airport. It is obvious, considering both of these operations, that the heavy gallonage charges which X would be required to pay bear no reasonable relationship to its use of the field, when compared with Y's very small payments and very substantial use.

Approaching the question of gallonage charges from the viewpoint of airport management, it is apparent that those airports which, for operational reasons alone, are major fueling stops would receive unjustifiably large revenues from this source, as compared with other fields where comparatively little fueling is done, but which contribute considerable traffic to, and furnish important services for, the air lines concerned.

The air lines and the Civil Aeronautics Board vigorously condemn the sale or delivery of aviation gasoline as a means of raising airport revenues, and recommend the use of landing fees, geared to the number of landings and types of equipment, as the equitable way for establishing the fair and full share of the air lines' contribution to the cost of operating and maintaining the airport.

The air lines are tenants on the airports which they serve and should have the right, upon payment of their "rent," in the form of hangar and terminal building rentals, and landing fees, to carry on their normal business at airports without having to bear additional fees and charges for this privilege.

It has been said that while the potential danger to the air lines from exclusive concessions and gallonage surcharges and special taxes is very great, actually the airport managements throughout the country have shown little inclination to raise revenue by these means, and hence the whole subject is academic only. Let me assure you that such is certainly not the case.

At the Washington National Airport there exists at this moment an exclusive concession for the sale of aviation gasoline. For this privilege the concessionaire pays to the airport a fee of $150,000 per year, which, in full, is passed on to the air lines using the airport. Although the air lines using Washington National have, for several years, vigorously protested this arrangement and suggested plans for a solution of the problem which it presents, the arrangement is still in operation. Information which I have received from the air lines. operating from the field indicates that as a result of the monopoly in force there, gasoline prices are approximtaely 2 cents per gallon higher there than at other comparable stations.

In a recent statement the chairman of the Port of New York Authority, which has under its jurisdiction LaGuardia, New York International (Idlewild), and Newark Airports, announced the basis upon which the Port of New York intends that aviation gasoline will be distributed on those airports. As I understand the plan, the airport authority will supply the dispensing system, which will be operated on the basis of a rental charge. This charge will include, in addition to amounts representing the debt service on the investment in the system and the costs of maintenance and operation, a fee or charge for maintaining and operating the system. In other words, the plan involves an exclusive dispensing system operated as a revenue-producing device. In view of the heavy air-line traffic at these airports, it is readily apparent what this would mean in added costs to the air lines.

Finally, it is clear also that the subject of surcharges and special taxes based on aviation gasoline gallonage are not academic possibilities, but hard realities. Recently authorities concerned with airports in two major cities proposed the imposition of gallonage fees of 3 cents and 1 cent, respectively. By gallonage fees I mean exactions for which no service was contemplated. These proposals were rescinded only after extensive discussions with the airlines concerned, and after the most vigorous protest by them. In at least two other cities, and we do not have information on all cities served by the air lines, gallonage surcharges are now in effect.

It is clear, therefore, that this whole problem is anything but academic.

It

If H. R. 6180 is enacted, its provisions would, of course, be reflected in an amendment to the regulations under the Federal Airport Act. may be anticipated that some objection will be raised to the effect that airport authorities, seeking Federal aid under the act, cannot legally give the assurances which the bill requires. It may be argued, that even if authorized by the legislative body controlling them, they cannot give the CAA assurances which will bind further legislatures or city councils.

So far as H. R. 6180 requires assurances that there will be no monopolies for the sale or dispensing of gasoline, or any gallonage surcharges or fees, I understand that these are matters reltaing to a proprietary undertaking by the State or municipality and, therefore, are proper subjects for a binding contract, which will be effective on subsequent sessions of the legislature or the city council, as the case may be.

With regard to the requirement of H. R. 6180 that the airport authority give assurances that there will be no special taxes on the sale or delivery of aviation products at the airport, our attorneys advise that a State, in the absence of constitutional limitations, has the power to enter into a contract for exemption from taxation, for a valid consideration, which will be binding on future sessions of the legislature.

Municipal corporations derive their powers from the State and are subject to control by the State legislatures and to the limitations contained in State constitutions. A municipality may make a binding contract to exempt certain transactions or classes of persons from taxes, provided such municipality is authorized by State statute or its own charter to exercise such a power. If that is so, there would seem to be no legal objection to its entering into a contract exempting air carriers from the special taxes referred to in the bill, which contract would be legally binding and could not be impaired by the action of future legislative bodies.

