the applicants and the intervenors as to the results of their freight operations. Hearing was held after the reopening and the record thus made was certified to the Board.

Prior to this reopening of the record exceptions had been filed to the examiners' report, briefs had been filed, and oral argument was heard by the Board for 5 days. Briefs were also filed after the reopened hearing. The Board adopted a tentative opinion and report under date of May 5, 1947. Exceptions were filed and the Board heard oral argument, this time for 3 days. The Board then adopted its final decision on July 20, 1949 (10 C. A. B. 572).

The intervenors immediately instituted proceedings for judicial review which resulted in a decision by the United States Court of Appeals for the District of Columbia affirming the Board's order (American Airlines, et al. v. Civil Aeronautics Board, 192 F. 2 (d) 417). More than 5 years elapsed between the filing of the application for a certificate and the date of the court decision, September 27, 1951, affirming the grant of a 5-year certificate.

The 5-year certificate granted Flying Tigers became effective August 12, 1949. Timely application for renewal was made. We applied for permanent certificate feeling that the mere fact that we were still around and operating on a sound basis was sufficient justification for a permanent certificate.

The first prehearing conference on the airfreight certificate renewals was called in February 1954. On May 4, 1954, the Board issued its order consolidating all pending applications into one proceeding. A second prehearing conference was then held. The north-south phase of the Air Freight Certificate Renewal case was heard first. The north-south record was closed on April 4, 1955, and the Board's opinion was issued on November 21, 1955. The hearings in the east-west phase, involving the applications of Flying Tigers and Slick, were held in April and May 1955. Briefs were filed and the examiner handed down his initial decision on December 21, 1955. Briefs were filed and oral argument was held before the Board. The Board order granting certificates for an additional period of 5 years is dated March 12, 1956.

On March 17, 1956 the passenger carriers who were again intervenors in the Air Freight Certificate Renewal case instituted judicial proceedings for a review of this Board Order in the United States Court of Appeals for the Fifth Circuit. More than a year has elapsed since this case was originally docketed but because of the length of the record to be printed, dates have not yet been set for the filing of briefs. It may well be another year before the court hands down its decision.

The record is so clear, the findings of the Board are so conclusive, the allcargo carriers have less to face in the current appeal than they did in the 1951 proceedings. There is little doubt that the court will again uphold the Board grant of certificates. But 3 to 4 years will again have elapsed between application and final court affirmance and then we will again have to begin preparation for another long, burdensome, and costly procedure for further renewal within a short time thereafter.

I have dwelled a bit a length on this recital of times and dates because it shows clearly not only that we-and the other all-cargo carriers-have been through most complete and thorough section 401 proceedings for certification, but also indicates the terrific burden we have been put to in conducting these proceedings. The financial burden has been extremely onerous; so has been the burden on our personnel-from top executive to working staff.

The time consumed in the preparation of exhibits, testimony, briefs, et cetera, has been substantial and much of it could have been used to better advantage in concentration on our obligations to the public, the postal service, and the national defense. This is the waste of time and money in renewal proceedings referred to in the House and Senate reports on the legislation to grant permanent certification to the local service airlines.

We feel strongly that we have demonstrated beyond a doubt that we merit permanent status. The many contributions of the all-cargo carriers to the airtransportation system in general and the ever-expanding and developing aircargo industry in particular merit permanent status for the all-cargo carriers. That they represent an important segment in the integrated air transportation system has been formally acknowledged by the Board; that they are helpful and useful to the Post Office Department has been formally acknowledged by the Postmaster General; that they are essential and contribute greatly to the national defense has been openly acknowledged by the Department of Defense.

We

now ask that Congress recognize these essential facts and grant permanent status as it has done in the case of the local service carriers and the Alaskan carriers.

THE FLYING TIGER LINE, INC.-BACKGROUND INFORMATION

The Flying Tiger Line, Inc., was one of the all-cargo carriers originally cer tificated by the Civil Aeronautics Board in the Air Freight case, dockets No. 810 et al.

Despite the fact that the company was certificated for freight only and without subsidy, Flying Tigers has grown to the point where in 1956 it was second only to American Airlines in the amount of freight ton-miles carried in the United States. Flying Tigers carried 56 million ton-miles in 1956 while American carried 71.2 million ton-miles.

