically, Aloha decided late Sunday to halt 61 years of air passenger service for the people of Hawaii. After attempting to fight off unregulated predatory pricing for 2 years, a $71 million increase in the cost of jet fuel pushed them over the edge. One thousand nine hundred people just lost their jobs today.

Aloha is not alone in being battered by this energy crisis. Other airlines are being forced to raise ticket prices or add as much as a $50 surcharge for fuel. According to the Air Transport Association (ATA), every penny increase in the price of a gallon of jet fuel means $190 million in annual fuel costs for U.S. Airlines--20 to 30 percent of their total operating expense.

As you may be aware, ATA has today called on Secretary of Energy Samuel Bodman to authorize releases from the Nation's home heating oil reserves to help increase the supply of The emergency, however, extends far beyond the airline industry. The effects of soaring fuel costs are rippling out through the economy.

Oil and refined products fuel almost 97 percent of our Nation's transportation: automobiles, trucks, trains, and ships, as well as aircraft. This is how our Nation moves people and goods. Fuel cost represents as much as 25 percent of total operating expenses for the Nation's motor carriers, second only to drivers' wages.

Transport companies and independent truckers across the country are facing the prospect of parking their trucks because they simply cannot afford to buy diesel fuel. One operator reported costs of nearly $900 to fill up his rig. The impact of rising fuel costs on transport obviously means increasing costs for consumer goods.

We are already seeing this in food prices and retail prices. Organizations like the United States Postal Service and private sector delivery companies have no choice but to keep buying fuel for their delivery vehicles, no matter the cost. And that cost will be passed along to businesses, and ultimately, to consumers.

Even as an independent government agency, the Postal Service cannot sustain such devastating cost increases for long without increasing rates. Oil and natural gas are raw materials in more than 95 percent of manufacturing: plastics, medicines, machinery and all kinds of consumer goods. Energy is the third largest manufacturing cost for the forest Mr. President, the instability of oil prices will continue to ripple through our economy.

We are, quite clearly, in the midst of an I am therefore requesting that you authorize a temporary release of crude oil from the Strategic Petroleum Reserve for the airline and cargo shipping industries. The average cost of crude in the reserve is approximately $27 per barrel.

If a quantity of this oil can be released to the market and refined at lower cost than the current market-priced crude, it could generate a temporary supply of lower priced gasoline, diesel fuel and jet fuel for those industries that are totally dependent on fuel, and on which the U.S. economy is totally dependent.

Under the Energy Policy and Conservation Act of 1975, draw-downs from the Reserve are authorized if the President determines that there is a ``severe energy supply interruption;'' if that interruption has caused a severe increase in the price of petroleum products; and if such prices are likely to cause a major adverse impact on the national This step offers the prospect of temporary relief, and should not be seen by anyone as a long-term solution to the national energy emergency.

But it may serve as an alarm to the American public that substantial and serious measures must be taken immediately to prevent further, even permanent, damage to the U.S. economy. It should also be the first substantive action by the Government of the United States to address the energy and economic crisis.

Mr. President, I believe those conditions which allow for a release from the Strategic Petroleum Reserve now exist, and I urgently request The Chairman. I must apologize. I did not notice the presence of Senator Smith here.

If I had known that, I would have called on you earlier. Please forgive me, sir. I am now privileged to introduce Senator Smith of Oregon.

STATEMENT OF HON. GORDON H. SMITH, Senator Smith.

Mr. Chairman, I am here with no agenda other than an affection for Hawaii. I have been a regular user of Aloha, and every time I travel the 6 hours to Oregon, I think of my colleague, the Chairman, who has another 6 hours to go.

I regard Hawaii as a very treasured place and I am anxious to learn what has happened because I am anxious to find ways that I, who often advocate for routes to Oregon--how we can improve this system and make sure that Essential Air Service is I am old enough to remember that when I used to get on an airplane, there used to be a lot of empty seats.

I am mindful that there are many planes that are now grounded simply to make sure that every seat is filled in order to afford the fuel costs. If there was a silver bullet on fuel costs, we would shoot it. We would fire it.

We would fix it. There is not. In the meantime, we have got to make sure that remote places--and I come from a remote part of Oregon--have the ability to access essential infrastructure like airlines.

Obviously, the Hawaiian Islands--you either get there by slow boat or by Aloha, Hawaii, or Go. ATA I guess has gone out as And I am anxious to be here just to learn, to offer constructive insights, and to ask some questions. So thank you, The Chairman.

If I may, on behalf of the people of Hawaii, I thank you for your presence here. It is most comforting. And it is now my pleasure to call upon the Assistant Secretary of Transportation for Aviation and International Affairs, the Honorable Michael Reynolds.

Will the others take their places? STATEMENT OF MICHAEL W. REYNOLDS, ACTING ASSISTANT SECRETARY