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Additional information submitted for the record by-Continued
Civil Aeronautics Board:

Reply to questions submitted by Mr. Staggers by letter of May 4,
1965---

Supplementary statement.

Appendix A-Comparison of passenger yield and operating
costs of international passenger/cargo carriers, 1946-64
(table).

Pagi

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38

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Appendix B-Rate power of foreign governments--
Appendix C-Comparison of ATA and board study of foreign
rate power of 13 countries where conclusions differ____
Appendix D-Power of the Civil Aeronautics Board to regu-
late rates in foreign air transportation------
Rate of return on investment for transpacific services, year
ending December 31 (table).

43

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Pan American Pilots, statement submitted by Curtis M. Olsen, chair-
man, system route committee...
Seaboard World Airlines, Inc., letter from John H. Mahoney, senior
vice president--

107

104

State Department:

Foreign countries which threatened to suspend operations of
U.S. air carriers during North Atlantic rate dispute of May
1963-

Reply to questions submitted by Mr. Friedel by letter of May 4,
1965---

64

66

INTERNATIONAL AIR FARES

WEDNESDAY, APRIL 28, 1965

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TRANSPORTATION AND AERONAUTICS

OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C. The subcommittee met at 10 a.m., pursuant to call, in room 2123, Rayburn House Office Building, Hon. Harley O. Staggers (chairman of the subcommittee) presiding.

Mr. STAGGERS. The committee will come to order.

Before we get into today's hearings on international rate legislation, I would like to make a few comments on one of President Johnson's announcements of yesterday.

We learned that Chairman Alan S. Boyd of the Civil Aeronautics Board has been appointed as Under Secretary of Commerce for Transportation. This news was received with mixed emotions because in the years since 1959, when Mr. Boyd first joined the Civil Aeronautics Board, I have been impressed with his industry, intelligence, and unquestioned integrity in fulfilling his difficult duties.

I say mixed emotions because I feel that the Civil Aeronautics Board and the aviation industry and the users of air transportation have benefited greatly under his leadership. In the years since 1959, revenue ton-miles of air freight have increased from some 35 to 78 million.

Revenue passenger miles have increased from 28 million to over 41 million. We have seen the successful transition from piston equipment to jet equipment, and an advance in available seat-miles from 46 to 75 million.

Mr. Boyd was first appointed by President Eisenhower, and in 1961 was appointed Chairman by President Kennedy. He has since been reappointed as Chairman at the beginning of each year, and, of course, the most recent appointment was under President Johnson.

He has made an enviable reputation for himself within the Civil Aeronautics Board, throughout the aviation world, and here before us in his numerous appearances as a witness.

I think that I and other members of the committee would deeply regret to see Mr. Boyd leave the Board and take on different duties in other branches of Government were it not for the fact that we can expect to have his presence at future hearings in his new role as Under Secretary of Commerce.

At this time I extend to you, Mr. Boyd, my heartiest congratulations. and my best wishes for your future.

Mr. FRIEDEL. I echo the remarks of the chairman and say that I have been greatly impressed with Mr. Boyd the times he has appeared before the committee. You have been very, very fair and decent.

Mr. BOYD. Thank you very much, gentlemen. I am truly pleased and humbled by your statements. I should say for the record, Mr. Chairman, that I would like Congressman Friedel to be assured that there were not any differences as to Friendship Airport that drove me off the CAB.

I do very much look forward to continuing to work in the field of aviation, which is my first love and has been the only interest I have had since 1959. In connection with your very kind words about the development in the period since I have been with the Board, I would like to say that what progress we have made has been due, in my judgment, to a tremendous staff at the Civil Aeronautics Board, the most competent group of people I have ever had the pleasure of being associated with in my life, and the very wonderful cooperation from the Congress in its efforts to wrestle with the problems which we have often unceremoniously dropped on your doorstep.

It has been a truly wonderful experience for me.
Mr. STAGGERS. Thank you.

Today the committee opens hearings on H.R. 465.
(H.R. 465 and agency reports thereon follow :)

[H.R. 465, 89th Cong., 1st sess.]

