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Mr. Elton. We have made an effort to get those, to sit down and talk about it, and we have been informed that those are confidential matters of private business.
Mr. HESELTON. If I understand it correctly, this alternative that has been so highly recommended to this committee of developing a landing fee schedule which would accomplish the purpose of eliminating the known deficit in operating the Logan Airport has been completely impossible of realization due to the resistance of the air lines themselves.
Mr. ELTON. That is absolutely right, sir. And that dates even so recently as the refusal in the matter of the last few weeks.
Mr. HESELTON. Is it correct to state that as of this very moment the Commonwealth of Massachusetts, which as we all know pays somewhere between $3 or $4 of Federal tax revenue for every dollar that it gets out in the way of return, has been told in substance and effect by the CAA that the money appropriated by Congress and allocated to the Logan Airport in the amount of $600,000 will be denied them unless they yield before May 31 in their very sincere contentions that this is an unwarranted and illegal interpretation of the Federal Airport Act?
Mr. ELTON. That is right, sir. We have been given now until May 31.
Mr. HESELTON. So it is as close as that, and if they persist in their attitude the Commonwealth of Massachusetts will lose at least $400,000?
Mr. ELTON. It is about $450,000.
Mr. ELTON. $150,000 is so-called nondiscretionary fund, which would have to be reallocated to some airport in Massachusetts, but $450,000 would be lost.
Mr. HESELTON. Your deficit, demonstrated on experience, is something like $250,000 a year? It runs around that figure?
Mr. ELTON. It runs that, and an item we don't carry in there is the cost of policing, the State police do it, and it is not carried on our budget.
Mr. HESELTON. And all that is involved in this $600,000?
Mr. HESEL1ON. The actual agreement there that they are asking you to sign, which would eliminate the provisions that have been undertaken as a result of an act of the legislature, would mean that for 20 years you would bind the Commonwealth of Massachusetts to eliminate that revenue that they are now getting.
Mr. ELTON. As a practical matter, yes.
Mr. HESELTON. So the practical side of it is you multiply the receipts that you are now getting; and how much is that?
Mr. Elton. It is a minimum of 5,000,000 gallons at 3 cents, which would be $150,000 a year.
Mr. HESELTON. Would be multiplied times 20, and that is the amount that the Commonwealth of Massachusetts would lose if they accepted this provision of the Federal Government.
Mr. Elton. That is right.
Mr. HESELTON. And the proposition of the Federal Government only involves $650,000.
Mr. Elton. Yes.
Mr. HESELTON. I think that points up rather clearly that you have a situation here of which you had no adequate notice, and which in terms of Mr. Rhyne's book is so clearly described as a vaccilating and fluctuating policy of the CAA in which they first state they rely on section 11 (1), that the airport will be available for us on fair and reasonable terms, and then they go over to a first draft of an agreement in which they provide that the sponsor will not grant to any one airport service operator an exclusive right to sell gasoline or oil, and then they jump to 1946, to the statement that the sponsor shall not hereafter grant to any one the exclusive right to sell, and then they come up in the summer of 1947 with a most amazing letter, in which they said that this section permits the sponsor to exercise in its own right and exclusive right to sell aviation gasoline and/or oil.
It also permits the sponsor to exact a gallonage charge on gasoline and oil dispensed or used by other at the airport. The prohibition is that the sponsor will not after the date of the agreement grant to someone else the exclusive right to sell aviation gas or oil and then the general counsel, in a letter dated February 10 of this year, stated that the revised regulations will shortly be forthcoming, which "would permit the grant of an exclusive right to sell aviation gasoline and oil for terms not in excess of 3 years,” and finally, they come out with this new language, that they have incorporated into the proposed agreement in Massachusetts.
In other words, they are on and off again.
Mr. Elton. It is an endless performance for anyone to get involved in.
Mr. HESELTON. It may be there are not enough of us here in Congress who realize what this situation is, so that if they are going to persist in this matter in terms of just Massachusetts alone, we will not get
However, I have a strong suspicion that the Congress of the United States has had enough experience with the misinterpretation of the clear intent of congressional acts so that there may be a few ears willing to listen, to what I think is a distorted and unreasonable and higbly impracticable gun-at-the-head proposition that they are trying to hold up against my own State.
