plemental air carriers and, therefore, reversed the decision of the Board. The court did hold that the Board has legal power under section 416 to issue exemption orders to these supplemental carriers. It merely held that the Board had not made sufficient findings of fact to justify the issuance of the exemption orders in that particular case, although, I might add, the record as certified to the court of appeals was something in excess of 5,000 pages. Senator MONRONEY. Did the court have before it, in this voluminous record testimony by American, evidence taken by the Board for the need for additional service that was being granted to the supplemental carriers? Mr. LEAR. Yes, sir. The court did, as a technical matter, have before it the entire record. However, the case was severed and the court decided merely the legal issues involved, namely, whether, as a matter of law, the Board had made sufficient findings of fact to justify the issuance of exemption orders. So I don't think the court considered the merits of the case at all. The judgment of the court of appeals has been stayed by stipulation of the parties until the Board renders its final decision in the Irregular Air Carrier Investigation, Docket 5132 et al. This decision, which will finally determine the operating rights, if any, of the supplemental air carriers, is expected to be handed down within the next several months. In its opinion dated November 15, 1955, the Board found that the granting of limited operating authority to the supplemental air carriers is in the public interest and in the interest of national defense. Unless the Board's right to issue certificates of public convenience and necessity pursuant to section 401 (f) of the act is clarified, however, the Board may possibly refuse to issue such certificates and, at the same time, may fail to make additional findings of fact sufficient to justify the issuance of exemption orders to the supplemental air carriers. Thus, in the present posture of the case, there is grave danger that the supplemental air carriers may be deprived of all authority to engage in air transportation as a result of a legal technicality. Accordingly, it is respectfully submitted that recommendation No. 2 should be implemented by appropriate legislation in order to remove all doubts as to the authority of the Civil Aeronautics Board to issue certificates of public convenience and necessity for supplemental air transportation. Senator MONRONEY. In other words, by the passage of legislation you wouldn't run into the court decisions such as you did in this current case that the Board had not had sufficient evidence before it as to the need for supplemental service? Mr. LEAR. That's right, Mr. Chairman. In that connection, I would also like to point out that with the law the way it is now, if the Board should issue certificates to these supplemental carriers in the irregular air-carrier investigation, then I think the chances are--I think it is practically a foregone conclusionthat we will again be back in court with more years of litigation and more expense. This has been an enormously expensive case for these small carriers. Senator MONRONEY. They would be in court on what would amount to a granting of a permit to fly, wouldn't they? Under certain conditions, between two points on the route? Mr. LEAR. Yes, sir, I think so. Let me put it this way: If the Board granted a certificate to these carriers, assuming no changes were made in the act, authorizing, say, 10 flights a month between any 2 points, then that question would, I believe, inevitably be appealel by the big air carriers, which consistently opposed the supplemental carriers, to the court of appeals, and eventually to the Supreme Court, for that matter. So, no matter who won, we would still be forced to have expensive litigation. Senator MONRONEY. Senator Schoeppel? Senator SCHOEPPEL. No questions. Mr. LEAR. Mr. Chairman, I have with me Mr. Seamon, who is general counsel of the Independent Military Air Transport Association, consisting of, I believe, 11 or 12 supplemental air carriers. I wonder if it would be possible for him to make a short statement? Senator MONRONEY. Does he have a statement prepared? Mr. LEAR. No, sir. He just contemplated making a short oral statement in support of our position. Senator MONRONEY. We will be glad to hear him. You are a member of his association? Mr. LEAR. Yes, sir. STATEMENT OF THEODORE I. SEAMON, GENERAL COUNSEL, INDEPENDENT MILITARY AIR TRANSPORT ASSOCIATION Mr. SEAMON. Mr. Chairman, Senator Schoeppel, my name is Theodore I. Seamon. I am counsel for the Independent Military Transport Association, commonly known as IMATA. I very much appreciate this opportunity to make this statement, which I will make brief. To explain it, and apologize for not having a prepared statement: It had been anticipated that several members, a cross section of the membership of the supplemental air carriers composing the association, would appear. Due to a number of various reasons, only Mr. Lear could be present. What I want to say is on behalf of these 11 members who are supplemental air carriers, all parties to the large irregular investigation, is that we endorse the comments and would adopt the comments that Mr. Lear has made, and endorse the recommendation of the Civil Aeronautics Board. I would like to point out that these carriers are in somewhat of a legal never-never land. We believe and have argued that the Board has the power to grant supplemental rights both by exemption as well as by certificate, but we find legal doubt on both phases of the type of authorization. The supplemental authority that the Board has as a matter of policy adopted in the initial decision in 1532 would not relate so much to fixed routes, but to a combination charter service without regard to points, and a limitation on the number of flights which could be made in what is termed individually ticketed operations. That is, the normal common carriage, limited to 10 flights per month between any 2 points, without regard to regularity. In other words, there have been a lot of filed schedules. If I may impose a minute more, Mr. Chairman, because I think this is very important. One of the carriers, Trans-Ocean Airlines, has been operating within the regulations of the Board under supplemental service between the west coast and Hawaii, and has filed schedules to that extent within the 10-flight limitation. Trans-Caribbean Airways, now operating a DC-6, and which has an order for four DC-6's, has been operating