be bound by the facts of record to determine whether the public convenience and necessity can really show a need for such service. Senator SCHOEPPEL. That is the point I am getting at. This does not and would not represent a departure from the requirement of a public-convenience-and-necessity showing? Mr. NEWMANN. Absolutely not, sir. Senator MONRONEY. Would not this be a fact? That, in the highdensity-traffic areas, there is practically always an overbooking and overdemand for coach-type service. I doubt if there is any highdensity traffic point such as Florida or California with New York where you do not usually have a heavy backlog of unfilled seats. Mr. NEWMANN. Assuming that we have a route that has a fairly heavy density on it, and let us assume there were three carriers presently certificated on that route, and that there were a need for additional service, at the present time, under the present law, if the Board did not have the power to grant a limited type of certificate, the Board could authorize only additional service of an unlimited nature. If this proposal were adopted, the Board would then be in a position where it could authorize something less than a whole, entire certificate. There may not, perhaps, be a need for an unlimited amount of service over that route, but maybe for a limited or supplemental type of service. And that is what this legislation would be designed to get at; to permit the Board to issue something in a limited type of certificate. Senator MONRONEY. And this would apply then not by deduction, but as a result of Board determination as to the need for separation of specialized services, such as air-coach service or seasonal operations, into high-density-traffic areas where other airlines are now certificated to serve? Mr. NEWMANN. Yes, sir. Senator MONRONEY. And the Board recommends the passage of legislation of this type? Mr. NEWMANN. Yes, sir; the Board does. Senator SCHOEPPEL. I have one other question. With reference to that specialized type of service, do you envision-I know you can't judge it now, based upon hearings-would you envision limiting the number of runs or flights? Mr. NEWMANN. Yes, sir; very definitely. Senator SCHOEPPEL. If you didn't, then you could see it would manifestly be unfair and it would gut a legitimate operation? Mr. NEWMANN. I think you have struck at the crux of this entire bill, Senator Schoeppel. The Board very clearly envisions a limited type of operation, both as to the points involved and as to the number of schedules that would be involved. And the only way that could be determined as to the precise number, as I pointed out, would be based upon the evidence of factual material to be presented in a proceeding under our statute. Senator SCHOEPPEL. Naturally, I could see where a scheduled airline, if it knew an application was coming in, but it persisted in not furnishing, under its certificate, proper plane schedules, proper capacities, ships in service, and persistently did it, the public would suffer. But, if the certificated airlines could be given the right to put on addi 32150-58-2 tional service, if they applied for it, it would seem to me that they should be given that safeguard because they maintain schedules and serve intermediate stops in their scheduled operations. If you give someone else the right to skim off that cream indiscriminately, they would whip you to death. Mr. NEWMANN. Senator Schoeppel, the certificated carriers today have the right to operate an unlimited number of schedules under the act. This legislation, as I pointed out in my testimony, will not change in any detail the existing right of the certificated carriers. They can continue to operate as many schedules as they see fit over the route, providing they are furnishing adequacy of service. We would hold a proceeding under section 401 to determine whether an application that might be filed for a limited type of certificate should be granted. The Board would hold a hearing, and if the evidence showed that there was a need for additional service on a limited scale, the Board then would be able to issue a limited certificate. If the evidence showed there was no need for additional service, that the service presently being provided was adequate, the Board presumably would come out with a finding that the request for a limitedservice certificate should not be granted. Senator SCHOEPPEL. The main point that we are clearing up here is that there is no desire under this type of legislation, if approved and passed, to alter or change the certificated carriers' position and rights existing under the act? Mr. NEWMANN. Absolutely; no desire at all. Senator MONRONEY. Those proposed certificates, which are less than first class, I think you say they are not all-comprehensive, could be limited not only as to class of service and frequency and season but also could be limited as to duration, could they not? You might be franchised for 6 months to operate