Senator BASS. You have gone on a waiting line? Senator Moss. Yes. Senator BASS. Do you know what has happened on commuter service from Washington to New York? Senator Moss. No; I don't know the figures on it. Senator BASS. They started a shuttle flight several years ago, and I read in the press, where it was the most profitable service that had been performed, and I know I have ridden it several times and usually they have to put on an extra section. And they started out, if I remember right, Mr. Chairman, the price was $13? Senator MONRONEY. $12 or $13. Senator BASS. And they announced it was the most profitable flight they had ever had. And the last time I rode it it was $18. But I don't know if any new airline has been certificated to run this service from here to New York. Maybe if they had a little competition, they would get back down to $13 or $14 and it would be profitable. Senator MORTON. There are plenty of airlines between here and New York. Senator Bass. I am talking about shuttle service. Senator MORTON. You don't need special certificate for a shuttle. Senator BASS. So they have an agreement then, is there some collusion we go up on price and nobody will get in with us? Senator MORTON. American has their coach. Senator BASS. On shuttle service? Only one shuttle? Senator MORTON. You buy the ticket on the plane, but you have planes going. Senator Bass. And they don't have a certificate to operate shuttle service? Senator MONRONEY. Any certificated airlines can put in a shuttle service on their route, but the main thing about it is that it is short haul. This is what is involved primarily in this frequency of service, in our intermediate cities, is the airlines all have gone for the longer haul which is supposed to be the most profitable. And the short run from Washington to New York City, is not considered a very highly profitable run. That is one reason I presume Eastern has been able to get away with the $18 fare, because while it is older equipment, the fact is that it offers standby service without reservation, and that has made it one of the most popular from standpoint of total traffic. Senator Bass. I think maybe we ought to have some more of this. We have some of the nonscheduled airlines, they have a lot of good equipment. Maybe we should put some of them in business of operating commuter service in some of the intermediate cities. We might have to subsidize them as we did the others until they get on their feet, but we could, I know we have some in Tennessee, have some nonscheduled airlines that might want to operate. You probably have some out in your area. Senator Moss. We do. Senator Bass. Maybe we could let them start some commuter service and start a little competition to see if we couldn't get some service like they have in Europe. The airline service in Europe is 100 percent better than it is here. You can go over there and fly anywhere you want to, Geneva, Paris, Rome, London, 15, 20, 30 airlines a day and over here you have to sit around and beg. That is all. I appreciate your statement. Senator MONRONEY. Any further questions? Were there any other Members of the House or the Senate that are here today to testify? We will take them each day. Thank you Senator Moss for helpful and timely statement. We appreciate it. your very Our next witness is Mr. Romert T. Murphy, Vice Chairman of the Civil Aeronautics Board. Vice Chairman Murphy, we welcome you and members of your staff to the committee again. We appreciate your help and advice on this very important subject that we are discussing, the adequacy of service to the medium-sized intermediate cities. STATEMENT OF ROBERT T. MURPHY, VICE CHAIRMAN, CIVIL AERONAUTICS BOARD; ACCOMPANIED BY 0. D. OZMENT, ASSOCIATE GENERAL COUNSEL; JOHN W. DREGGE, DIRECTOR OF COMMUNITY AND CONGRESSIONAL RELATIONS; IRVING ROTH, DIRECTOR, BUREAU OF ECONOMIC RELATIONS; AND W. R. WILLIAMSON, CHIEF, TRUNKLINE SECTION OF THE ROUTES AND AGREEMENTS DIVISION Mr. MURPHY. Thank you very much, Mr. Chairman. Perhaps for the record I should identify the gentlemen with me: On my left is Mr. Ozment, our associate general counsel; and on my immediate left, John Dregge, the Director of our Office of Community and Congressional Relations; and on my right is Mr. Roth, the Director of our Bureau of Economic Regulation; and on my immediate right, Mr. Williamson, Chief of our Trunkline Section. Mr. Chairman and members of the committee, I am pleased to meet with you today in your review of the adequacy of trunkline air service to medium-sized intermediate cities. I can assure you that the Board is aware that, despite the significant and impressive improvements in our national air transportation system over the past several years, there remain communities which do not now receive a wholly satisfactory pattern of service. However, the Board believes that it can say with some pride that this Nation has developed the greatest and the soundest air transportation system in the entire world, both domestically and internationally. During the 27 years that have elapsed since 1938 when air transportation was placed under economic