AVIATION

TUESDAY, MARCH 30, 1937

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met, pursuant to call, at 10 a. m., Hon. Clarence Lea (chairman) presiding.

The CHAIRMAN. The committee will come to order.

We have met this morning for hearings on H. R. 5234, a bill to amend the Interstate Commerce Act, as amended, by providing for the regulation of the transportation of passengers and property by air carriers in interstate, overseas, and foreign commerce, and for other purposes.

(H. R. 5234 is as follows:)

[H. R. 5234, 75th Cong., 1st sess.]

A BILL To amend the Interstate Commerce Act, as amended, by providing for the regulation of the transportation of passengers and property by air carriers in interstate overseas, and foreign commerce, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Interstate Commerce Act, as amended, is hereby further amended by adding the following:

"PART III

"SEC. 301. This part may be cited as the 'Air Carrier Act, 1937.'

"DECLARATION OF POLICY AND DELEGATION OF JURISDICTION

"SEC. 302. (a) It is hereby declared to be the policy of Congress to regulate transportation by air carriers in such manner as to recognize and preserve the inherent advantages of, and foster sound economic conditions in, such transportation and among such carriers in the public interest; to promote adequate, economical, and efficient service by air carriers, and reasonable charges therefor, without unjust discriminations, undue preferences or advantages, and unfair or destructive competitive practices; to improve the relations between, and coordinate transportation by and regulation of, air carriers and other carriers; and, by the regulation specified herein and by providing for the transportation of mail by aircraft, to preserve and further develop a system of transportation by aircraft in interstate, overseas, and foreign commerce, properly adapted to the needs of the commerce of the United States, of the Postal Service, and of the national defense.

"(b) The provisions of this part apply to the transportation by air carriers of passengers or property in interstate, overseas, and foreign commerce; and to the transportation of mail by aircraft; and the regulation of all such transportation is hereby vested in the Interstate Commerce Commission. Nothing contained in this part shall be construed to relieve any person from any requirement of law respecting the operation of aircraft within, to, or from the United States.

1

"SEC. 303. As used in this part

"(a) ‘Air carrier' means any citizen of the United States who or which undertakes, whether directly or by a lease or any other arrangement, to transport by aircraft, (1) as a common carrier, passengers or property in interstate, overseas, or foreign commerce, or (2) mail.

"(b) 'Aircraft' means any contrivance of whatever description which is used, or is capable of being or intended to be used, as a means of transportation by air.

"(c) 'Certificate' means a certificate of public convenience and necessity issued under this part.

"(d) 'Citizen of the United States' means (1) an individual who is a citizen of the United States, or (2) a partnership of which each member is an individual who is a citizen of the United States, or (3) a corporation or association created or organized in the United States or under the law of the United States or of any State, Territory, or possession of the United States, of which the president and two-thirds or more of the board of directors or other managing officers thereof, as the case may be, are individuals who are citizens of the United States and in which at least 51 percentum of the voting interest is controlled by persons who are citizens of the United States.

"(e) 'Commission' means the Interstate Commerce Commission.

"(f) "Foreign commerce' means commerce between any place in the United States, and any place in a foreign country, whether such commerce moves wholly by air or partly by air and partly by other forms of transportation.

"(g) 'Interstate air transportation', 'overseas air transportation', and ‘foreign air transportation' mean transportation by aircraft in interstate commerce, overseas commerce, and foreign commerce, respectively, including the use of any and all facilities and instrumentalities of shipment or carriage, irrespective of any contract, express or implied, for the use thereof, and any and all services in or in connection with such shipment or carriage.

"(h) Interstate commerce' means commerce between a State of the United States, or the District of Columbia, and any other State of the United States, or the District of Columbia; or between places in the same State of the United States through the air space over any place outside thereof; or between places in the same Territory or possession of the United States, or the District of Columbia, whether such commerce moves wholly by air or partly by air and partly by other forms of transportation.

"(i) 'Mail' means, except when used specifically in reference to mail of foreign countries, (1) mail of the United States prepaid at the rate prescribed by section 2 (b) (1) of the act of June 12, 1934, or, in the case of mail originating at any point in the United States for overseas or foreign air transportation, prepaid at such rate as the Postmaster General may fix from time to time for the transportation by aircraft of first-class mail to the destination concerned, and (2) foreign transit mail received by the Postmaster General for transportation by aircraft.