During 1953 merger negotiations were instituted with Slick Airlines. The proposed merger was approved by the Civil Aeronautics Board but had to be abandoned in 1954 due to labor protective provisions attached to the CAB approval which proved far too burdensome for the merging companies to sustain. The constant growth of Flying Tigers' ton-mile traffic was retarded during the disruptive period of the proposed merger with Slick and the collapse thereof. Since the abandonment of the proposed merger Flying Tiger has again regained its position-its traffic is constantly increasing so that once again it is the largest of the all-cargo carriers.

The Flying Tiger Line is operating a total of 34 aircraft and is receiving delivery of 5 additional aircraft, as follows:

Two of the DC-6 aircraft are on long-term lease purchase agreements; the remaining 2 DC-6 aircraft are on short-term lease from the military. Flying Tigers has since February 1, 1957, accepted delivery of the 5 L-1049H Super Constellation aircraft and by July 1, 1957, will have accepted delivery of an additional 5 Super Constellation aircraft.

The Flying Tiger Line, Inc., domestic freight-Ton-miles of common carriage and domestic charter freight carried

Senator MONRONEY. We appreciate the statement of Mr. Prescott. Are there any questions, Senator Schoeppel?

Senator SCHOEPPEL. I have no questions.

Mr. OBERDORF. Mr. Chairman, I appreciate the courtesy extended to me this morning, and by your committee.

Senator MONRONEY. The next witness is Mr. Oliver Stern, vice president of cargo sales, AAXICO Airlines, Inc.

Would you state your name for the record?

STATEMENT OF OLIVER F. STERN, VICE PRESIDENT OF CARGO SALES, AAXICO AIRLINES, INC.

Mr. STERN. I am Oliver F. Stern, vice president in charge of cargo sales, AAXICO Airlines, Inc.

We would like an opportunity to submit some financial records to the committee. We realize that the reports submitted by the Board yesterday didn't have any for us, and in the report it is stated, based on the first year of operation-and we just got underway on November 15 of last year-we think it would be pertinent to have some sort of a statement.

Senator MONRONEY. It would be very helpful if you would put that in the record. Do you have the statement with you?

Mr. STERN. I don't. I tried to acquire it.

Senator MONRONEY. We will hold the record open for a few days for you to supply that in proper form for the record.

Mr. STERN. I will do that.

(The statement referred to follows:)

Mr. STERN. My name is Oliver F. Stern and I am vice president in charge of cargo sales for AAXICO Airlines, Inc.

AAXICO Airlines, Inc., holds a temporary certificate of public convenience and necessity from the Civil Aeronautics Board authorizing scheduled air transportation of property, air express and mail over a route known as route No. 121. Generally speaking this route authorizes airfreight service between the New Orleans, La., area, on the one hand, and the northeastern and midwestern areas, on the other hand. Our certificate became effective on May 11, 1956, and will expire with respect to property on January 19, 1961, and with respect to mail on May 11, 1957.

We have recently requested the Civil Aeronautics Board to extend our authority for the transportation of mail to make such authority coextensive with our authorization to transport property.

AAXICO Airlines, Inc.-formerly known as American Air Export & Import Co. was incorporated in Florida in 1946 and during the past 8 years has engaged almost exclusively in the transportation of airfreight. At the present time the company has approximately 135 employees and owns 27 C-46 aircraft, all of which are equipped for the transportation of cargo.

The air transportation activities of AAXICO are divided into two separate divisions, as follows: First, the operation of a contract for the United States Air Force transporting high priority military cargo between and among Air Force bases in the southeastern and western parts of the United States, and second, the operation of our regular common carrier freight service over route No. 121.

We inaugurated scheduled service over route No. 121 on November 15, 1956, serving New York, Atlanta, and New Orleans. We conduct daily cargo service between these points and to date we are the only carrier offering such service with all-cargo equipment. The traffic over this route has gradually increased since we began service and, if it continues to increase, we intend to begin service to the other points named on route No. 121 as soon as possible.

Although the operation of the service with C-46 aircraft is adequate for our present volume of traffic, it is apparent to us that within the near future it would be desirable to convert our operations to longer range and more economical freight aircraft. There are only two types of such aircraft presently available, namely, Douglas DC-6A and Lockheed 1049H aircraft.

Douglas DC-6A aircraft on today's market cost about $1,650,000 each with the necessary spare parts and Lockheed 1049H aircraft are even more expensive. It is apparent to us that we will experience extreme difficulty in financing the purchase of more modern aircraft unless we can obtain a permanent certificate from the Civil Aeronautics Board.

