We could tell you lots about chairs for employees, and rest bars. We probably made the most intensive studies of that of any concern in the United States. We had the benefit of men whom the Government can call to its aid— men in private industry who are engaged in the manufacture of chairs. So there is nothing new in this. However, as Mr. Burke says, the Post Office Department is very anxious to have the best, but it must not be thought that something new has been called to our attention, for the reason that the best engineers in the world, including those of the United States, have been studying mail distribution for many, many years. Time studies have been made, motion studies have been made. Machines have been devised, such as the Transorma machine, which was described in the first pages of Congressman Rees' report here. There are other machines that the Post Office Department has tried. At the present time we have a machine that we believe will greatly improve mail handling. That is another story. As Mr. Burke said, you will get the utmost cooperation. Senator REED. The committee will recess until 10:30 tomorrow morning. Mr. FOLEY. Thank you, Senator, and my thanks to your associates and the postal people. (Thereupon, at 3:50 p. m. Wednesday, April 14, an adjournment was taken until 9: 30 a. m. Friday, April 16, 1948.) TREASURY AND POST OFFICE APPROPRIATION BILL, 1949 FRIDAY, APRIL 16, 1948 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, D. C. The subcommittee met at 9:45 a. m., Senator Guy Cordon (chairman of the subcommittee) presiding. Present: Senators Cordon (presiding), Bridges, Saltonstall, Knowland, McKellar, and Hayden. Present also: Senator Ferguson. Senator CORDON. The hearing will come to order, please. CIVIL AERONAUTICS BOARD This hearing was called as a result of the receipt by the chairman of the subcommittee of two letters, one from Pan American-Grace Airways, Inc., and the other from Pan American Airways System. In order that the question which is before the committee with reference to which we are seeking light may be fully before you gentleman of the Civil Aeronautics Board, I shall read the two letters. LETTER AND MEMORANDUM FROM PAN AMERICAN-GRACE AIRWAYS, INC. The first is dated April 13, from the Pan American-Grace Airways, Inc., and reads as follows: Hon. GUY CORDON, Chairman, Post Office Appropriations Subcommittee, Senate Office Building, Washington, D. C. DEAR SENATOR CORDON: I beg to call your attention to the following with reference to the Post Office portion of the appropriations bill now under consideration by the subcommittee of the Senate Committee on Appropriations. In 1946 on the basis of evidence submitted in 1944, Braniff Airways was granted a certificate for a South American air route. Four years have thus elapsed since the making of the record on which this certificate rests. Braniff has not yet begun operations on this route. Since the certificate was granted, radical changes have occurred in the South American air picture, and in the character of Braniff's proposed operation and the cost thereof to this Government. For example, their original application estimated their mail pay requirements at 4.26 cents per mile, or $123,587 per year. In 1947 they applied to the CAB for a mail rate of $1.51 per mile and were awarded a temporary rate of 95 cents. At this rate the cost to the Government for the entire Braniff route would be about $3,000,000 per year. These and other changes are briefly summarized in the memorandum enclosed herewith. These changes clearly indicate that it is in the public interest that the CAB investigate whether in the light of present conditions this certificate should not be suspended. In September 1947 Panagra filed with the CAB application for such an investigation and is pressing for a hearing of this application. Pending such hearing, it seems clear that mail pay for this service should be suspended. I will be glad to furnish any further information or to appear before your committee if desired. Respectfully yours, HAROLD J. ROIG, President. Copies of this letter went to the other subcommittee members. Attached to the letter is a memorandum entitled: "Changes in the South American Air Picture and Changes in the Character of Braniff's Proposed South American Operation, 1944 and 1948." That statement, which is short, is as follows: (1) In 1944 Panagra was the only air line operating along the west coast of South America between Buenos Aires and Panama Canal and it and Pan American, with one European line to the Caribbean, were the only air lines operating between the United States and South America. Today six foreign lines are operating between the United States and South America in competition with the American lines. These include Peruvian, Colombian, Dutch, British, Brazilian, and Venezuelan lines. An Argentine Government line will enter the field shortly. (2) In 1944 Panagra's load factor was 80 percent and it was operating at a profit. In 1947 the load factor had dropped from 80 to 55.9 percent, despite the fact that Panagra was operating only one round-trip flight a day over its main line, and operations resulted in a loss of $2,000,000 after receipt of $1,000,000 of United States mail pay. (3) In 1944, and in 1946 when the Braniff certificate was issued, Panagra service did not come through to the United States but terminated at Balboa. Braniff made much of this at the hearing, and the CAB commented on it in its decision. This defect has now been remedied and under through-flight agreement with Pan American, Panagra's planes now come through to the United States. (4) In 1944, in applying for the route, Braniff estimated the cost to the Government of the proposed route at 4 26 cents per mile or a total of $123,587 a year. In 1947, on Braniff's application for $1.51 per mile, they were awarded a temporary rate for a portion of their route of 95 cents per mile or 22 times the original indication. At this rate, the cost to the Government of the complete Braniff operation would be not less than $3,000,000 per year. Additionally higher payments would be required to Pan American and Panagra