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Now, again, the only thing that is at stake here at the present time is whether an airport can operate in such a way as to recover its bare operating costs each year, which is little enough. Nobody is asking any air line or any oil company yet to contribute to the cost of the plant. That is the important thing in all of this discussion.
Now, we are telling you that when terminal buildings are built, and very few airports in the country of today have permanent terminal buildings—Washington is one, because obviously, it has received Federal funds to do it ahead of all others. Boston is building one now. The apron building is on the boards and in construction and the terminal building will be authorized, we hope, with another $15,000,000 on top of the $53,000,000 this month, by the Massachusetts Legislature.
When that building is there, then the opportunity will come to exploit concessions, ground transportation, taxicabs, limousines, shops, restaurants, bars, any kind of a business we can get in there to produce substantial revenue with the ultimate objective of taking the burden off the air-line user, if we can possibly do it. We want to do that.
But in the meantime we are talking only about operating costs, just that and not the plant, we don't think it is an unfair proposition that the air lines help us pay that, whether it comes out of the gasoline or whether it comes out of landing fees.
Now, in the case of this bill, it seeks to set apart one group, namely, the scheduled air lines, from any risk of having passed on to them any recognized and legitimate business license fee that the airport imaginably might impose upon anybody who does business at the airport. It makes no difference whether the person who does the business at the airport has a place of business on the airport or not. That is sometimes used as a distinguishing point, but obviously the major supplies of petroleum products in most cases have no place of business on the airport and do the largest business on the airport.
So, whether they have a place of business or not is not important. This legislation seeks for them to avoid any risk, and when I say "them” the air lines, that any business privilege placed upon someone else to do business and to make profits at the airport should by any chance be passed on to the air lines.
That is what it is about. We have many instances. The little fellow who comes in with a lunch wagon and we run a restaurant, we run a State airport, and we try to keep nobody out, and we try to let everybody in on an equal basis, and we are one of the very few State airports in the country, and as my statement shows, the reason we are is because the city of Boston years ago discovered that it couldn't afford it any longer, but the little fellow who comes in with the lunch wagon, and he wants to do business at the airport-well, we say “10 percent of the gross, Tony; that is what the restaurant pays. We are glad to have him, because he takes his wagon over to the hangars to serve the employees over there for whom it is too long a walk to come over to the restaurant. That is perfectly all right, and Tony pays his 10 percent. I don't know whether he adds that 10 percent onto the price of his coffee and sandwiches, and the air-line employees over in the hangars are not kicking about it.
But when you move into meals aloft, that is what they are called; the meals that are served by the air lines in their planes in flight, they are loaded on the ground-there every airport eater does or will have
we never can.
a restaurant which will be quite capable of furnishing those meals to any air-line user of that airport. But the air lines say, "We may not like his food.” “All right, get your food anywhere you want to get it, but we get 10 percent from our concessionaire, and so long as you have whatever supplier you chose to get your food from, pay the same privilege for doing his business in this airport with you, you can have it.”
In the case of American, there is right off the airport a subsidiary corporation known as “Sky Chefs”; it is an American Airlines subsidiary, and it is a commissary. It furnishes meals for American's apron service at Logan Airport. We can get nothing out of it, and the air line doesn't propose that we shall, and if this bill goes through
Under the existing CÁA regulations, as they are written, it cannot be done.
Then we move into oil. Oil, naturally, is a substantial item, because a great deal of it is delivered, and dispensed at an airport. We have two situations. We have the so-called fixed-base operator. He is the airplane garageman, if you will, the airplane repair fellow at the airport. In order for him to get a stand to do business on the airport he pays rent, and it is a basic rent for his space occupancy, and then he pays a percentage of his gross on top of that if he does the business which we hope he will, and if he does and it is successful we get a substantial income from that.
Now, he sells gasoline, like any garageman, and that is part of his business. Who does he sell it to? He sells it to the little private flyer and the occasional itinerant flyer, and the cargo carrier who is not a scheduled air liner, and what does he do? It costs him something to do business, so he tacks on some of that cost to his price to those users of his gasoline, because he has to pay it.
However, in the case of this bill, what about the scheduled air line? Nothing is said as to the fixed-base operator, or his passing his charge on to the little fellow that uses the airport, the occasional fellow. They say it is O. K. to stick him, but the big air line says, “We buy our gas off the airport and we don't patronize your fixed-base operator. We get it outside under our national contracts." All we say in that case
not to the air line, but to the oil companyis, "In order to dispense your oil or your airport gas on our airport you have to pay so much a gallon."
