Resistance of foreign countries to the operation of inclusive tour characters by U.S. carriers. Route realignment of local carriers' routes by providing more access to more profitable markets. Route actions involving local carriers to allow more economic utilization of jet aircraft. Need to improve trunkline services by licensing of carriers in additional markets. Review of routes in Caribbean area and South America. Subsidy reduction, mainly by improving route structure of local carriers. Review of transatlantic, transpacific and military ordinary mail rates. Annual review of Military Airlift Command rates. Follow-up action on air cargo regional workshops. Handling consumer complaints. Role of air taxi operators. Rebating practices in foreign air transportation. Need for increased automation and machine access to carrier-based data in providing timely facts for changing regulatory needs. Need for improved cost data and costing techniques for fare, rate, and route work and new aircraft evaluations. To sum up our request for 1968 for Salaries and Expenses, the Board needs the additional 21 positions requested for high priority work that should be done in 1968 and done well because of its great importance to the industry, the public, and the Federal government. The House cut of $166.000, if allowed to stand, will not only mean delays in solving some of these and other problems but the inability to handle some of our current work, with a further accumulation of backlogs. This concludes my prepared statement. I will try to answer any questions you may have. JUSTIFICATIONS "SALARIES AND EXPENSES" (House hearing, pp. 722 to 868) Page 4, line 12 of H.R. 9960 as reported to the House on May 12, 1967. 1967 appropriation (adjusted) 1968 budget estimate___. Increase of estimate over 1967 appropriation__ 1968 House allowance.... House reduction from 1968 estimate- Restoration requested___. 1 See following table: Appropriation, 1967. Proposed supplemental for pay increase Transfer to "Operating expenses, Public Buildings Services," GSA___ Total_ 1 $8. 632, 000 9,066, 000 434, 000 8, 900, 000 166,000 166, 000 $12, 000, 000 +200, 000 -54, 000 3. 514, 000 8, 632, 000 AMENDMENTS REQUESTED On Page 4, line 12 delete $8,900,000 and insert $9,066,000. HOUSE REPORT (NO. 259) "The Committee considered a budget estimate of $9,066,000 for salaries and expenses of the Board for the next fiscal year and recommends $8,900,000, or $166,000 less than the amount requested. The appropriation recommended herein does not include funds for the former Bureau of Safety since this function has been transferred to the new Department of Transportation. On a comparable basis, the budget requests an increase of $434,000 and the Committee is recommending $268,000 for supervision and regulation of the thriving, growing, and expanding aviation industry." JUSTIFICATION The House Bill would provide the Civil Aeronautics Board with $166,000 less than the appropriation requested in the President's budget. Even with all of the funds requested it will not be possible to do all the work that should be done in 1968. The House reduction can only worsen the situation. The Board's budget for 1968 includes funds for 21 additional positions. The House cut would allow for only 10 new positions. It also would result in postponement to fiscal year 1969 of the printing of 2 bound volumes of the Board's decisions and an up-to-date revision of the aeronautical statutes. Both of these documents are valuable working tools of our staff. In light of the tremendous growth and rapid changes anticipated within the next year or two in the air transport industry and the resultant increase in the Board's workload, we request that this committee approve full restoration of the $166,000 reduction proposed by the House. The functions which the Board considers critical in terms of need for the 21 additional positions in fiscal 1968 are economic research, rates and fares, awards of operating authority, field audits, and the statistics, costing and automatic data processing activities. ECONOMIC RESEARCH The Board requires an effective economic research staff to fulfill its responsibilities under the Federal Aviation Act. Logical and orderly research and the development of broad economic plans and programs are prerequisites to effective Board action in the fast-growing air transport industry. The additional positions requested in this area will be used to provide this economic assistance to the Board in research and analysis on such matters as subsidy reduction, passenger fares, the role of third-level carriers, air cargo, new aircraft types, market potential for airline service, and economic trends in the air transport industry. Investigation of the major economic problems confronting the industry, forecasting significant aspects of transport operations, evaluation of current and anticipated economic trends are indispensable to the Board in the interests of a broader understanding of the economics of air transportation. RATES AND FARES The workload in passenger fares, cargo rates, service mail rates, and military rates continues to increase. Additional manpower is needed in order to keep current with day-to-day tariff matters and to deal with proceedings involving suspension of carrier tariffs and Board-initiated passenger fare and property rate investigations. The Board is nearing completion of a formal proceeding involving review and reduction of domestic service mail rates. Also planned in 1968 is the review and revision of service mail rates in the transatlantic, transpacific, and LatinAmerican areas. In the area of military rates, the Board annually must review the minimum Military Airlift Command rates. This is