regulation, we have progressed from a small DC-3 fleet, with limited passenger capacity and a relatively short cruising range, to the large, longer range, and more efficient jets. In 1938, the airlines operated a total of 254 aircraft in domestic and international operations, of which less than one-half were 21passenger DC-3's, the most modern aircraft at that time. Today, the U.S. carriers operate almost 2,100 multiengine aircraft with 563 of them being the modern-day jets. In 1938, there were some 1,300,000 passengers, and last year there were more than 83 million. In terms of passenger-miles, the traffic of 1965 is over 100 times greater than the traffic in 1938. The number of cities in the 48 contiguous States receiving air service in 1938 was 182; in 1965 it is 518. Senator MONRONEY. Would that be trunk service or total service? Mr. MURPHY. That would be total service, Senator. We can give you a breakdown on the total number of cities served by the trunks Senator MONRONEY. I would like to get that for the record. Mr. MURPHY. All right, sir. (Subsequently, the following information was received:) The following information is in response to a request of the Aviation Subcommittee of the Senate Commerce Committee: As of June 30, 1965, the number of domestic points authorized for scheduled air transportation were: Mr. MURPHY. During these 27 years the domestic air carriers have been under the affirmative duty imposed by section 404 to provide "adequate service" to the cities served by them. Despite the changes that have occurred in operations, the statutory obligation of the carriers has remained unchanged. However, there certainly has been a change in the type of service which is necessary to meet the "adequate service" standard. That standard is not fixed and rigid, but depends on the facts and circumstances in a given case. What was adequate in 1938 is not adequate today. And what is adequate today may be inadequate tomorrow. Adequate service has been said by the Supreme Court to be a relative term calling for such facilities as might be fairly demanded, regard being had, among other things, to the size of the place, the extent of the demand for transportation, to cost of furnishing the additional accommodations asked for, and to all other facts which would have a bearing on the question of convenience and cost (Atlantic Coast Line v. Wharton, 207 U.S. 328, 335). Senator MONRONEY. Not an airline but a railroad case? Mr. MURPHY. A railroad case, that is true, Senator. The language in our statute is comparable to the language found in the Interstate Commerce Commission Act. Thus, a proper evaluation of adequacy of service requires an appraisal of all the facts and circumstances affecting the service and its use by the public at a particular time. Moreover, the Board may not compel an air carrier to provide improved or new services without full evidentiary hearing and without according the carrier the procedures guaranteed to it by the Administrative Procedure Act. The Board must find on the record that the service is inadequate and determine what additional services the carrier should be compelled to provide to remedy the defficiency. This necessarily involves a consideration of such questions as whether new single plane or connecting service should be ordered, as well as the number of flights required and their timing, permissible number of intermediate stops, the class of service to be provided, that is, coach or first class, the equipment to be used, and the effects such changes in the carriers' pattern would have on other communities. All of these factors, in turn, must be considered in terms of the economic feasibility of the additional and improved service to be ordered. It is obvious why such proceedings would be complex, time consuming, costly, and burdensome on the communities, the carriers, and the Board. I am sure that the committee is aware of the general background of the Boards' handling of adequacy problems. Nevertheless, it might be helpful if I briefly summarize the administrative history for the record. From 1938 through the middle 1950's, the Board largely relied upon the interplay of competitive forces to assure service adequacy. This was, of course, consistent with the basic philosophy of the act. By the late 1950's most of the major and many of the smaller markets had two or more competitors. Because of the competition which was thus provided, and the deployment made of the piston-aircraft fleet, the problem of overflying intermediate cities was not as acute then as it later became. However, the situation began to change in the late 1950's both from an economic and operational standpoint. The carriers were faced with the necessity of doubling, tripling, and even quadrupling their capital investment to secure jet aircraft with their promised greater passenger appeal and their potential service improvement and improved economy. At the same time, there was a decline both in traffic growth and in the carriers' earnings. In these circumstances, it became clear that the authorization of additional competitive services to insure adequate service could