And who is it that objects? First of all, the air line, and the oil company always appears for him. The air line says, “We cannot afford to pay it," and we say, “We are not asking you to pay it; it is on the oil company.” The air line says, “But under our contracts with the oil company, it is provied that if there is any tax or fee or charge of this kind, the oil company requires that we pay it,” and the $64 question, of course, is “What is there to prevent à changing of the agreement between the air line and the oil company so that if the burden gets too heavy for the air line, the oil company can share it with them, his best customer, or one of his best?”
Now, that is what this thing comes down to. The charge is not placed on the air line, it is placed on oil, the oil company. There is no transaction between the airport and the air line, it is on the oil company. For putting the oil into the airport for the privilege of plying his trade inside an airport without which he would not have that source of business, that is on the oil company.
Now, that is the principle that runs through all of this thing, and related closely to it is landing fees. Why the air lines run the landing fees as the alternate, I can't understand, because landing fees which is one thing after they are established, will have to be paid solely by the air lines. Oil delivery charges can be shared. Landing fees can only be paid by the air lines, and they are assessed directly on the air lines and charges on oil are placed initially on the oil company, who then has the choice of passing it on to the air line or not, as it sees fit.
But nevertheless, when oil is discussed, the representatives of the air lines say, “It is not fair; it will cost too much and the oil companies will make us pay it, instead of paying it themselves." Yet, landing fees is suggested as the alternate, and the air lines know perfectly well that as to landing fees, there is no escape from those, but they suggest it as the alternate. There is an escape for them from oil if thu oil companies will collaborate with them.
But what has been the experience on landing fees? Most airports in the United States operate on what is known as schedules, air-line schedules. The schedule is this: The daily schedule would be the 2 o'clock plane from Washington to New York every day in the month. That is a schedule. It operates a minimum of 30 days per month. That is one schedule. I don't know how many of those there are operating out of Washington, but that 1 schedule involves 30 airplane landings in a month. Now, it is worked this way: For the first three of those schedules, the air line will pay $150 each, and then for the next three, it will pay $75 each, and all per month, and the three next from the seventh on it will pay $25 each. There are many, many airports in this country where the top-bracket landing fee from either the sixth or, say, the ninth schedule on, is $25 per schedule. What does that mean? It means $25 for 30 air-line landings. How much per landing, and how much per plane? It is less than a dollar per plane. And suppose the plane is a DC-4 with 60 people, how much per passenger is that? And if you try to increase that you get terrific opposition.
It comes down to almost fractions of a cent per passenger, the current rates which are so bitterly opposed.
Now, as far as the airport is concerned, I don't think that it carries any consideration as to whether it covers the cost; that is, the air line's fair share; and by the way, in any hearing, representatives of the air lines always talk about paying their fair share. In dollars, it has never been defined. That is the difficulty. They want to pay their fair share, but what is that fair share reduced to concrete dollars on some basis? But as far as the airport is concerned, it doesn't make any difference to the airport whether it recovers its landing-area costs, its operating costs, the air lines’ share for landing fees or from gasoline per gallonage charges; that is, from the airport's point of view. Presumably, if and when an adequate source of revenue were established in either one, the other wouldn't be necessary, so far as the airport is concerned, and I know the thinking in Massachusetts is that if we get one we will stop seeking the other, but so far we have been at it for one solid year, and we have not gotten either one.
We have met opposition in the case of either; bitter opposition. Very recently the Governor instructed the department of public works to carry out the legislative mandate in Massachusetts and put in an oil fee. That is still pending. Just a few days ago we informed the air lines that we would give them an opportunity to come up with a proper landing fee, and we proposed to them a new kind of landing fee, based not on schedules, but on weight of the aircraft.
* In other words, the proposal was 12.7 cents per thousand pounds of airplane. That is representative of only about half of our landing fee costs. Our landing fee costs are about $300,000 per year. Reducing that to terms of cents per thousand pounds of airplanes in accordance with the experience of the last year, the actual amount came out to 19 cents. Now, there is such a thing as competition. New York International has proposed 12.7 cents, or thereabouts; obviously, Boston, it would seem, would have difficulty in justifying the same rate, and certainly not any higher rate.
How, the reason that Boston in order to recover its costs would have to charge a higher rate, strictly, is because Boston has fewer number of airplanes landing and the greater the volume of airplanes the lower the price per plane may be. Therefore, to avoid exceeding the New York figure for the proposed New York International Airport, we cut it in half and finally resolved it at 10 cents per thousand pounds of airplane, which represented barely 50 percent of our landing area costs, just half of it.