"(j) 'Overseas commerce' means commerce between a State of the United States, or the District of Columbia, and a Territory or possession of the United States; or between Territories or possessions of the United States, whether such commerce moves wholly by air or partly by air and partly by other forms of transportation.

"(k) 'Person' means any individual, firm, copartnership, corporation, company, association, joint-stock association, or body politic; and includes any trustee, receiver, assignee, or other similar representative thereof.

"(1) United States' means the several States, the District of Columbia, and the several Territories and possessions of the United States, including the Territorial waters and the overlying air space thereof. Possessions of the United States shall include Puerto Rico, notwithstanding the provisions of the Act of March 2, 1917, to provide a civil government for Puerto Rico, and any other Act or Acts which are inconsistent with the provisions of this part; and any other possession of the United States; including, for the purposes of this part, the Canal Zone.

"GENERAL DUTIES AND POWERS OF THE COMMISSION

"SEC. 304. (a) It shall be the duty of the Commission

"(1) To regulate air carriers as provided in this part, and administer, execute, and enforce all of its provisions, and to that end the Commission shall have authority to make and amend necessary orders in connection therewith, and to prescribe general or special rules, regulations, and procedure for such

administration: Provided, That in the exercise of its duties under this part in respect of foreign air transportation, the Commission shall take into consideration all treaties, conventions, and agreements between the United States and foreign countries, and all applicable laws and requirements of foreign countries. "(2) To promote the development of efficient interstate, overseas, and foreign air transportation by prescribing, and revising from time to time, general standards respecting the character and quality of service to be rendered in such transportation, and to make such standards effective on such dates as it may determine after due consideration of the time required to conform to such standards.

"(3) To inquire into the organization of air carriers and into the management of their business; to keep itself informed as to the manner and method in which such organization and management are conducted; and to transmit to Congress from time to time such recommendations as to additional legislation relating to such carriers as the Commission may deem necessary.

"(4) To approve or disapprove, in whole or in part, any and all applications made after the date of the passage of this part for or in connection with any loan from the United States or any agency thereof to or for the benefit of any air carrier; and no such loan shall be made without such approval.

"(b) The Commission may from time to time establish such just and reasonable classifications of air carriers as the nature of the services performed by such carriers shall require; and such just and reasonable rules, regulations, and requirements, pursuant to and consistent with the provisions of this part, to be observed by the carriers so classified, as the Commission deems necessary or desirable in the public interest.

"(c) Any person complaining of anything done or omitted to be done by any air carrier in contravention of the provisions hereof, or any requirement established pursuant hereto, may file with the Commission a complaint in writing, which shall briefly state the facts. Upon such complaint, or upon its own initiative, the Commission may investigate whether any such carrier has failed to comply with any such provision or with any such requirement established pursuant thereto. If the Commission, after notice and hearing, finds upon such investigation that such carrier has failed to comply with any such provision or requirement, the Commission shall issue an appropriate order to compel such carrier to comply therewith. Whenever the Commission is of the opinion that any complaint does not state reasonable grounds for investigation and action on its part, it may dismiss such complaint without hearing.

“(d) In any proceeding under section 309 or section 310 of this part, there shall not be taken into consideration in determining, or allowed as evidence of, or elements of, the value of the property of any air carrier, either goodwill, earning power, or the certificate of the carrier, and in applying for and receiving a certificate any such carrier shall be deemed to have agreed to the provisions of this paragraph on its own behalf and on behalf of the transferees of such certificate.

"(e) In the exercise of its powers under section 309 or section 310 of this part, the Commission shall give due consideration, among other factors, to the policy declared in section 302 (a) hereof; to the effect of rates, fares, and charges upon the movement of traffic; to the need, in the public interest, of adequate and efficient transportation service by such carriers at the lowest cost consistent with the furnishing of such service; to such standards respecting the character and quality of service to be rendered in air transportation as the 'Commission may prescribe; to the condition that such carriers may hold certificates and operate thereunder only by providing necessary and adequate facilities and service for the transportation of mail; to the need of each such carrier for compensation for the transportation of mail by aircraft sufficient to insure the performance of such service and, together with all other revenue of the carrier, to enable the carrier, under honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent, and of the character and quality, required in the public interest.