Mr. ELTON. I might just add one statement, Mr. Chairman, and that is this: that if the Civil Aeronautics Administration this year is going to prescribe a cost-basis formula for a gasoline charge, what assurance does any airport have that next year—as a condition of getting funds next year—the Civil Aeronautics Administration won't have been prevailed upon to establish a cost-basis formula for landing fees?—then they will have it all.
Mr. HALE. Are there any other questions?
Mr. HESELTON. The gentleman who was here from SoconyVacuum this morning after the meeting recessed handed me this tabulation from the American Petroleum Institute Committee, with reference to various kinds of taxation, and I wondered if I might ask that that be inserted at the place where it was requested.
Mr. HALE. Without objection, it will be so inserted.
Mr. HALE. The next witness is Mr. E. P. Owen, municipal consultant of the city of Jacksonville, Fla. I understand that Mr. Owen
was obliged to leave and that his statement will be offered by Mr. Rogers.
Mr. Rogers. I wish to file in the record at this point a statement by Mr. E. P. Owen, who is the municipal consultant of the city of Jacksonville, Fla.
Mr. HALE. The committee will be pleased to receive the statement.
(The statement is as follows:) STATEMENT SUBMITTED BY E. P. OWEN, JR., Municipal Consultant, CITY OF
JACKSONVILLE, FLA. This bill seeks to amend section II of the Federal Airport Act (U. S. Code, title 49, sec. 1110) to provide that if Federal aid is received, the scheduled air carriers shall have the right to obtain and take delivery of personal property of any nature, at the airport, including among other things gasoline, food and beverages, without the payment of any fees, charges, rentals, payments or taxes for the privilege, except those representing fair and reasonable compensation for services rendered in connection therewith.
Under the provisions of the proposed amendment, the city of Jacksonville, would stand to lose some $6,000 annually in airport revenue, which amount represents the 5-percent commission received by the city on "in flight” meals placed on airplanes in Jacksonville by the caterers serving the various air lines.
Under existing regulations, the right to require the use of storage, dispensing and delivery systems owned by the airport, when necessary for the safe and efficient operation of the airport, is eliminated. Another provision of the proposed amendment purports to exempt property and transactions of the air lines from State and local taxes “except for the payment of any tax which is imposed by the airport owner or operator upon business organizations in the tax jurisdiction.''
We do not feel that the cities should be deprived of the revenues they now receive as commissions on “in flight” meals and commissions they may later receive on other nonaeronautical services furnished the air lines.
Mr. HALE. The next witness is Mr. James C. Buckley, the director of airport development of the Port of New York Authority.
STATEMENT OF JAMES C. BUCKLEY, DIRECTOR OF AIRPORT
DEVELOPMENT OF THE PORT OF NEW YORK AUTHORITY, NEW YORK, N, Y.
Mr. BUCKLEY. The Port of New York Authority is a municipal corporate instrumentality of the States of New York and New Jersey created by treaty between the States in 1921, with the approval of the Congress, to deal with the planning and development of terminal and transportation facilities, and to facilitate the commerce of the metropolitan area.
Its geographic jurisdiction covers an area roughly 20 miles in radius around the Statue of Liberty in New York Harbor. Within the area there is a population of approximately 11 million, or more than 8 percent of the population of the continental United States.
The authority is given wide powers to finance, construct, and operate terminal and transportation facilities within the port district. It has no taxing powers; its projects must be self-sustaining and they are financed through the issuance of port authority bonds which are sold in the open market on the basis of the port authority's established credit base and its anticipated earning power.
As a part of its statutory obligations, and under its leases with the cities of New York, N. Y., and Newark, N. J., the port authority had the responsibility for operating, maintaining, and developing the air-line airports of the port district for a period of 50 years. Currently, we are operating LaGuardia Airport in New York City, and Newark Airport in Newark, N. J. On July 1, 1948, we shall open the great New York International Airport in New York City, and in about 10 years we anticipate that the air traffic of the New York region will require a fourth air-line airport.
The airports for which the Port of New York Authority is responsible under its leases with the cities of Newark and New York represent accumulated municipal investments of approximately $100,000,000. The port authority is prepared to invest an additional $200,000,000 in these facilities over the next 10 years to keep them abreast of the developing needs of commercial air transportation.