That is all we were asking for, and we submitted it to the air lines, and met with terrific opposition to it. They said they were against it in principle. And yet, that plan of charging the airplane each time it lands on the basis of its weight at a set rate for all kinds of airplanes whether they be large or small is in general use throughout the rest of the world except in the United States. It is approved by the International Convention of Air Operators, and it is approved by the Civil Aeronautics Administration, and it is in effect in one airport, that we know of, St. Paul-Minneapolis, in Minnesota, but it is bitterly opposed by all scheduled carriers in this country.
Now, we are in the situation of "how shall we get it?" and while we are in that situation, trying to work it out, comes this bill. We say that in any charge which is a privilege charge for doing business at an airport on which something is deemed sold and upon which the person who sells it makes a profit, that there should be no burden on the airport to relate that charge to some specific cost related to the service rendered by the airport in connection with the delivery of the article under that business privilege.
There is no relationship, and a gasoline tax has no relationship to such a thing. Therefore, we oppose not only this bill, but we oppose the present regulations of the Civil Aeronautics Administration, and I ended up by recommending a bill in place of the bill which is before this committee, which reads as follows:
Provided, That the Administrator shall require no assurances from any airport sponsor that shall directly affect the economic or business management policy of an airport by prescribing a formula, standard, or ceiling for any rate, rental, charge, or fee established or to be established for any occupant or user of airport ground, building, or other space, facility, or business privilege.
The gist of the position of the Civil Aeronautics Authority here is to say to Congress, "Don't you regulate this sort of thing, let us do it.” Believe me, gentlemen, this is so complicated that the only power in this universe that could ever hope to do it is an Unknown Power above.
Mr. Hale. Thank you very much. Are there any questions?
Mr. HESELTON. First, may I say that I am aware, of course, of the recommendation of the legislation, and depending upon the testimony of the witnesses from the Civil Aeronautics Authority, I can assure you that I shall file that bill if it becomes necessary and I think it will be filed in the Senate contemporaneously.
If we have to get at it that way, all well and good. It is not the best way to get at it in my opinion.
Secondly, I would like to file for the record a letter addressed to myself, and say that a similar letter was addressed to every member of the Massachusetts delegation in both bodies, with reference to the controversy as to the 1948 Federal grant for the Logan Airport, dated February 13, and a copy of the project application which was submitted to the Commonwealth of Massachusetts, and a memorandum of the objections to certain provisions, and a statement by Governor Bradford of April 16 with reference to this matter, and a unanimously adopted resolution of the Executive Council of the Commonwealth of Massachusetts, April 14, in which they oppose what they describe as the unwarranted interference by Federal administrative agencies.
(The documents are as follows:)
THE COMMONWEALTH OF MASSACHUSETTS,
Boston, February 13, 1948. Hon. John W. HESELTON,
House Office Building, Washington, D. C. DEAR John: I am writing to each member of the Massachusetts delegation to ask assistance in meeting an emergency problem that has arisen in connection with the allocation of the 1948 federal grant for the General Edward Lawrence Logan Airport.
The Civil Aeronautics Administration allocated $600,000 from current appropriations for the development of the Airport, but insists that before the Commonwealth can receive the grant, it must sign a tentative so-called "Sponsor's Assurance Agreement” whose final terms have not yet been approved and published by the Administration.
The situation has become very serious due to a recent notice from the Administration that they will withdraw the availability of the $600,000 unless the Commonwealth agrees to execute the tentative form of agreement before February 16, 1948.
All of the Commonwealth's agencies concerned with the development and operation of the airport agree that several provisions of the "sponsor's assurance agreement” would seriously interfere with efficient and economical operation and development of the airport.
Neither the Civil Aeronautics Act of 1938 nor the Federal Airport Act of 1946 appear to authorize the imposition of such provisions as a condition precedent to receiving Federal funds. The last federal airport grant accepted by the State was not restricted by regulations forcing the surrender of so many vital construction and maintenance activities to federal control.
Generally, our basic objections to the proposed agreement are that they would impose Federal approvals and controls over those activities and business procedures not financed in any way by Federal funds.
In cases in which the Federal Government is furnishing a major share of the cost of airport development, there may be reason for requiring some assurance as to the future operation of the air field. Such is not the case with reference to Logan Airport where the total State's investment to date is nearly $50,000,000. The ratio of the proposed Federal grant to already expended State funds is about 1 to 100.
Under these circumstances, I can see no basis for the Civil Aeronautics Administration insisting on agreements by the Commonwealth that may unduly delay and even prevent the operation of Logan Airport on a self-supporting basis.