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of NIMLO's rather extensive research report entitled "Airport Lease and Concession Agreements," so that each member of the committee may be furnished a copy. These copies are just off the press, and this is the first release of the study to anyone. The study is long and involved, and extremely technical, but we firmly believe that it has been carefully and conscientiously prepared with nothing but the interest of the public to motivate it. The study does not ask any special legislation from the Congress to force the scheduled air lines to be fair to cities, and we believe it reveals in startling fashion why this committee should not force cities to be unfair to their own taxpayers by continuing and increasing the unfair situation which now exists in most cities with respect to the use of city airports by scheduled air lines.
I do not say that this legislation was designed to offset the information contained in our study, but I do say that the air lines knew that this study was coming and they knew that upon the facts as revealed in city after city, that they themselves would be revealed in an unfavorable light. This is true, even though you will find that our study quotes lengthy explanations of the position of the air lines as written by the air lines--on various subjects, as we have tried to be extremely fair and set forth the air lines' position even though we did not agree with it.
This committee is well aware of the fact that city after city has been hesitant to accept funds under the Federal Airport Act because of the restrictions and the vacillating policies of the CAA. If the amendment proposed in H. R. 6180 becomes law, I do not see how any city in the Nation could accept funds under that act. Is it not rather illogical to plan a national airport system and yet jerk out from under the cities which accept a part in this system the financial basis upon which they must operate their airport? I know that "subsidy" is considered to be a bad word by the air lines, and I use it deliberately because of that fact, but is it not true that H. R. 6180 is designed entirely to hand them an additional, and I submit unreasonable, subsidy?
It may well be said by the air lines that the thinly disguised purpose of H. R. 6180 is to let them be free of all possible charges which might cover gasoline. It may interest the committee to know that the study which I am filing with you reveals that the only financially selfsufficient airports in the United States are those which receive their major revenue from the sale or handling of aviation gasoline. What the air lines want is to have cities furnish them with a gasoline filling station "for free.” How many of our thousands of gasoline filling stations throughout the Nation would react favorably to a Federal law which required them to allow automobiles to be parked in their filling station while gasoline bought from someone else, and on which someone else was making a profit, was inserted in the automobile tanks? Automobiles use highways on which Federal funds are spent, and I suppose that following the logic of this bill, Congress could welí say that cities and States who refuse to help them enforce such a requirement of free use of filling stations for filling purposes by others would lose all Federal aid to their streets and highways.
To take up food, beverages, and other items covered by H. R. 6180 would unduly prolong this statement. The imposition from "on high,” through Federal legislative edict, of restrictions such as those proposed by H. R. 6180 would be just as illogical and just as unreasonable.
It can be seen that H. R. 6180 would legislatively insure that there be no self-sustaining airports in the United States as a condition for Federal aid. I doubt seriously that even the air lines can logically support such a position. I knew they were desperate, but I never thought they would reach this state.
I think I know the real purpose of H. R. 6180 when I tell you it is a little-hoped-for "legislative insulation" against the feeling of cities that the air lines have“burned them” on airport-use leases in the past. The air lines feel that “their chickens are about to come home to roost” and they know such a homecoming will hurt and hurt and hurt. They also know why it will hurt.
Fred T. Van Liew, former city solicitor of Des Moines, past president of NIMLO and former chairman of NIMLO's airport committee, the man whom I just recently succeeded, summarizes this whole picture on air-line use of airports in the study I have handed to the committee when he says, at page 10:
I am also greatly impressed with the facts showing that Tulsa and a few other airports are operating entirely in the black due to revenue received from the city's exercise of an exclusive right to sell gasoline at the city-owned airport. The thousands of gasoline service stations throughout the Nation are ample evidence of the fact that money can be made out of the sale of gasoline and I cannot understand why CAA in its latest regulations tries to prevent cities from realizing revenue from exclusive gasoline sales concessions. After all, the airport is a gasoline service station and if properly handled it is evident that revenue from gasoline sales would make most, if not all, of the airports self-supporting. When the air lines try to direct attention away from revenues from gasoline sales and yet retain a landing-fee system under which they pay less than 1 percent of their revenues for airport use, it is time for city officials to give some thought to both of these subjects. Sooner or later the air lines, which enjoy a monopoly under their certificates of public convenience and necessity-a monopoly which is sometimes exclusive-must, through fair-minded management, face the fact that city taxpayers expect some evidence of fair play, and I am certain that such evidence has not always been present in the dealings between air lines and cities in the past.