an important, complex proceeding requiring detailed cost analysis of 20 or more air carriers to determine rates to be paid by the Department of Defense in expending Government funds estimated to exceed $800 million in fiscal 1968 for military airlift performed by civil air carriers. We are in serious need of strengthening our staff in this important area of our work. AWARDS OF OPERATING AUTHORITY The authorization of routes continues to be one of the most important aspects of the work of the CAB. The additional positions requested for this work will enable us to concentrate on route adjustments to keep pace with changes in travel patterns, population-center movements, and technological improvemets in aircraft. The growth trend of the trunklines and the growing demand for more service in more areas indicates that some monopoly markets and two-carrier markets can support additional competitive services. New interarea, long-haul services will be investigated. We must press forward with the local service carrier route development program. This program is an effort to provide these carriers more profitable markets which will result in improved service to the public and a reduction in Federal subsidy. Technological advances in aircraft and continuous intergovernmental negotiations require that international and overseas routes be reviewed. New routings to Europe and a revision of African routes will be processed. In the area of nonroute air carriers we expect an increase in workload. Inclusive tour charters by supplemental air carriers will require more attention, as will the licensing of air freight forwarders. Shortage of personnel is becoming a definite limiting factor in the Board's ability to authorize the improved airline service sought by many of our cities and towns. FIELD AUDITS The Board is dependent upon field audits for the policing of subsidy payments to air carriers, for the conformance of air carriers with Board economic and accounting regulations, for the continuing surveillance of the fitness of supplemental air carriers under Public Law 87-528, and for the carrying out of numerous special assignments in support of individual regulatory actions and formal proceedings. The 1968 budget makes provision for full surveillance of the subsidy payments program, substantial but not full coverage of the supplemental air carriers, and only limited coverage on a selected area basis of the nonsubsidized carriers. It makes no provision at all for the young and rapidly growing air freight forwarder segment of the industry. Evidences exist of deviations among the nonsubsidized carriers from the accounting and reporting regulations which tend to seriously undermine the comparability of the financial data reported to the Board. This group of carriers constitutes approximately 90 percent of the commercial air transport industry, whether measured in terms of investment, revenues, or traffic volume. The limited audit coverage of this important segment of the industry provided in the 1968 budget is the minimum required to give reasonable protection to the integrity of the regulatory process. STATISTICS, COST-FINDING AND AUTOMATIC DATA PROCESSING Regulation of the air transport industry requires collection and analysis of a growing volume and variety of facts. Continuing industry growth and development create needs for new and improved data, especially on passenger and cargo movements by markets and on cost levels and patterns by carrier operations, services, and aircraft types. The voluminous traffic and financial data received from the carriers are largely mechanized, and expanded use of ADP by the Board is contributing to agency-wide productivity and efficiency in the processing and use of the data. Extensive revision in the Board's data collection program is in process to provide information of more adequate scope and quality through integrated use of industry and Board machine facilities. MAJOR PROBLEMS FOR 1968 Among the most difficult problems currently facing the CAB are: Increasing demands for foreign airlines' access to U.S. markets. Resistance of foreign countries to the operation of inclusive tour charters by U.S. carriers. Route realignment of local carriers' routes by providing more access to more profitable markets. Route actions involving local carriers to allow more economic utilization of jet aircraft. Need to improve trunkline services by licensing of carriers in additional markets. Review of routes in Caribbean area and South America. Subsidy reduction, mainly by improving route structure of local carriers. Study of the domestic passenger fare structure and development of a program for possible improvements. Review of transatlantic, transpacific and military ordinary service mail rates. Establishment of space available mail rates. Annual review of Military Airlift Command rates. Review of IATA passenger fares and cargo rates. Role of air freight forwarders. Increase in consumer dissatisfaction with airline services. Role of air taxi operators. Rebating practices in foreign air transportation. Revision of the local service class subsidy rate. Need for increased automation and machine access to carrier based data in providing timely facts for changing regulatory needs. Need for improved cost data and costing techniques for fare, rate, and route work and new aircraft evaluations. Even if we receive all the funds requested we cannot do all the work that needs to be done and should be done in all of these areas in fiscal 1968. The House cut of $166,000, if allowed to stand, will not only mean delays in solving some of these and others problems, but the inability to handle some of our current work, with a further accumulation of backlogs. |