"CERTIFICATES OF PUBLIC CONVENIENCE AND NECESSITY

"SEC. 305. (a) No air carrier shall engage in interstate, overseas, or foreign air transportation or in any transportation of mail by aircraft, unless there is in force a certificate issued by the Commission authorizing such carrier so to engage: Provided, That if an air carrier was so engaged in such transportation on the date of the passage of this part, such carrier may continue so to engage

between the same points for one hundred and twenty days after said date, and thereafter, if said carrier files an application for a certificate as provided for herein within said one hundred and twenty days, until such time as the Commission shall pass upon such application.

"(b) Applications for certificates shall be made in writing to the Commission, be verified under oath, and shall be in such form and contain such information and be accompanied by proof of service upon such interested parties as the Commission shall by regulation require.

"(c) Upon the filing of an application under this section the Commission shall give due notice thereof to the Postmaster General and to the public by posting a notice of such application in the office of the secretary of the Commission; and if the application is for a certificate authorizing foreign air transportation, the Commission also shall give due notice thereof to the representatives of the Departments of State, Treasury, Post Office, and Commerce, comprising the Interdepartmental Committee on International Civil Aviation, or to such other agency as the President may designate for such purpose. Any interested person may file with the Commission a protest or memorandum of opposition to the issuance of the certificate. Such applications shall be set for public hearing and the Commission shall, insofar as practicable, give to the disposition thereof preference over all other proceedings pending before it under this part, and shall dispose of such applications as speedily as possible.

"(d) The Commission shall issue a certificate authorizing the whole or any part of the transportation covered by the application, if it finds that the applicant is fit, willing, and able properly to perform such transportation and to conform to the provisions of this part and the requirements, rules, and regulations of the Commission hereunder, and that such transportation is or will be required by the present or future public convenience and necessity; otherwise such application shall be denied: Provided, That if any applicant shall show that from December 31, 1936, until the date of the passage of this part, it or its predecessor in interest, was an air carrier, continuously operating as such (except as to interruptions of service over which the applicant or its predecessor in interest had no control) the Commission, upon proof of such facts only, shall issue a certificate or certificates, not limited as to duration, authorizing such applicant to engage in interstate, overseas, or foreign air transportation of all classes of traffic except mail, between the terminal and intermediate points between which it, or its predecessor, so continuously operated during such period, and also authorizing such applicant to transport mail between the terminal and intermediate points between which such applicant, or its predecessor, was engaged in the transportation of mail at any time during the period from December 31, 1936, to the date of the passage of this part: Provided further, That if any applicant qualifying under the foregoing proviso, or any other applicant, shall show that, on the date of the passage of this part, it had been authorized by the Commission or the Postmaster General to engage in any interstate, overseas, or foreign air transportation, or any transportation of mail by aircraft, the Commission, upon proof of such fact only, shall likewise issue a certificate or certificates, not limited as to duration, authorizing such applicant to engage in the transportation of the same classes of traffic, to the same extent, and between the same terminal and intermediate points, as it had been so authorized: And provided further, That any certificate issued under either of the foregoing provisos of this paragraph may be amended to permit the transportation of mail or in other respects, in accordance with paragraph (j) of this section.

"(e) Each certificate shall specify the terminal and intermediate points vetween which the carrier is authorized to engage in transportation, the service which may be rendered, and such reasonable terms, conditions, and limitations as the public convenience and necessity may require, which may be changed from time to time after due notice and hearing: Provided, That a certificate issued under this section to engage in foreign air transportation shall designate such points only insofar as the operation is to take place within territories or territorial waters subject to the soverignty or authority of the United States, and otherwise shall designate only a general trade route, and the foreign markets to be served. No term, condition, or limitation of a certificate shall restrict (1) the right of a carrier to change equipment accommodations, and facilities for performing the authorized transportation and service as the development of the business and the demands of the public shall require; or (2) compliance by a carrier engaged in foreign air transportation with any treaty, agreement, or convention between the United States and a foreign