It is essential that freedom of the right to contract for and obtain services, equipment and supplies, without the interference of Government or private monopolies, and without the crippling burden of surcharges and special taxes, be preserved for air transportation as it has been for all other industry and individuals in our society. If this right is refused air transportation, then it can no longer hope either to compete with other forms of transportation which enjoy that right, or even to survive.

We strongly endorse H. R. 6180. If enacted, it would encourage airport managements to obtain from the air lines on a sound business basis, their fair and full contribution to the cost of operation and

maintenance of airports. If the air lines are relieved of the necessity of having to drop everything and run to put out the fire, whenever plans for monopolies, surcharges, and special taxes are thrust at them as a means of raising airport revenues, they will be able to give their undivided attention to keeping the air transportation system of this country the best and safest in the world.

Mr. DOLLIVER. Are there any questions that members of the committee.desire to ask Mr. Ramspeck?

Mr. HESELTON. I think you anticipate that I do not agree with your statement in terms of its application to what we have previously discussed, the situation at Logan International Airport in Boston. I would like to have the record at least clear about the situation there, and to ask you some questions of general application.

In the first place, I am informed that approximately $53,000,000 has been expended or authorized for the construction on that airport, of which the city of Boston has contributed $1,579,000, the Federal Government, $4,087,000, and the Commonwealth of Massachusetts, $47,334,000. In addition to that, there is pending in the legislature now another bill which would appropriate $15,000,000 for additional construction. So that the total State contribution would be $62,334,000, against these two contributions of $1,579,000 and $4,087,000 by the city and Federal Government.

In addition to that, I am informed that since 1941 the airport has been operating annually on a deficit of approximately $250,000.

I think that you are probably aware of the controversy that is still pending there, as to whether the Commonwealth of Massachusetts would receive $600,000 for further project developments at the airport. They are confronted with a deadline of May 31 to file a project application. I think no one will deny that would require the Commonwealth of Massachusetts to repeal or ignore the express provisions and mandate of a provision in the general laws.

I want to quote that statute so that we will have it firmly in mind. It was enacted in 1947, and it is as follows:

The Department (that is, the Department of Public Works of Massachusetts) shall establish a schedule of aircraft landing fees, packing or tie-down fees, services and other charges, including the sale of gasoline or other aviation fuels, oils, and other articles and supplies as required or holds for airport purposes.

I should add that this was originally a project of the city of Boston, but it became obvious sometime in 1928 that it was far beyond the financial power of the city to develop and operate it, and consequently the request was made that the State undertake to do so, and the State acceded. It is now operating what I think is fair to say is probably the one single major terminal airport in not only Massachusetts, but actually in New England.

Now, having run into that conflict, it seems to me perfectly obvious that the provisions of this porposed bill, if adopted, would simply wipe out any local management, economic management or administrative policy of the nature I have mentioned, and I suppose that you agree with me that that would be the result?

Mr. RAMSPECK. No, sir; I do not.

Mr. HESELTON. Will you explain why it would not be the result? Mr. RAMSPECK. In the first place, I do not construe the statute which you read as requiring the management of the Logan Airport to exercise an exclusive right to sell gasoline.

Mr. HESELTON. I do not understand that that is the case. It is a delivery charge there. And I understand-and I stand to be corrected on this if I misunderstand you that purchase can be made on or off the airport from any oil company, and it is simply the imposition of a fair delivery charge in an effort to make up this extremely important deficit, an operating deficit, I should add, that the State has never undertaken to take back that contribution or liquidate it, and I think it regards that as a contribution toward the development of this airport and to the transport system in this country.

If that is so, would that not run exactly counter to the mandate of the Legislature of Massachusetts?

Mr. RAMSPECK. I do not construe the mandate, and I presume that that is all it is, it is a statute that you read, to require the exercise of any exclusive right to sell or dispense gasoline.

Mr. HESELTON. I do not think that that is involved.

Mr. RAMSPECK. All right. This proposed bill would not keep the State of Massachusetts, through its public works department, from selling gasoline on the airport to anybody who is willing to buy it from them. This bill would only prevent their requiring the air carriers, the scheduled air lines, from buying gasoline from the management of the airport, and preserves to the air line their right, which we think is an essential right, to buy gasoline from whoever they can get it from cheapest.

