SUPPLEMENTAL AIR SERVICE THURSDAY, APRIL 4, 1957 UNITED STATES SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The subcommittee met, at 11:40 a. m., in room F-39, United States Capitol, the Honorable A. S. Mike Monroney presiding. President: Senators Monroney (chairman of the subcommittee) and Schoeppel. Senator MONRONEY. We are glad to have you, Mr. Newmann. You may proceed in your own way. STATEMENT OF ROSS I. NEWMANN, CHIEF OF THE INTERNATIONAL AND RULES DIVISION OF THE CIVIL AERONAUTICS BOARD, ACCOMPANIED BY JOHN DREGGE, BUREAU OF AIR OPERATIONS, CIVIL AERONAUTICS BOARD Mr. NEWMANN. Mr. Chairman and members of the committee, my name is Ross I. Newmann, and I am Chief of the International and Rules Division of the Civil Aeronautics Board. The Board appreciates the opportunity of presenting to the committee testimony in support of legislation 1 proposed by the Board which would authorize the Civil Aeronautics Board to issue certificates of public convenience and necessity containing limitations on the type and extent of service authorized. 1 I might say at the outset that the Board does not propose to limit the terms of certificates of public convenience and necessity which are now outstanding and which in effect guarantee a certain freedom of action to the certificated carriers with respect to schedules, equipment, accommodations, and facilities. These certificates are governed by the fourth sentence of section 401 (f) of the Civil Aeronautics Act of 1938, which provides that No term, condition, or limitation of a certificate shall restrict the right of an air carrier to add to or change schedules, 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. The Board proposes no change or modification of this provision as it applies to certificates hereinbefore granted. However, this provision has had the effect of casting doubt on the extent to which the Board 1 S. 1977, relating to supplemental air service, was introduced by Chairman Magnuson on May 2, 1957. NOTE. Staff members assigned to this hearing: Harold I. Baynton and John W. Black. may issue certificates of public convenience and necessity which would authorize a limited or supplemental type of service. Of course, at the time the Civil Aeronautics Act was passed in 1938, there was no occasion for limited or supplemental service certificates, as all efforts were being bent toward establishing and fostering a sound and nationwide air transportation system and section 401 (f) was drafted with that as the primary objective. However, the need for limited or supplemental types of service has recently become apparent and the proposed draft is designed to meet that need. Without some clarification section 401 (f) may result in preventing the Board from issuing limited-service certificates to carriers which request authority to perform air-carrier operations on a limited scale. The purpose of the proposed legislation is to make it clear that a carrier, if it chooses, may request something less than a full certificate and that the Board would have the authority to grant a certificate which shall be less than a full certificate and which will expressly authorize the Board to specify the type of service to be rendered and make suitable provision that the service rendered shall not exceed the authorization. In accordance with this purpose the draft bill submitted by the Board would leave undisturbed the present certification provisions, but would provide for the establishment of limited-service air carriers. Each limited-service air carrier would be so designated in the original certificate issued to it. To accomplish this, the first section of the draft bill provides a definition of "limited-service air carrier" to be added to the definitions in section 1 of the Civil Aeronautics Act as follows: (32) "Limited-service air carrier" means an air carrier holding a certificate of public convenience and necessity wherein the holder is designated as such, which designation was included therein on the original issuance of the certificate. The second section of the draft bill adds the following provision to section 401 (f) : Provided, That the Board shall, in issuing any certificate to a limited-service air carrier, include in such certificate such terms, conditions, and limitations as are necessary to define the type and extent of the limited service authorized by such certificate, and to assure that the service offered thereunder does not exceed the authorization. The enactment of this legislation would make it clear beyond any doubt that the Board could, through the issuance of a limited-service certificate, authorize a carrier to operate a specific type of service. More important, the Board believes that this type of legislation would encourage the development of new and improved types of special service. At the present time, prospective applicants for such types of service are confronted with the burden of meeting the requirements for full certification in spite of the fact that they may wish to engage only in a specialized type of operation. The Board recommends the proposed legislation for the committee's favorable consideration. The Bureau of the Budget has advised that there is no objection to the submission of the foregoing statement. Senator MONRONEY. Thank you very much for your statement. Is there anyone else here for the CAB to further testify on this? Mr. NEWMANN. No, sir. Senator MONRONEY. You are the only witness from the CAB? Senator MONRONEY. I don't believe we have received a draft of the bill defining these. There are only two changes as presented here? Mr. NEWMANN. Yes, sir. I have the proposed draft right here, Mr. Chairman. (The draft legislation is as follows:) A BILL To amend the Civil Aeronautics Act of 1938, as amended, to authorize the Civil Aeronautics Board to include in certificates of public convenience and necessity limitations on the type and extent of service authorized, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1 of the Civil Aeronautics Act of 1938, as amended, be amended by renumbering the last two