A BILL To amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (a) of section 404 of the Federal Aviation Act of 1958 (49 U.S.C. 1374(a)) is amended by inserting “(1)” immediately after “(a)" and adding at the end thereof the following new paragraph:

"(2) It shall be the duty of every air carrier and foreign air carrier to establish, observe and enforce just and reasonable individual and joint rates, fares, and charges, and just and reasonable classifications, rules, regulations, and praetices relating to foreign air transportation; and, in case of such joint rates, fares, and charges, to establish just, reasonable, and equitable divisions thereof as between air carriers or foreign air carriers participating therein which shall not unduly prefer or prejudice any of such participating air carriers or foreign air carriers."

SEC. 2. Section 801 of the Federal Aviation Act of 1958 (49 U.S.C. 1461) is amended by inserting "(a)" immediately after "801" and by adding at the end thereof the following new subsection:

"(b) Any order of the Board pursuant to section 1002(f) requiring that an air carrier or foreign air carrier discontinue demanding, charging, collecting. or receiving a rate, fare, or charge for foreign air transportation, or enforcing any classification, rule, regulation, or practice affecting such rate, fare, or charge, and any action of the Board pursuant to section 1002 (g) suspending the operation of a tariff filed with the Board by an air carrier or foreign air carrier stating a new individual or joint rate, fare, or charge for foreign air transportation, shall be subject to the approval of the President: Provided, That any order of the Board directing an air carrier or foreign air carrier to alter any rate, fare, or charge, or any classification, rule, regulation, or practice affecting such rate, fare, or charge, to the extent necessary to correct any discrimination, preference, or prejudice, and any order that the air carrier or foreign air carrier shall discontinue demanding, charging, collecting, or receiving any such discriminatory, preferential, or prejudicial rate, fare, or charge, or enforcing any such discriminatory, preferential, or prejudicial classification, rule, regulation, or practice, shall not be subject to such approval. Copies of any such proposed orders, and of proposed statements containing reasons for suspension, shall be submitted to the President by the Board before publication."

SEC. 3. Subsection (d) of section 1002 of the Federal Aviation Act of 1958 (49 U.S.C. 1482(d)) is amended by changing the colon following the word "effective" to a period and striking out the following: “Provided, That as to rates, fares, and charges for overseas air transportation, the Board shall determine and prescribe only a just and reasonable maximum or minimum, or maximum and minimum rate, fare, or charge."

SEC. 4. Subsection (e) of section 1002 of the Federal Aviation Act of 1958 (49 U.S.C. 1482(e)) is amended by inserting the words "and foreign air carriers” after the words "air carriers" where they appear in paragraphs (2) and (3) of the subsection, and by inserting the words "and foreign air carrier" after the words "air carrier" where they appear in paragraph (5).

SEC. 5. Subsection (f) of section 1002 of the Federal Aviation Act of 1958 (49 U.S.C. 1482(f)) is amended to read as follows:

"RATES AND PRACTICES IN FOREIGN AIR TRANSPORTATION

"(f) Whenever, after notice and hearing, upon complaint or upon its own initiative, the Board shall be of the opinion that any individual or joint rate, fare, or charge demanded, charged, collected, or received by any air carrier or foreign air carrier for foreign air transportation, or any classification, rule, regulation, or practice affecting such rate, fare, or charge, or the value of the service thereunder, is or will be unjust or unreasonable or unjustly discriminatory, or unduly preferential, or unduly prejudicial, the Board may alter the same to the extent necessary to correct such unjustness, unreasonableness, discrimination, preference, or prejudice and make an order that the air carrier or foreign air carrier shall discontinue demanding, charging, collecting, or receiving any such unjust, unreasonable, discriminatory, preferential, or prejudicial rate, fare, or charge, or enforcing any such unjust, unreasonable, discriminatory, preferential, or prejudicial classification, rule, regulation, or practice. The Board may in the aforesaid order set forth and prescribe the lawful rate, fare, or charge (or the maximum or minimum or the maximum and minimum thereof) thereafter to be demanded, charged, collected, or received, or the lawful classification, rule, regulation, or practice thereafter to be made effective."

SEC. 6. Subsection (g) of section 1002 of the Federal Aviation Act of 1958 (49 U.S.C. 1482 (g)) is amended

(1) by striking out the words "interstate or overseas";

(2) by amending the parenthetical phrase following the word "joint” to read as follows: "(between air carriers, between foreign air carriers, or between an air carrier or carriers and a foreign air carrier or carriers)"; and

(3) by inserting the words "or foreign air carrier" after the words "air carrier" wherever they appear therein.