The marginal nature of this program is clearly indicated by the fact that even with a reasonable amount of Federal aid our anticipated margin, after all charges over the next 37 years, will average less than seven-tenths of 1 percent per annum on our invested capital. And the achievement of even this infinitesimal margin of safety is further contingent upon the greatest possible development of nonflight revenues at our airports through the exercise of good business judgment in their development and operation.
Today, however, that program as well as the program of every major air traffic center in the country is threatened by the bill which is before the committee. I am referring, of course, to H. R. 6180, a bill to amend the Federal Airport Act. It is important to have that in mind in considering any legislation which will hamper or in fact eliminate any ability of the airport operator to use his business judgment. That is the reason why today on behalf of the Port of New York Authority for the first time in my experience before this committee, we are wholeheartedly opposing a bill completely and unequivocably, and we recommend and urge that the bill neither be approved or reported out on the floor of the Congress.
Gentlemen, it has been my privilege from time to time over the past few years to testify before this committee on various measures affecting our national transportation pattern. Today, for the first time in my appearances before this committee, I must state that the organization which I represent is inequivocably opposed to the measure before
you. We urge that this bill not be approved by the committee and not be recommended for consideration by the House. Let me review briefly a few of the many compelling reasons which have brought us to this view.
Passage of this will force the continued subsidization of scheduled air carriers by local municipalities and authorities who accept Federal airport aid. Under this bill, the scheduled air carriers will be relieved of paying their fair share of the cost of providing and maintaining facilities at airports which are used by them and their suppliers. Under this bill, the airport operator could charge only “for the cost of any service rendered in connection” with the procurement by the scheduled air carrier of personal property of any nature.
This provision obviously intends that charges made on account of gasoline, oil, flight meals, and other supplies brought into the airport from the outside shall be based solely upon services, if any, rendered by the airport operator directly in connection with such supplies. It obviously is intended to prevent the airport operator from including à fair and just proportion of his general expenses in connection with facilities used by air line suppliers in common with others. Such unjust discrimination in favor of one group cannot be defended.
A point which I do not think has been brought out too well to the committee is this: There are many expenses at an airport in connection with facilities which are used in common by suppiers which have nothing to do with the space which an individual supplier uses exclusively. For example, at our airports in connection with the delivery of personal property, including gasoline to scheduled air lines, we have to do maintenance dredging in our channels so that the oil barges can come up, and so that the scheduled carriers can have the substantial money advantage of getting their gasoline delivered by barge instead of having it come in by motortruck. But we have to see that those channels are maintained.
At port authority airports, for example, we have to do maintenance dredging in our channels so that oil barges may make delivery of gasoline for the scheduled air carriers who thus enjoy a much lower rate than if delivery were made by tank car or truck. We have to maintain the bulkheads at which those barges tie up; we have to provide rights-of-way for pipe lines to handle this gasoline or we must maintain special roadways for the use of gasoline tenders if distribution is by motortruck within airport boundaries.
On other types of personal property delivered to scheduled air lines at our airports, as well as on the handling of gasoline within the airport, we must maintain police protection and traffic regulation. We must have fire protection, particularly with reference to the handling of gasoline in the hangars and on the loading ramps; we must have expensive snow-removal equipment manned by regular personnel available at a moment's notice so that the roadways within the airport may be kept open for delivery of essential items of personal property to our air-line tenants. And we must have a supervisory staff which can direct all these activities, a goodly portion of whose salaries under a sound cost-accounting system are allocable to the public areas of the airport used in large measure by suppliers of personal property to scheduled air carriers. In other words, gentlemen, the delivery of a box of chewing gum to a scheduled air carrier on an airport costs the airport management dollars and cents even though the airport does not provide any special service directly in connection with that delivery.
But under this bill, if passed, if we were to accept Federal aid we would be denied the right to recover any of that cost for facilities which are used in common. We could only recover our cost in connection with things that we did directly in connection with the delivery.
Mr. BUSBEY. May I interrupt there? In filing these landing charges for air lines, are these extra costs that you are now speaking of taken into account?
Mr. BUCKLEY. No, sir; they are not. We have just adopted a tariff for New York International Airport to which Mr. Elton made reference; in establishing the rate base for that tariff for the flight fees in that tariff, we computed the cost of the landing area, the
runways and the taxiways, which we considered to be in the nature of a public utility, where the air lines would land and taxi. We did not include the cost of these other facilities which are used in common, because in our judgment those are not proper charges against the landing area.