no longer be relied upon as it had in the past. Despite the competitive service pattern which the Board had established, there were still communities which had legitimate service complaints which the carriers were unwilling to satisfy on a voluntary basis. Consequently, the Board resorted to use of its statutory power under section 404 (a) to investigate the adequacy of air service at certain communities with a view to ordering such improvements as appeared warranted by the formal record compiled in the hearing process. During the late fifties the Board instituted four such proceedings. They were protracted; they were costly to the communities, the carrier, and the Board; and even upon their completion the Board was able to order only those minimum services for which it could find record support. From this experience it became apparent that the Board should explore other possible avenues for dealing with adequacy questions rather than attempting to proceed in the ordinary case by way of formal evidentiary proceedings. Accordingly, in 1961 we decided to create a new staff office and give full-time responsibility to a senior staff member to assist the communities in obtaining from the carriers those service improvements which they appear to need and desire. I am sure that most of you know the Director of our Office of Community Relations and are familiar with his work. He, of course, is John Dregge, sitting with me on my left. You may also know that he has had the support and assistance of our entire professional staff. At the time this new staff office was created, the Board widely circulated to the carriers and the communities, and to the Congress, a letter expressing, in part, its view that during the trunkline transition from piston to jet service many changes in the existing pattern of air service might take place, and that service disputes between carriers and communities could be best resolved through discussion and negotiation rather than formal adequacy-of-service proceedings. The services of the Office of Community Relations were offered to assist communities in obtaining improvements in air service which they believed were warranted. Since its creation, our Office of Community Relations has assisted many communities in their efforts to obtain needed new or additional air service. It has worked closely with more than 150 communities in solving their problems with the carriers. Both the communities and the carriers have been most cooperative. While these efforts have not always been successful, we also think that a great deal has been accomplished. It may be helpful to the committee to give specific examples of the manner in which the Board's use of informal conference procedures has served to dispense with the necessity of formal adequacy-of-service proceedings, and to accomplish on an informal basis at least as much as could have been done through formal proceedings. Two of these cases involved Oakland, Calif., and Baltimore, Md. In the case of Oakland, due to its satellite characteristics with San Francisco, the amount of air service through its own airport was practically nonexistent. The representatives of the community had filed a formal adequacy complaint, completely documented as to alleged service deficiencies and the required remedies. The carriers were apparently unwilling to provide the service. The prospect of a long and bitterly fought formal adequacy case seemed to be the only solution. However, shortly after the establishment of the Office of Community Relations, Mr. Dregge undertook to mediate and alleviate the Oakland problem. To make a long story short, direct air service was provided to Oakland's own airport and the public response has been such that the air carriers have continued to increase the number of frequencies and improve the character of services being provided. As a result, the city of Oakland has withdrawn its adequacy-of-service petition. The Baltimore case differs in certain respects from the Oakland case, but the end result has been the same. In this instance, the Board first held a lengthy proceeding and, as a result, ordered certain carriers to provide additional service in a number of markets. However, the resulting service pattern still left Baltimore unsatisfied. A conference was held between the Office of Community Relations, the carriers, and representatives of the city of Baltimore. Again, without filling the record with unnecessary detail, plans were reached by the air carriers which were satisfactory to Baltimore and the Office of Community Relations and the city withdrew its complaint. More recent examples of complaints which have been settled by our staff office in 1964 and 1965 are as follows: In 1964 (1) United instituted nonstop service between Huntsville, Ala., and New York City, and Eastern reinstituted nonstop service between Huntsville and St. Louis, with improved nonstop service to Chicago; and (2) American agreed to a nonstop California flight from Memphis, as well as providing improved service to the northeastern area of the country. I believe Senator Gore referred to that recent development. |