SEC. 7. Subsection (i) of section 1002 of the Federal Aviation Act of 1958 (49 U.S.C. 1482 (i)) is amended by changing the colon following the word "operated" to a period and striking out the following: “Provided, That as to joint rates fares, and charges for oversea air transportation the Board shall determine and prescribe only just and reasonable maximum or minimum or maximum and minimum joint rates, fares, or charges."

SEC. 8. The amendments made by this Act shall become effective thirty days after the date of enactment of this Act.

EXECUTIVE OFFICE OF THE PRESIDENT,

Hon. OREN HARRIS,

BUREAU OF THE BUDGET, Washington, D.C. April 26, 1965.

Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: This is in reply to your request for the views of the Bureau of the Budget on H.R. 465, a bill to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation, and for other purposes.

The purpose of H.R. 465 is to secure for the U.S. Government a position of control of international air rates comparable to that of most foreign governments. At present, the power of the Civil Aeronautics Board over the rates

and practices of both U.S. carriers engaged in foreign air transportation and foreign air carriers is limited to removing any discrimination found to exist after notice and hearing. H.R. 465 would give the CAB discretionary authority to prescribe rates and practices and to suspend tariffs of U.S. and foreign air carriers in foreign air transportation under the same ratemaking standards that apply to interstate air transportation. This authority would be subject to the approval of the President to assure consistency with the general foreign policy and security objectives of the U.S. Government.

Enactment of this bill would give the CAB necessary powers to protect U.S. travelers and shippers and would carry out a recommendation of the statement of international air transportation policy, approved by President Kennedy in April 1963, that “*** Congress should adopt legislation which would give to the Civil Aeronautics Board authority, subject to approval of the President, to control rates in international air transport to and from the United States." The Bureau of the Budget strongly recommends enactment of H.R. 465 and advises that its enactment would be consistent with the administration's objectives.

Sincerely yours,

Hon. OREN HARRIS,

PHILLIP S. HUGHES, Assistant Director for Legislative Reference.

DEPARTMENT OF STATE, Washington, D.C., April 27, 1965.

Chairman, Committee on Interstate and Foreign Commerce,
U.S. House of Representatives.

DEAR MR. CHAIRMAN: In your letter of February 4, 1965, you requested the Department's views on H.R. 465, a bill to amend the Federal Aviation Act of 1958 to provide for the regulation of rates and practices of air carriers and foreign air carriers in foreign air transportation and for other purposes. The Department strongly supports enactment of this legislation.

H.R. 465 is identical to H.R. 6400 which you introduced in the 1st session of the 88th Congress and which was not reported out of your committee during the 88th Congress.

The Department first commented on this bill in a letter to you dated July 26, 1963. In that letter, we anlayzed in detail the effect which the passage of H.R. 6400 would have on our scheme of bilateral air transport services agreements and concluded by strongly supporting its prompt enactment. We renew this support now. We believe that experience since the North Atlantic rate dispute of the spring of 1963 demonstrates anew the need for this legislation.

I should like at the outset to review briefly the various letters and certain aspects of the public testimony which the Department of State directed to your committee following our original comments of July 26, 1963. These letters, along with testimony, amplified the reasons for and gave a more detailed clarification of the Department's original position.

By letter dated September 8, 1963, the Department replied to the questions posed in your letter of August 8, 1963. In our letter, we discussed the problem, which we still believe to be an illusory one; namely, that H.R. 6400 would not protect the United States against destructive rate cutting practices by foreign airlines flying to and from the United States. We pointed out that if any problem did exist with respect to destructive rate cutting practices, the Department would seek to solve this problem by negotiating either the Bermuda form rate article or the so-called new rate article, depending on whether the carriers of the country with which we were negotiating had a history of destructive rate cutting practices. We concluded that enactment of H.R. 6400 would, if anything, strengthen our position in solving the real problem-how to prevent international rates from rising.

On May 19, 1964, your committee opened public hearings regarding H.R. 6400. The then Legal Adviser of the Department of State presented a detailed statement supporting and urging prompt enactment and pointing out the differences between H.R. 6400 and the so-called ATA bill, H.R. 1716.

The statement outlined the advantages inherent in H.R. 6400 and the defects of H.R. 1716, in terms of our position to be able to influence the international air fare structure in the direction of lower rates. The statement also discussed

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