permanent mail-rate structure for carriers which were doing business at the end of the war and those authorized to do business since has been such that we have not yet achieved a permanent mail-rate struc

ture.

Mr. STEFAN. I am going back to page 197, to the first paragraph. Just what administrative procedures are prescribed by law which prevent the acceleration of the Board's work?

Mr. O'CONNELL. I do not find that. [After a pause:] Oh, I see what you mean.

Mr. STEFAN. That is just contrary to what you say now.

Mr. O'CONNELL. The statement on page 197 refers to the fact that with respect to both rate cases and route cases and all of the other substantial things the Board has to do, we have to operate under the administrative provisions of our statute and under the provisions of the Administrative Procedure Act, and that process, is a time-consuming process. I venture to say it would take over a year between the filing of an application in a route case and the time that it could be completely processed; that is, from the time it is scheduled for hearing and getting to the Board for decision.

Mr. STEFAN. Turning to page 198, the first part of the paragraph says that due to the impact of economic change, the mail-rate structure is now on a temporary basis.

Mr. O'CONNELL. That is right.

Mr. STEFAN. In the second part of the paragraph, you say you propose to make substantial progress in converting the mail-rate structure to a permanent basis.

Mr. O'CONNELL. That is right.

Mr. STEFAN. How is that to be done? Would the Board attempt to control the impact of economic change on air carriers?

Mr. O'CONNELL. No, indeed. But the impact of economic change on the air lines has undermined their stability, their revenues, and other things to such an extent that we have been unable up to the present time to arrive at a stable level of mail pay. We have been moving in that direction, and what I said earlier here, until we do, we will not have made our contribution to the future of the aviation business or give it the degree of stability it should have.

Mr. STEFAN. I have asked these questions because of your statistics on page 206. I thought the backlog of mail-rate proceedings brought about some of those conditions.

Mr. O'CONNELL. As I think I mentioned, in the last 6 months of 1948, we were able to put about eight of our major certificated carriers on what we consider to be a fair, reasonable, and equitable final rate. We are going to move as rapidly as we can during 1949 to bring about that same result with respect to the others. One of the major things involved in the program announced last week end was interim adjustments in connection with the mail rates which are now on a temporary basis, pending a determination with respect to the final rate action. And what is said on page 198 I believe is perfectly sound. So long as we are operating on a temporary mail-rate basis with retroactive adjustments in the mail rate, that situation must be considered a very substantial aspect in cost-plus contracts that is bad for industry, and we have not yet been able to correct that situation. That will not have been corrected adequately until we have all of the

carriers on a final mail-rate basis. I think they can make some money; if they do better than we expect they will, and they will lose if they do not do as well. But that situation does not prevail at the present time in the industry as a whole.

MAIL AND PARCEL-POST RATES

Mr. STEFAN. What has been done with the increase in mail rates and parcel-post rates?

Mr. O'CONNELL. Parcel post was just put in the air last September on a schedule of charges which I do not believe has since been changed. It is a little early to tell how much parcel post is being flown, but we have, generally speaking, increased the mail rates. Here is what we have actually done. We have put the final mail rates in effect within the past several months for Braniff, Chicago & Southern, Delta, Florida, Pioneer, Empire, American, Overseas, and Alaska Airlines. Now, then, with respect to the other carriers, this action taken over the week end included some final rate show-cause orders for some of the small carriers like West Coast, which is a feeder line. Some increased rates established previously were challenged immediately and necessitated temporary rates applicable to two of the Big Four and two or three other carriers that I mentioned here. I do not think the major part of the industry can be considered as on a final air-mail rate basis at the present time. We attempted to do that last year. In March last year we put out what we hoped would be a final mail rate for the Big Five, Northwest being included then, but that mail rate has never become final, because it was protested by all of the carriers, and the filing of the protest has involved a reconsideration; so, in effect, we classed it at that time as a temporary rate. That rate was much too low, according to present conditions.

Mr. STEFAN. I know you do not have this decision to make, but can you give the committee the advantage of any knowledge you have regarding any progress that is being made under the recommendations of the Air Policy Board, regarding the success of carrying mail by air? Has anything been done about that?

Mr. O'CONNELL. I do not know. That is a question I am afraid you would have to take to the Post Office Department.

EARNINGS AND LOSSES BY CARRIERS

Mr. STEFAN. Put in the record the earnings and losses by carriers that you gave us before.

Mr. O'CONNELL. Yes, sir.

Mr. STEFAN. Which air lines showed earnings last year?

Mr. O'CONNELL. The carriers I mentioned, I think, did show a net operating profit in 1948.

Mr. STEFAN. Put that in the record all the way down, and also show those that showed losses.

Mr. O'CONNELL. I will be glad to do that. As a matter of fact, the list I gave you plus the actions taken by the Board will probably leave very few air lines to show an operating loss in 1948.

Mr. STEFAN. Give us the detail in the record.

Mr. O'CONNELL. Yes, sir.

(The information requested is as follows:)

Northwest:

United:

1 See supplemental statement showing recent adjustments in mail pay.