In closing, Mr. Chairman, may I report this to the committee: I conferred today with Col. Paul V. Betters, the executive director of the United States Conference of Mayors, who advised me that I could inform this committee that Mayor George Welsh of Grand Rapids, the president of the Conference of Mayors, and Mayor D'Alesandro of Baltimore, the chairman of the executive committee, both agree with this statement which I am presenting here today, and urge the defeat of this legislation; and state further that if there is any danger of this legislation being reported out favorably, that they would like to appear here and testify themselves.
Mr. DOLIVER. Are there any questions of the witness?
Mr. HESELTON. I have not had an opportunity to examine carefully the study here by Mr. Rhyne, but there are some things I have caught as I went along that inteest me, and I wondered if you might not care to elaborate briefly on them.
On page 12, in the introduction, it says:
In June 1947 the National Institute of Municipal Law Officers issued four proposed model agreements for comment. These were: (1) air-line lease agreement; (2) fixed-base operators' agreement; (3) restaurant-concession agreement; and (4) aviation-gasoline concession agreement. _Copies of these models were furnished to all NIMLO members and to the Air Transport Association. Comments from NIMLO members were received and the Air Transport Association requested a conference to discuss, section by section, the provisions of the model air-line lease with the hope that some understanding might be reached as to certain of the provisions whlch were objectionable to the air lines. This meeting was held October 27 to 28, 1947, in Washington.
Now, I did not understand that that had been fruitful. I am not sure that I have seen what the result was. Did anything come of that?
Colonel KELLY, Mr. Rhyne is here, and I think that he can tell you about that. I have just been appointed chairman of this committee, and I just took office the first of the year, and my predecessor worked with Mr. Rhyne, and I have worked with Mr. Rhyne briefly the last few days. If you would like to ask him, he is sitting right here. He was not intending to testify.
Mr. HESELTON. I wonder if Mr. Rhyne might not give his name and position and address?
Mr. DOLLIVER. Will you give your name to the reporter, and your occupation?
STATEMENT OF CHARLES S. RHYNE, GENERAL COUNSEL OF THE
NATIONAL INSTITUTE OF MUNICIPAL LAW OFFICERS, WASHINGTON, D. C.
Mr. RHYNE, My name is Charles S. Rhyne. I am general counsel of the National Institute of Municipal Law Officers, and my address is 730 Jackson Place NW., Washington, D. C.
In response to your question, I must say that the conferences we held with the Air Transport Association, and the information that we received from the gasoline people and others, was very helpful.
Our original lease agreements contained a number of things that we did change as a result of the conferences. We of course do not agree with them wholeheartedly on everything, and I think that probably the chief difference of opinion related to gasoline.
Our feeling—and when I say “our” feeling, these conferences, Mr. Congressmen, were attended by quite a number of city attorneys and city officials from throughout the country, who are more or less expert on this subject because they had worked on it for a long time
Mr. HESELTON. I see quite a list here, and if you would like to have your record clear on that statement, I will ask that the reporter list the approximately 25 representatives at the conference, so that what we are saying now will be appropriate.
Mr. DOLLIVER. That will be done.
Sidney Goldstein, assistant general counsel, Port of New York Authority, New York, N. Y.
William Schwarz, chief, Scheduled Air Transport Bureau, Port of New York Authority, New York, N.'Y.
Robert D. Morrison, city attorney, Lynchburg, Va.
Harry A. Johnston, county attorney, Palm Beach County, West Palm Beach, Fla.
Larry B. Hickam, aviation director, Palm Beach County, West Palm Beach,
W. Glen Harlan, Eastern Air Lines, Atlanta, Ga.
William G. Van Meter, Eugene J. Bradley, Charlie 0. Murphy, and Brice W. Rhyne of NIMLO's staff.
Mr. RHYNE. What we did was sit around the table and talk about what we thought the cities should do.
Mr. HESELTON. Did you have occasion at that time, in any of these model agreements, to discuss with the Air Transport Association this question of developing a landing fee schedule which would be acceptable?