a certain route, and then it would be a temporary matter, and then it would expire? Mr. NEWMANN. Yes, sir. The Board would have the opportunity to designate the length of the certificate as it sees fit. Senator MONRONEY. Would it provide any new rules for original entry into the airline business? The nonskeds that were flying and fought so hard to maintain their regular route schedules on a scheduled-nonscheduled basis, I guess you would say, were seeking this type of a certificate at one time, asking that they be allowed to fly only coach service. If now they were found to be willing and able to fly such a service, would the Board have the right to certify them with a selective certificate? Mr. NEWMANN. Yes, sir. There is no limit on who may file such application. Senator MONRONEY. It would be open to anyone, and it would be the Board that would find whether they were able and competent to operate the schedules and service that they requested? Mr. NEWMANN. That is correct, sir. Senator MONRONEY. Senator Schoeppel? Mr. BAYNTON. Does the Board have any statistics on empty seats on some of these main routes? Mr. NEWMANN. Mr. Dregge is here from the Bureau of Air Operations. I think he can answer that. Mr. DREGGE. I don't have the figures for empty seats on that basis. However, for the month of January 1957 I have the load factors for first-class and coach service which would give you a comparative figure there, if that would be of interest. Senator MONRONEY. Could we have those for the New York-Los Angeles run and New York-Miami? Mr. DREGGE. Yes, sir. I am afraid there again I do not have it for specific routes. It is an overall industry figure. Senator MONRONEY. For the percentage of seats in each class? Senator MONRONEY. Industrywide? Mr. DREGGE. Industrywide. Senator MONRONEY. I would be interested in having those read to us. Mr. DREGGE. For the month of January 1957 the revenue passenger load factor for the entire industry is 59.7 percent. For first class it was 58.7 percent. Coach service was 61.2 percent. For the domestic trunk operations Senator MONRONEY. Does that include feeder service? Mr. DREGGE. Yes, sir; that is the whole industry. For domestic trunk operations the total load factor was 60.5 percent. First class, 60 percent. Coach, 61.4 percent. For Big Four carriers which would be American, Eastern, TWA, and United-the total was 61.6 percent; first class, 61.2 percent; and coach, 62.3 percent. Senator MONRONEY. They stay close together on all categories, including feeders, all trunks, and your Big Four. Only about 1 percent difference. Mr. DREGGE. That is interesting. Senator MONRONEY. There is not much difference between coach and first class. Mr. DREGGE. Of course, you have to realize that the trunks are the only ones that are operating a coach service today, with the exception of one local service airline, Southwest, which is operating a coach service on certain of its routes. Senator MONRONEY. Senator Schoeppel? Senator SCHOEPPEL. No further questions. Senator MONRONEY. Thank you very much, Mr. Newman, for appearing before us with regard to this bill. Mr. Coates Lear, of Overseas National Airways, will be our next witness. STATEMENT OF COATES LEAR, REPRESENTING OVERSEAS Mr. LEAR. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, my name is Coates Lear. I am a lawyer with offices in the Cafritz Building, Washington, D. C. I represent Overseas National Airways, Inc., a suppleental air carrier operating pursuant to the Civil Aeronautics Act of 1938, as amended. I am also vice president of this company. Overseas National Airways and its predecessor companies have been continuously engaged in civil aviation since 1946. During the period July 1, 1950, to May 4, 1954, the company operated 4 to 5 DC-4 aircraft as one of the prime contractors for the Air Force on the so-called Korean airlift. Throughout this entire operation Overseas was consistently ranked by the Air Force as one of the most efficient contractors, and the company was also the lowest-cost operator for the Governent by a very substantial margin. In connection with the Korean airlift operation, flights were conducted between the west coast of the United States and various points in the Far East, transporting high priority military cargo and personnel. The aircraft which Overseas operates are readily convertible from passenger to cargo configurations so that many of the outbound flights which transported cargo were, on the return flights, used for the transportation of wounded military personnel, including litter cases. During the year following the termination of the Korean airlift it was necessary for Overseas to drastically curtail its operations because of the lack of commercial or military business. In the spring of 1955, however, the company began to expand its operations by the purchase of DC-4 aircraft. At the present time the company operates 3 such aircraft and has 68 employees, of which number 44 