Letters from- Page 249 259 Faubus, Orval E., Governor of Arkansas, Little Rock, Ark. Floberg, John F., chairman, Conference of Local Airlines, World Center Gilger, Col. Chester P., USAF, Commander, Headquarters 3575th Pilot Training Wing (BSC ME), Vance Air Force Base, Okla.... Green, Cliff B., executive director, Texas Aeronautics Commission, Griffin, Hon. Marvin, Governor of Georgia, Atlanta, Ga.. Healy, Patrick, Jr., executive director, American Municipal Associa- tion, 1625 H Street NW., Washington 6, D. C............. Langer, Hon. William E., a United States Senator from the State Leake, James C., Griffin Grocery Co., Muskogee, Okla. Meaders, L. B., Halliburton Oil Well Cementing Co., Duncan, Okla__ Miller, Max H., chairman, aviation committee, the Wichita Chamber Nuber, Robert L., assistant director, Washington State Aeronautics Rune, J. L., Champlin Refining Co., Enid, Okla. 89 258 Shivers, Hon. Allan, Governor of Texas, Austin, Tex__ 69 Smith, Robert J., president, Pioneer Air Lines, Inc., Love Field, 255 Snyder, Earl W., director, State of Oregon Board of Aeronautics, 255 Stratton, Hon. William G., Governor from the State of Illinois, Spring- 266 Symington, Hon. Stuart, a United States Senator from Missouri_ Timmerman, Hon. George Bell, Jr., Governor, State of South Caro- White, Hon. Hugh, Governor of Mississippi, Jackson, Miss. Wilkins, Gerald D., city manager, the city of Enid, Enid, Okla Zess, Roy F., president, Moultrie Chamber of Commerce, Moultrie, Abney, A. E., director, department of aeronautics, Springfield, Ill. Deller, Frank, managing director, Oklahoma Development Council, Normand, Leon, El Paso, Tex... 86 Supplemental Report No. 1, CAB, Local Service Routes, Measure- ments of Financial Operating Results, Traffic Density, and the PERMANENT CERTIFICATES FOR LOCAL SERVICE AIR CARRIERS MONDAY, FEBRUARY 21, 1955 UNITED STATES SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, SUBCOMMITTEE ON AVIATION, Washington, D. C. The committee met at 10 a. m., in room G-16, United States Capitol, Senator A. S. Mike Monroney, presiding. Present: Senators Monroney, Bible, Schoeppel, and Payne. (Professional staff member assigned to this hearing: Edward C. Sweeney, aviation counsel.) Senator MONRONEY. The subcommittee will come to order. We have before use the bill S. 651 referred to the Subcommittee on Aviation by the full Committee on Interstate and Foreign Commerce. (The bill referred to is as follows:) [S. 651, 84th Cong., 1st sess.] A BILL To amend section 401 (e) (2) of the Civil Aeronautics Act, as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 401 (e) (2) of the Act of June 23, 1938, as amended (49 U. S. C. 487 (e) (2); 52 Stat. 987), is amended by adding the following: (3) If any applicant who makes application for a certificate within one hundred and twenty days after the enactment of this section shall show that, from the date of enactment of this section until the date of its application, it or its predecessor in interest, was an air carrier furnishing, within the continental limits of the United States, local or feeder service consisting of the carriage of persons, property and mail, under a temporary certificate of public convenience and necessity issued by the Civil Aeronautics Board, continuously operating as such (except as to interruptions of service over which the applicant or its predecessor in interest have no control) the Board, upon proof of such fact only, shall, unless the service rendered by such applicant for such period was inadequate and inefficient, issue a certificate or certificates of unlimited duration, authorizing such applicant to engage in air transportation betweenthe terminal and intermediate points within the continental limits of the United States between which it, or its predecessor, so continuously operated between the date of enactment of this section and the date of its application: Provided, That the Board in issuing the certificate is empowered to limit the duration of the certificate as to those intermediate points which have, over a reasonable period of time, generated insufficient traffic and revenues to reimburse the applicant carrier for its direct costs and a reasonable share of its indirect costs incurred in serving such points." Senator MONRONEY. Our first witness is Mr. John F. Floberg, Chairman of the Conference of Local Airlines. Mr. Floberg, do you have a statement? Mr. FLOBERG. Yes, Senator, I have a prepared statement and I have given copies of it to members of the subcommittee who are present. I have other copies for those who have not yet arrived and I have given to Mr. Sweeney a substantial number of copies of this statement and there will be many more copies available. STATEMENT OF JOHN F. FLOBERG, CHAIRMAN, CONFERENCE OF LOCAL AIRLINES Mr. FLOBERG. Mr. Chairman and gentlemen of the subcommittee. My name is John F. Floberg. I am chairman and Washington counsel of the Conference of Local Airlines in whose behalf I appear today before this subcommittee in support of S. 651. My local address and that of the conference is 800 World Center Building. The Conference of Local Airlines is an association made up of 14 local or feeder carriers: Allegheny Airlines, Bonanza Air Lines, Central Airlines, Frontier Airlines, Lake Central Airlines, Mohawk Airlines, North Central Airlines, Ozark Air Line, Piedmont Airlines, Pioneer Air Lines, Southern Airways, Southwest Airways, TransTexas Airways, and West Coast Airlines. On March 31, 1955 Pioneer will cease to be a member of the conference as its merger into Continental Airlines, a trunkline, becomes effective. I wish at this point to express to you my appreciation and that of all the members of the conference for furnishing us this opportunity to discuss our problems with this committee and to present our views on S. 651. Local service or feeder airlines have come into existence since the end of World War II. They are the new and small businesses that have been established in the scheduled air transport industry in accordance with the Civil Aeronautics Act. The oldest of the feeders has been operating less than 10 years, while the