Mr. HESELTON. What about the effect on the delivery charges? Mr. RAMSPECK. Well, we do not think that we ought to have to use somebody else's system of delivery. We think this, Mr. Heselton, and I so stated at a meeting in Boston recently, and I would like to quote, if I might, Mr. Chairman, for the benefit of this discussion, a part of a speech which I made at a session of the first annual meeting of the Airport Operators Council. I might state for the information of the committee and for the record that the Airport Operators Council is an organization of the larger airport managers, and it held its first annual meeting in Boston in April. I think that I am correct in stating that the organization of this council was initiated by the Port Authority of New York, and some of their people, for the very purpose of initiating such charges as we are objecting to. At least that is our construction of their purpose. I said this to that group:

In negotiating airport leases, hangar rentals and terminal building fees, which generally speaking are handled as ordinary real estate transactions, they should be such that they pay for all costs involved, amortized over a reasonable period of time. Miscellaneous service fees for the use of battery carts, baggage or mail or cargo loading services, and so forth, when furnished by the airport, should be determined by negotiation, the resulting charge being primarily based on the type of facilities and the services made available. Insofar as landing fees are concerned, airport agreements relative thereto, over the years, have taken a standard form, which imposes fees on a sliding scale basis in an amount dependent on the number of schedules operated into an airport per month, and in its application the charge per daily schedule per month decreases as the number of schedules increases.

At the present time, 99 percent of airport agreements apply this principle, because it is recognized as the only equitable means of establishing reasonable landing fees. In a limited number of cases, the sliding scale formula is adjusted to reflect excess landing weight of air craft.

I also said this, Mr. Chairman:

Another extremely important element to be considered in establishing reasonable landing fees is the proper allocation of landing-area costs among the various

classes of airport users. It is the usual practice not to charge military aircraft for the use of civil airports, and in determining the total amount of revenue to be derived from the landing area, the percentage of use and the proportion of the operating and maintenance costs represented by military operations should be accounted for and should be deducted from the total landing-area costs before computation of the landing fees for commercial users. In those instances where private fliers are required to pay landing fees, then such fees should be accounted for before computing landing fees for commercial users. Likewise, in those instances where private fliers are not required to pay landing fees, that percentage of the use of the airport landing area utilized by such fliers cost, the costs incident thereto should not be included in the landing-area costs that are used in determining the landing fees for scheduled air carriers.

The only additional consideration which has to be given to the establishment of reasonable landing fees occurs in those instances where an airport has an excess capacity. In such cases, the charges should be determined on the basis that if fees are held constant, they may be expected to contribute materially to making the airport self-supporting at such a time as the volume of air commerce reaches a reasonable degree of maturity, and the air traffic utilizes the full capacity of the airport. Having paid our way at the airport, there ceases to be a need for other special charges or levies, such as gallonage, storage, or dispensing fees.

If I might emphasize that, Mr. Heselton, our point of view is this: In regard to space in the terminal building, and with regard to hangars and other facilities of that type, we are just like any tenant anywhere, we ought to pay a fair rental for the space we use.

When it comes to the use of the landing area, there first should be determined who uses it and how much, and what does it cost to operate it on a fair basis. And then the costs should be apportioned among the users on an equitable basis, using the method of landing fees to collect that cost.

We do not see any connection, and I never have had anybody give me any reasonable reason why there is any connection between the amount of gasoline we should happen to take on at a given airport, and the use we make of that field.

As I pointed out in my statement, if an air line loads gasoline at Boston, we will say, for a flight to Portugal or London or Ireland, certainly they are going to pay a lot more money than will an airplane that is going to take off for New York from that same airport, if it is based on gallonage fees; and I think that you would agree with me that that is not a proper measure of the use of that particular plane. Mr. HESELTON. Do not place me on the record as agreeing with you, because I do not.

Mr. RAMSPECK. I would like to very much, Mr. Heselton.

Mr. HESELTON. Well, that is all very good. but I want to go back to my question. If this bill is enacted into law, it would result in the indirect repeal of a Massachusetts statute, would it not?

Mr. RAMSPECK. I do not think so.

Mr. HESELTON. That is where you and I differ. I think that it would.

Mr. RAMSPECK. I do no think the Massachusetts statute requires the management of that airport to exercise a monopoly.

Mr. HESELTON. Of course, you can use that term "monopoly" in both senses, and I suppose it is going to be so used in both senses before the hearing is over. Let me try to get at it another way. What is there in the law that you know of that authorizes the CAA to regulate airport rates or charges or fees? What specific provision of the existing law is there that gives them that authority?