are flight personnel and 24 are ground and administrative personnel. Last year the company placed orders with Douglas Aircraft Co. for five new DC-6A aircraft. These planes, which cost in the neighborhood of $1,650,000 each, are scheduled for delivery beginning in March of 1958. The following data are submitted to indicate the extent of the operations of the company during the period July 1, 1950, to December 31, 1956: I am appearing before your committee today in support of legislative recommendation No. 2 contained in the Annual Report of the Civil Aeronautics Board to the Congress for 1956. Appropriate legislation to implement recommendation No. 2 would remove all doubt regarding the authority of the Civil Aeronautics Board to grant certificates of public convenience and necessity authorizing limited or supplmental service by air carriers, including Overseas National Airways. The legal problem regarding the issuance of certificates of public convenience and necessity for supplemental service arises by virtue of the fact that section 401 (f) of the Civil Aeronautics Act 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. During the past several years the Civil Aeronautics Board has been conducting a proceeding known as the Irregular Air Carrier Investigation, Docket No. 5132 et al., the purpose of which is to determine what place, if any, the irregular air carriers now known as supplemental air carriers-shall have in the field of civil aviation. In their initial decision in the case, the CAB examiners took the position that the proviso contained in section 401 (f), quoted above, prevents the Board from issuing certificates of public convenience and necessity which would authorize, among other things, a limited number of flights per month between each pair of points to be served by the supplemental carriers. On the other hand, the supplemental air carriers and the Bureau of Air Operations of the Civil Aeronautics Board-have taken the position that the Board has the power to issue certificates of public convenience and necessity to supplemental carriers since the type of service authorized to these carriers does not contemplate the operation of schedules as that word is used in section 401 (f) of the act. In other words, the supplemental carriers argue that inasmuch as the Civil Aeronautics Board has authority pursuant to section 401 (f) of the act to specify the service to be rendered, a limitation upon the number of flights to be operated merely specifies the type of service to be rendered-namely, supplemental service and it is, therefore, within the power of the Board to issue certificates of public convenience and necessity for this type of operation. In addition, there is disagreement as to whether supplemental services can be authorized by certificates of public convenience and necessity in view of the fact that section 401 (f) of the act also provides that Each certificate issued under this section shall specify the terminal points and intermediate points, if any, between which the air carrier is authorized to engage in air transportation and the services to be rendered *** The CAB examiners have construed this proviso to mean that air transportation not defined with respect to specific terminal or intermediate points cannot be authorized by means of a certificate of public convenience and necessity. On the other hand, the Bureau of Air Operations and the supplemental carriers argue that if no terminal or intermediate points are named in the certificate, then the Board must merely specify the type of service to be rendered. If the latter interpretation is placed upon section 401 (f), then it seems clear that the Board could authorize supplemental air transportation by certificates of public convenience and necessity, even though such certificates might not specify any definite terminal or intermediate points. In its decision in the Large Irregular Air Carrier Investigation, Docket 5132, dated November 15, 1955, the Board did not pass upon the question of whether it has legal power to issue certificates of public convenience and necessity for supplemental service. Instead, the Board authorized a number of air carriers to engage in supplemental air transportation-principally unlimited charter operations plus 10 flights per month between each pair of domestic points on an individually ticketed basis-by issuing them exemption orders pursuant to section 416 (b) (1) of the act. This opinion of the Board was appealed to the United States Court of Appeals of the District of Columbia by the large certificated airlines which had opposed the granting of any operating authority to the supplemental carriers by the Civil Aeronautics Board. In its opinion, dated July 19, 1956, the Court of Appeals held-American Airlines, Inc., et al. v. Civil Aeronautics Board et al. (235 F. 2d 845)—that the Board had not made sufficient findings of fact to justify the issuance of exemption orders to the sup |