paragraphs thereof as (33) and (34), respectively, and by inserting before the renumbered paragraph (33) a new paragraph reading as follows: "(32) 'Limited-service air carrier' means an air carrier holding a certificate of public convenience and necessity wherein the holder is designated as such, which designation was included therein on the original issuance of the certificate." SEC. 2. Subsection (f) of section 401 of the Civil Aeronautics Act of 1938, as amended, is hereby amended by striking the period at the end of the fourth sentence thereof, inserting a semicolon in lieu thereof, and adding the following proviso: "Provided, That the Board shall, in issuing any certificate to a limited-service air carrier, include in such certificate such terms, conditions, and limitations as are necessary to define the type and extent of the limited service authorized by such certificate, and to assure that the service offered thereunder does not exceed the authorization." STATEMENT OF PURPOSE AND NEED FOR PROPOSED LEGISLATION The fourth sentence of section 401 (f) of the Civil Aeronautics Act of 1938 provides that "No term, condition, or limitation of a certificate shall restrict the right of an air carrier to add to or change schedules, 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." Under this provision it is not entirely clear as to the extent to which the Board may impose on certificates of public convenience and necessity effective limitations or restrictions with respect to schedules, equipment, accommodations, or facilities. Without some clarification this provision may result in preventing the Board from issuing certificates to carriers which request authority to perform air-carrier operations on a limited scale. The purpose of the proposed legislation is to make it clear that a carrier may request and be authorized to perform limited services. Senator MONRONEY. It seems to me that, under the nomenclature of "limited service air carrier," you will open up several limited classifications that have never been in existence before. That is, an allcoach carrier could be given this certification, could it not? Mr. NEWMAN. That is correct, sir. Senator MONRONEY. You could certify a seasonal carrier, could you not, for operation during part of the year in areas where travel volume becomes heavy at certain times of the year? Mr. NEWMAN. That is correct, sir, although the Board has, in the past, issued seasonal certificates to some of the carriers, some of the certificated carriers, and we feel that, perhaps, we do have that power now. Senator MONRONEY. I didn't know about that. Mr. NEWMAN. For example, Piedmont Airlines, a local-service carrier operating in the southeastern portion of the United States, in the Piedmont area, has a seasonal authorization to serve certain beach points during certain times of the year. And, as I recall, I think Western Airlines serves West Yellowstone on a seasonal basis. So, we have done that in the past. Senator MONRONEY. But what they have done in the past has been to give seasonal service to vacation areas not otherwise having air service; is that not correct? I think what Senator Smathers suggested, in bringing about consideration of this, is that, during the extremely heavy traffic load periods, other airlines might be given the right to fly on a seasonal basis into these high-traffic-density points to relieve congestion and to spread the load around a little bit. Mr. NEWMANN. That is correct, Mr. Chairman. Under the provisions of the proposed bill, the Board would clearly have the authority to issue such a type of certificate. Senator MONRONEY. Would these certificates be issued with proper respect for the right of airlines already serving those points to protest and be heard by the Board? Mr. NEWMANN. Absolutely. The Board would contemplate all of the statutory provisions of the Administrative Procedure Act and section 401 of the Civil Aeronautics Act, so that the determination by the Board would be made after notice of hearing and after the parties had a full opportunity to present their comments in an evidentiary hearing. Senator MONRONEY. The chairman had a very strong blast from Eddie Rickenbacker, the president of Eastern, regarding this. He said there were a great many vacant seats, and had been all season, flying into Florida, and he wanted the privilege of being heard, personally, before anything is done on granting the right to give parttime or seasonal certification. Mr. NEWMANN. I would like to point out, Mr. Chairman, that any limited certificate that would be issued under this proposed legislation would be issued only after notice of hearing and after all of the parties interested had full opportunity to present their case. Senator SCHOEPPEL. On page 4 you say "may wish to engage only in specialized type of operation." What do you envision there? Mr. NEWMANN. Senator Schoeppel, we envision, basically, the coverage of this proposed legislation to be a limitation on frequency, as the chairman has pointed out, permision for a coach-type service at lower fares, perhaps a provision that would involve seating density. I think, essentially, those are the three main objectives to be accomplished by this legislation. Senator SCHOEPPEL. I can well envision the scheduled, certificated airlines, who operate under schedules that have been approved, which they are bound under the laws and under your procedures to follow, feeling that, if the Board would say, "We will give other carriers an opportunity to fly from one density point to another with a specialized service just for coach service," those carriers would then skim that cream off there, and it would be a tremendous handicap to the scheduled airlines who are bound to maintain and keep their schedules if they did not have the same right to do it. Mr. NEWMANN. I think you raise a very important point, Senator. I would say that the Board would be completely cognizant of that in deciding whether or not a limited type of certificate should be issued, if this legislation is adopted. The Board would certainly |