by reason of increasing losses they would sustain from diversion of traffic revenue from them. (5) Braniff does not now propose to fly the route for which its certificate was issued. In its application stress was placed on the fact that it would serve all of the principal cities of South America, with emphasis on the capitals of the different countries. Braniff is not now in position to serve five of these capitals: Bogota, Colombia; Buenos Aires, Argentina; Quito, Ecuador; La Paz, Bolivia; and Asuncion, Paraguay. Its certificate laid down a route substantially different from Panagra's. They now propose to directly parallel Panagra over a good part of its route. (6) The traffic potential on which Braniff's application was based in 1944 has not developed. In the entire year 1947 the number of air passengers actually carried between the territory that would be served by Braniff's route from the United States and the points served by Braniff's route in South America amounted to less than one plane load a month in each direction. Obviously, no air line could survive on such traffic without wholly disproportionate subsidy. (7) If both Braniff and Panagra fly this route in direct competition to each other and to the other foreign lines with load factors involving heavy losses to both lines, it will mean that they both will become financially insolvent or that they will have to be supported by the United States Government in the amount of a figure between 7 and 10 million dollars. There is, at present, no consideration of public interest which justifies a third American-flag carrier in South America. The commercial and traffic needs of the area and any desired competitive element are more than adequately taken care of by the two American lines, Pan American and Panagra, and the numerous foreign lines already in the field. Prompt investigation by the CAB in the light of present-day conditions is clearly indicated before the Braniff service is begun. LETTER AND MEMORANDUM FROM PAN AMERICAN AIRWAYS SYSTEM I will now read the letter dated April 15, 1948, addressed to the chairman of the subcommittee, from Pan American Airways System, but I shall simply incorporate the memorandum in the record without reading it. The letter is as follows: In May 1946, in a proceeding known as the Latin-American certificate case, the Civil Aeronautics Board issued certificates to Chicago & Southern Air Lines and to Braniff Airways for service in Latin America. The Board's action was based on evidence taken at hearings held in 1944. Chicago & Southern's certificate is for a route from New Orleans and Houston to points in the Caribbean which Pan American Airways has served for nearly 20 years. Braniff's certificate extends from Houston through Caribbean points which have long been served by Pan American to capitals in South America which have been served either by Pan American-Grace Airways (Panagra), or by Pan American, or in one case (Buenos Aires) by both. In the nearly 2 years that have elapsed since issuance of these certificates, Braniff has not operated at all and Chicago & Southern has operated only the sector of its routes between New Orleans and Habana. We have seen a copy of the letter addressed to you by Mr. Harold J. Reig, president of Panagra, concerning the use of appropriations for foreign air mail pay on Braniff's proposed service. We believe that Congress should withhold such appropriations, both for Braniff's proposed Latin-American services and for those of Chicago & Southern (other than those already in operation between New Orleans and Habana) pending a thorough investigation as to the justification for these services in the public interest under the changed conditions that have developed during the past 4 years. It The reasons for this belief are summarized in the enclosed memorandum. now appears that the cost to the Government of supporting Braniff's operations to South America would be 22 times and of supporting Chicago & Southern's operation in the Caribbean would be 61⁄2 times the estimates made by these companies on the basis of which their certificates were issued. It also appears that if the appropriation of funds at the present time should enable these carriers to extend the operations in Latin America, the increase in the Government's bill in mail pay for these carriers and additional mail pay for the established United States flag carriers from whom they are taking traffic would approximate $7,000,000 per year over and above what would otherwise be required. The then Chairman of the Civil Aeronautics Board stated more than a year ago with reference to Chicago & Southern's duplicating Caribbean service: "I cannot believe that a recognition of the realities of any situation is likely to threaten either our prestige or our position in international air transportation. Failure to do so may, however, threaten its whole structure. The unwise expenditure of money for the performance of an operation not demanded by public convenience and necessity may make it impossible to throw resources that otherwise would be available into the performance of an operation that the national interest truly demands. Herein lies the real danger and the real insecurity to our present design of international air transport." Pan American Airways joins in the fear so expressed. It fears also that if the Government's foreign mail pay budget is swollen by the addition of uneconomic and unjustified services supported by altogether disproportionate air-mail payments, the burden may become so large as to prevent appropriations required to provide for essential international air routes in which more than $80,000,000 of its stockholders' money has been invested over the last 20 years. A copy of this letter is being sent to each member of the subcommittee. J. T. TRIPPE, President. Attached to the letter is a memorandum of explanation which I shall not read. I think it follows generally the memorandum of Pan AmericanGrace except with reference to Chicago & Southern Air Lines, and the committee, I believe, should direct its attention first to the major question, which is that of Braniff Airways. |