youngest has been operating only 412 years, and I believe that in the course of this statement I shall be able to demonstrate the amazing progress that their enterprising managements have accomplished in these few years. In August 1943, the Civil Aeronautics Board initiated a public investigation to determine the feasibility of extending scheduled air transportation to small- and intermediate-size communities. By January 1944, there were on file with the Board over 400 applications for new domestic air services. During extensive hearings before an examiner of the Civil Aeronautics Board all segments of the airtransport industry, as well as other transportation groups, presented evidence. After the issuance of the examiner's report and oral argument by many of the parties, the Civil Aeronautics Board in July 1944, announced its opinion. In this opinion the Board recognized the many problems involved in certifying a new class of air carriers to serve small- and intermediatesize cities, but it also recognized the responsibility imposed by the Civil Aeronautics Act "to encourage the development of an air transport system properly adapted to the present and future needs of the commerce of the United States, the Postal Service, and the national defense, and to encourage the development of civil aeronautics generally," and because of this congressional directive, the Board decided to authorize local or feeder service on an experimental basis. Over the next few years the Civil Aeronautics Board authorized 20 local service carriers to perform air services by granting certificates of public convenience and necessity. Each of these carriers went through the full procedure required by section 401 of the Civil Aeronautics Act; each filed an application; each waited its turn on the Board's docket; each presented evidence in long and complex hearings; and each argued its case to the Board. Each proved to the Board as required by section 401 (d) that it was fit, willing, and able properly to perform such transportation, and to conform to the provisions of this Act and the rules, regulations, and requirements of the Board. In each case the Board determined that the public convenience and necessity required the service which it was certifying. The results which have followed the certifying of local independent airlines have proved the wisdom of the Board's action. By bringing new small and locally conscious businesses into the industry, the local. carriers have generated traffic at points formerly served by the trunks far in excess of that developed there by the trunks. Example after example could be given of cities where the local service carrier has doubled or trebled, or more, the number of passengers which trunklines, formerly treating the town in question as a mere interruption in a long-distance flight, which flight was scheduled primarily for the convenience and traveling schedules of the long-distance passengers, formerly carried. This growth is easily explained in the fact that the local airlines are devoted completely to the small and intermediate-size communities and have geared their flight operations and sales solicitations programs to fit these communities' requirements rather than merely fitting these communities, regardless of their requirements, into the long-distance operations characteristic of the trunks. Today we have 14 local service airlines offering air service to the small communities in the United States. In addition to the original proceeding for a certificate of public convenience and necessity described above, all these 14 airlines have successfully undergone the proceedings for at least one renewal of their certificates. The following charts show the details of the local service carriers' certificate authorizations and renewals: And I won't go through those charts in detail, gentlemen. I will make a couple of observations in connection with them. (The chart above referred to is as follows:) One observation is that the arithmetic doesn't necessarily add up, in the cases of several of the carriers, in calculating renewal in terms of the previous expiration date and the subsequent expiration_date. By that I mean sometimes when it says in here a 4-year renewal, you will note that the new expiration date is not exactly 4 years from the previous expiration date. That is a matter of the way the orders read and there is no special mystery to that. I would like to point out a specific example, however, to show just what I have done here. Ozark, which is about half way down the column, Ozark's certificate expired September 1953. About a month ago they got a new certificate which expires September 1958. Theoretically, I suppose that is a 5-year certificate although it didn't say so on its face; it is only 32 years from now until the certificate expires, and actually there are still parts of that certificate in litigation so that even what there is cannot be called final. There are many other cases like this where the people have had a 3- or 4-year renewal, but a year or year and a half or more of the period has already gone by when they get their renewal, so the ostensible period of renewal and the actual period of renewal might be quite different. Senator MONRONEY. At that point they are undergoing sort of a suspended animation, not knowing whether they will be certificated or not; is that it? Mr. FLOBERG. Yes, they are operating under the provisions of the Administrative Procedure Act and they are in a kind of limbo, or rather purgatory, until the matter is decided. I might make a further observation, Senator. Although this chart shows that everybody has had 1 renewal and several have had 2, in practical effect some of these lines have been through 5 or 6 renewal proceedings because of the nature of having particular routes or segments in addition to their certificate renewed. Some of them are almost perpetually in a renewal situation. There is some point, in reference to this chart, Senator, where things cease to be experimental. I don't think anybody questions the wisdom of the Board in making the initial 3 years on an experimental basis, but |