between New York and Puerto Rico within the various regulations of the Board and consistent with those regulations as a large irregular carrier and, more recently, as a supplemental air carrier. These carriers work in various States. They do charter work for the military, they do commercial charters. And where there is traffic that will allow them to operate to the extent of 10 flights a month, which is not going to support a substantial promotion campaign to get what might be called the run-of-the-mill business, they will operate those 10 flights, where there is peak traffic-and that has been the circumstance, for example, between New York and Puerto Rico. As an example of that, Trans-Caribbean has applied for an unlimited certificate in the second proceeding on the grounds that it has been operating there since 1945, and it received the recommendation of the Bureau of Air Operations in a pending case. What I would like to point out, sir, is that recently you enacted permanent legislation for local service air carriers. You have before you a bill for permanent certification of all-cargo carriers. I recall a statement by Board member Gurney-I believe it was before this committee several years ago-in which he pointed out that the exemption authorization, the initial nonscheduled exemption in 1938 which allowed fixed-base operators to conduct service without certificates, the subsequent large irregular exemption orders, exemption orders with respect to all-cargo carriers, provided the experimentation which led the way to the local service program, to the all-cargo program. AAXICO was a supplemental air carrier, a member of ÎMATA, so was Seaboard and Western. Flying Tigers and Slick were originally large irregular carriers. Many of your feeder lines grew out of the fixed-base operators that were operating pursuant to the 1938 initial nonscheduled exemption. For these reasons it seems that there should be eliminated any doubt as to the power of the Board to issue certificates covering supplemental service, power which the Board itself assumed it had in its interim decision as a policy determination in the large irregular investigation in 1956. Senator MONRONEY. Do I understand from page 5 of Mr. Lear's statement, where he says: The judgment of the court of appeals has been stayed by stipulation of the parties until the Board renders its final decision in the irregular air carrier investigation— that that is the way these lines are now flying the 10 schedules a month? Mr. SEAMON. The have the authority to fly 10 schedules a month between any 2 points under the interim supplemental air carrier authorization which was granted by the Board pending its final decision as to whether to grant this authorization by certificate or exemption, and as to the carriers who it would ultimately find to be fit, willing, and able to receive that supplemental grant. There has been throughout the case the legal questions to which Mr. Lear adverted. That was taken up in appeal, as Mr. Lear pointed out. The court of appeals found that the Board had the power to grant exemption, although there has been controversy as to that, but that they had not made the statutory findings to support it. In view of the fact that that was an interim decision with respect to the method of granting the rights, and there were further hearings, and the matter is now coming before the Board for argument on its final determination, it was agreed among the parties that to avoid further litigation, to avoid the requirement of the Board having to make supplemental findings in a matter which might be moot, it was stipulated that the court's decision be stayed pending final decision in the case. If they grant it by exemption we will be back up in the courts. If they grant it by certificate we will be back up in the courts, unless this doubt is removed. We have taken the position that the Board clearly has the right, despite the condition in 401 (f), to grant limitations with respect to the number of schedules, on the grounds that it is designating or describing the services to be rendered. There are a series of cases in the legislative history-the Motor Carrier Act and cases under the Motor Carrier Act-which do not leave what can be termed a clear-cut conclusion, at least not clear enough for us to persuade the examiners that they have the right to grant certificates. And without conceding that the Board couldn't do it, we do know. that there is sufficient doubt-certainly the Board feels there is sufficient doubt so that we think it would be a great mistake to continue this never-never land of legal uncertainty without clarifying and insuring that the Board has the power to grant rights when it finds limited rights are in the public interest. Senator MONRONEY. There is no subsidy? Mr. SEAMON. No subsidy. Senator MONRONEY. And there are no mail contracts? Mr. SEAMON. No, sir. Senator MONRONEY. You don't carry mail? Mr. SEAMON. No, sir. Senator MONRONEY. It is just a matter of picking up your passengers and delivering them on 10 round trips a month under the new policy of the Board? Mr. SEAMON. That is correct, sir. Senator MONRONEY. But your position is that unless something else is done the decision in the American Airlines case might prevent even that from becoming effective? Mr. SEAMON. Yes. It might prevent the Board from continuing to grant rights which it found to be in the public interest by exemption, on the grounds that it couldn't make the statutory findings that the court required, and this doubt as to its power to grant certificates could militate against effecting authorization. Senator MONRONEY. Do you have any further questions, Senator? Senator SCHOEPPEL. Can you give us the names of the members of your association? 32150-58-3 Mr. SEAMON. Yes, sir: American Flyers Airline Corp.; Capital Airways; Trans-Caribbean Airways, Inc.; Trans-Ocean Airlines; All American Airways; Purdue Aeronautics; General Airways; Meteor Air Transport; Los Angeles Airways; Modern Airways; Overseas National Airlines. Senator SCHOEPPEL. That is all. Senator MONRONEY. Thank you very much for your testimony. Mr. SOLOMON. Yes, sir. Senator MONRONEY. It will not be too inconvenient for you? Senator MONRONEY. We also have Mr. Beitel, Air Coach Transport Association. Is he in the room? (No response.) Senator MONRONEY. And we will have Mr. Tipton. The committee will stand in recess until 10 o'clock tomorrow morning. (Thereupon, at 12:23 p. m., the subcommittee was adjourned, to reconvene at 10 a. m. Friday, April 5, 1957.) |