We believe this general situation prevails with respect to all cargo carriers but it is particularly acute in our case because, first, we are a relatively small cargo carrier, and second, the route which we are authorized to operate is perhaps the leanest of the cargo routes and suffers from a severe imbalance of cargo traffic insofar as northbound traffic is concerned.

I also wish to point out that it has long been congressional policy and the policy of the executive branch of the Government to promote the operation of all-cargo aircraft in the interest of national defense. For example, in the President's Air Coordinating Committee Report, issued in May 1954, the following statement is made:

Proper growth of the air-cargo industry will provide, in addition to economic benefits, a civil air cargo fleet forming a substantial security asset in event of national mobilization. The further development of the air cargo industry, with particular emphasis on all-cargo services, is in the national interest and should be encouraged.

I also wish to emphasize that the operation of our military cargo service for the Air Force and our commercial common carrier service are mutually complementary. Thus our continued healthy growth in the commercial field will enable us to maintain equipment, facilities and trained personnel available to the military establishment, both in times of peace and in times of national emergency. Furthermore, the type of all-cargo aircraft which permanent certification will enable us to acquire would be particularly adaptable to serve the interest of the national defense in times of emergency.

In this connection, I wish to point out that of the approximately 350 civilian aircraft presently assigned to the Civil Reserve Air Fleet-CRAF-program, only about 30 of such aircraft are suitable for the transportation of heavy cargo. These latter type of aircraft are the ones which will be of particular value to the military in the event of mobilization.

The airfreight business is still in a pioneering stage of development. It has been our experience, however, that the business has a tremendous growth potential, provided that a carrier can provide frequent and reliable service with suitable all-cargo aircraft. In this connection, it should be noted that the southern part of the United States, which is served by our routes, is rapidly expanding from an industrial and commercial standpoint. We believe that the granting to us of a permanent certificate will enable us to provide a more reliable all-cargo service to this important section of the country, which will not only be of value to existing industries but will also promote the development of new industries in the South.

In my opinion, the granting of permanent certificates to the allcargo carriers could not conceivably have any adverse competitive effect upon the domestic trunkline air carrier system. As pointed out above, insofar as our route is concerned, we are the only carrier offering service with all-cargo aircraft. Moreover, approximately 93 percent of the domestic airline business is done by the 12 domestic trunkline passenger carriers, the remaining 7 percent being done by the 4 all-cargo carriers plus the 13 local service airlines.

I would like to add, Mr. Chairman, that we advocate no subsidy for ourselves, and we would be most interested, due to the fact that we have gotten started rather late in this picture, and should we serve additional cities prior to the passage of S. 1474, that those also be included in the permanent certification of our routes.

Senator MONRONEY. In other words, you would not ask for permanent certification for cities you were not serving at the time of the passage of the bill?

Mr. STERN. We would obviously like to have them but we feel

Senator MONRONEY. The Civil Aeronautics Board raised a rather cogent question as to just how much we should permanently certificate when it is not being now flown by these all-cargo lines. Since you are new, there are obviously going to be many places that you haven't been able to put service on yet. You have to build up a freight load. Mr. STERN. That's right.

Senator MONRONEY. It is foolish to stop the planes when you have done some groundwork, if planes can land to pick up cargo and discharge cargo.

Mr. STERN. We hope to serve a few more cities this year. It is dependent to a large extent on our developing our routes. We feel that is in the interest of the public to provide a sound operating organization and company, rather than just to open them and then be sorry that we had done so from a financial standpoint.

Senator MONRONEY. How many are you failing to touch on your scheduled routes?

Mr. STERN. We are certificated to 15 points and we are serving 3 of them; so there are 12 we are not serving.

Senator MONRONEY. You are certificated on 15?

Mr. STERN. Yes, sir.

Senator MONRONEY. And serving three. Those are New Orleans, Atlanta, and New York.

Mr. STERN. Yes, sir.

Senator MONRONEY. And the others are mostly intervening points, such as Birmingham, Richmond, Baltimore, and other cities?

Mr. STERN. And Philadelphia; yes, sir. And then the route between New Orleans and Chicago and Detroit.

Senator MONRONEY. But all of them are in the general direction, excepting the last one which you mentioned-New Orleans and Chicago and Detroit. That would be a complete new wing of your service. Mr. STERN. Yes, sir.

Senator MONRONEY. And they will require a lot more aircraft and personnel to handle?

Mr. STERN. Yes, sir.

Senator MONRONEY. Without any grant of authority to serve that, you would still be very happy to have permanent certification on the