Mr. RHYNE. Yes, we did.
Mr. RHYNE. Not too far, because our schedule developed that the landing fees were very small, and the air lines kind of gang up on our city officials in city after city, and when they try to negotiate an agreement down here in Richmond, Va., all of the air lines that use the city airport go as a group and demand a joint treatment.
Now, one air line might come in there with one schedule a day, and one may come in there with 50, but they all want to be charged exactly the same amount for that schedule. And one of the recommendations of our report is that cities abandon the schedule system and go to an actual-use system, so that the payments that air lines make to cities will be based on actual use of the airport.
Mr. HESELTON. Now, this question could be asked of either yourself or Colonel Kelly, whichever one wishes to answer the question. Has your experience in attempting to negotiate a satisfactory landing-fee schedule been such as to give you any optimism about the possibility of developing that in the near future?
Mr. RHYNE. No, Mr. Congressman; it has not, because as I say, the representatives of the air lines all go together, and they of course are all concentrating on knocking down the existing landing fees, and when you try to tell them that your city airport budget requires more money and everything, they always suggest that you take it out of the nonscheduled people; and of course, the nonscheduled people suggest that you get it out of the scheduled air lines. And it is awfully hard for the city officials to deal with these experts from the air lines, because they go from city to city, and they know how to chisel them down on every little item and to get everything into these agreements that they want.
I think the one thing that we get from city officials on this is that the air-line people are just too expert in this field, and that they need something to help them and they don't think that there is much possibility of getting the landing fees raised to a point where the landing fees alone will support airports.
They think that they have to tap all of these various sources of possible income at airports, all of these various concessions within the administration building, the restaurant, and those kinds of things, and the parking concessions. You will notice that our study examines every little possible source of income to every airport, and tries to indicate how cities can develop other sources of income, because it is generally conceded that the landing fees, which are very nominal now, you would have to double them and triple them and probably even more than that, to meet city airport budgets.
That is the reason for considering gasoline, where they come in and use the city airport as their filling station, and they use all of the airport's facilities and park on the ramp and create quite a fire hazard, and other things; there is quite an argument, as you will see developed in our study, there back of the idea of a gallonage fee, which we recommend in our final draft of the model air-line agreement.
Mr. HESELTON. It might be appropriate to quote another paragraph of this work of yours, Mr. Rhyne, after hearing you tell about the experts ganging up on the local officials, when you say, at page 13:
Some NIMLO members feel strongly that this unified front of the air lines to force an equal rather than a competitive agreement is a conspiracy in restraint of trade and is in violation of the antitrust laws.
Mr. RHYNE. I might say that they feel, in words that I could not express in print, that they very definitely come off second-best in trying to meet these air lines and discuss this landing-fee system with them. That is the reason they think that they have to tap all of these other sources of income. Of course, gasoline happens to be one of the most lucrative of all sources.
Mr. HESELTON. Looking at it from a long-range point of view, and I have in mind a point in your testimony, Colonel Kelly, that I think is very significant, where you said- , City officials and city taxpayers have begun to look at operation deficits at airports with a most critical eye. and you might add Federal Taxpayers and Congressmen do that, I am sure. They are wondering how scheduled air lines can spend millions of dollars for advertising, the most expensive ticketing procedure in the world, and other luxuries, yet spend less than 1 percent of their total revenues on their most essential facility—the airport.
That strikes me as an extremely significant point, and I think perhaps you might care, for the record, to set that out'in dollars and cents, if it is easily available, so that we could just see the figures in front of us. But that is just a suggestion, and if it is available in the book we will find them there
Colonel KELLY. They are in the book.
Mr. HESELTON. What I am getting at was from the long-range point of view, to help the industry, one that is operating to its greatest extent, should not the air lines think at least on the side of those who are operating these various essential airport facilities, trying to operate them at their maximum and at their best, and foresee the time when, if they can only get themselves onto a self-sustaining basis and if this traffic increases as all of us think it will, both passengerwise and freightwise, that it would all redound to their benefit? It could be the possibility of even reducing the charges to the air lines if you could only be given a little encouragement to try to put your ports on a sound and businesslike basis.
Colonel KELLY. I agree with you, Mr. Congressman. I think the air lines should make greater efforts to cooperate with the cities so that