the life of me I can't understand why a hotel cannot buy retail meat and must be required to buy wholesale meat.

Mr. HORROCKS. That certainly was a new one to me, too.

Senator INOUYE. I think Ralph Nader should get involved in something like this, and maybe give an assist to the industry. They have all kinds of regulations on highways about signs, but it's never been confirmed that those were effective. So I would hope that your agency would get a bit concerned about some of the complaints that were suggested today because, overall, like in any other activity, even if there are wrongdoers, the vast, vast majority of the members of the industry have done a good job.

Mr. HORROCKS. I agree.

Senator INOUYE. And that's why I just wanted to clarify the record, to say that out of 226 million, 138,346 were denied confirmed reservations-that's bad, but from statistics, it's not bad. I think country wise, the United States has the best record.

Mr. HORROCKS. We find sort of a domino effect—for want of a nail on the shoe, the battle was lost-the man is bumped which causes him to miss a hotel reservation which makes him go to another airline which makes him late to a business appointment and so forth and so on, and it's an accumulative effect which results in the original complaint burgeoning into maybe half a dozen and impinging on other areas of the tourist industry and inflicting hardship and financial loss to the individual involved for the original sin. So that 138,000, granted, is a small percentage of the overall air passengers, but it multiplies into a great many other grievances.

Senator INOUYE. I would also like to point out that a good proportion of those passengers with confirmed reservations get into that fix because there are a vast number of passengers during the so-called peak periods who make more than one reservation.

Mr. HORROCKS. True. Overbooking is the bête noir.

Senator INOUYE. But these reservations aren't made by the industry. They are made by the consumers.

Mr. HORROCKS. Yes. Consumers are not without fault.

Senator INOUYE. So the industry, in abiding with the law, would find itself holding the bag.

Mr. HORROCKS. They have a pretty sophisticated reservations system now Senator, where you can spot double bookings.

Senator INOUYE. I recall being on a flight about a year ago where when we called in, I was on the wait list and it was booked completely. When I got there, the plane was about two-thirds filled. So I asked what happened. They said, well, we did have reservations. These are all no-shows. So with that type of situation, to just have 138,000, I think we should give the industry a pat on the back. They did a pretty good job.

But seriously, we appreciate your participation today and you, as always, have been very helpful to us.

Mr. HORROCKS. Thank you sir. I would like to add one other thing. In listening to the Assistant Secretary today extol the virtues of Commerce's interest in tourism, we have been putting out a tollfree hotline booklet here which used to include the USTS. They had

a hotline which was called the "Travel Hot Line." Say you wanted to travel from here to Mr. Benefield's hotel in Bloomsburg, Pa., to his Pennsylvania Dutch hotel. They would let you know what route to take, whether the weather was good, any tolls involved, and that sort of thing. It was so successful that they cut it out. They don't have that hotline any more.

Senator INOUYE. That's par for the course.

Mr. HORROCKS. Well, I'm told that they are having budgetary problems, but don't we all?

Senator INOUYE. Well, I thank you again, Mr. Horrocks.

Mr. HORROCKS. My pleasure, sir.

Senator INOUYE. This hearing will stand in recess until 2 o'clock, September 26, 1978.

[Whereupon, at 5:20 p.m., the hearing was recessed, to be reconvened at 2 p.m., September 26, 1978.]

TUESDAY, SEPTEMBER 26, 1978

U.S. SENATE,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,

Washington, D.C.

The committee met at 2:10 p.m., in room 235, Russell Senate Office Building, Hon. Daniel Inouye presiding.

Senator INOUYE. The chairman of the committee, Mr. Cannon, is unable to be with us at this time, but he has asked me to advise the hearing that he will be here shortly. In the meantime, I have been asked to read a statement which he has prepared.

OPENING STATEMENT BY THE CHAIRMAN

Today the Committee continues the hearings which it began September 20, on the NTPS.

That hearing, as well as today's and the one scheduled for this Thursday, September 28, are concerned with testimony on the objectives a national tourism policy should seek to achieve, and the most effective federal mechanism to coordinate such a policy among the many government agencies having programs and responsibilities which impact travel and tourism.

Subsequent hearings this year will consider the most effective principal federal implementing mechanism for that policy, and how best to provide for cooperation with the states, cities and the private sectors of the industry.

The federal government significantly affects the travel industry and the traveling public because over 100 programs administered by some fifty separate agencies now adopt policies and administer programs which directly or indirectly impact travel and tourism. To date, however, no legislation has been enacted which provides these agencies with the necessary policy guidance to assure that their programs are furthering the national interests in tourism. Nor is there a federal mechanism for coordinating and implementing a tourism policy if one existed.

The government failure in this regard was, I believe, illustrated by the Bermuda II agreement which we concluded with the United Kingdom.

Until Bermuda II, most U.S. Air Service Agreements had followed the precept that carriers from each country should have a fair and equal opportunity to compete for traffic, without a guarantee of either specific market share or level of revenue.

I believe it is accurate to say that the consensus is that Bermuda II represents a substantial departure from the kind of system envisioned by Congress and generally incorporated in other bilateral agreements.

It is also fair to say that this departure has been made at the expense of U.S. air carriers, both scheduled and supplemental.

That Bermuda II was not in the best interests of the United States and our carriers was, in large measure, due to the traditional lack of coordination among the agencies of government which made up our negotiation team.

In testimony before my Aviation Subcommittee last year the Chairman of the CAB noted that the increasingly complex nature of air services agreements, and the larger number of federal agencies who sometimes have an interest in particular negotiations strongly suggest that our negotiation process could be improved. He recommended that various government agencies with expertise and perspective to contribute should share integrally in the responsibility for the planning of a broad negotiating strategy in each instance.

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At present, Chairman Kahn said, (November 1976), "each agency makes recommendations reflecting the particular perspective of its own individual institutional interests and legal responsibilities, without sharing in the responsibilities for integrating the relevant economic regulatory and foreign policy considerations."

I am pleased to note that since Chairman Kahn's remarks of November 1976 the situation has improved and that the federal agencies involved are more effectively coordinating and negotiating international aviation bilateral agreements.

Chairman Kahn's words came as no surprise to my Committee, because we know that there are over 100 tourism and tourism-related programs administered by 50 federal agencies. There is little or no coordination. Often there is contradiction. And in some cases, duplication.

As a consequence, the federal tourism effort is wasteful, inefficient, and unresponsive to the needs and interests of the private sector of the industry. Essentially, this is what the NTPS is about. It is an attempt to make sense out of the vast federal involvement in travel and tourism.

Last week the Committee heard testimony from the Administration, the lodging industry, organized labor, and consumer representatives. Today we look forward to hearing from representatives of the Lieutenant Governors' Association, the scheduled U.S. airlines, the International Association of Convention & Visitor Bureaus, and the American Express Company.

OPENING STATEMENT BY SENATOR INOUYE

Senator INOUYE. I would like to say a few additional words. Today the committee expects to learn from representatives of the States, the cities, the scheduled airlines, and the travel promotion and sales segment of the industry how each has been affected by the lack of a legislatively enacted national tourism policy and a Federal mechanism to assure that such a policy is coordinated among and reflected in the numerous tourism and tourism-related programs.

We would also hope that the witnesses will make whatever recommendations they feel necessary for a national policy and coordinating mechanism.

Today's witnesses represent additional segments of the $115 billion a year travel industry which has been seriously handicapped by the Federal Government's myopia and inertia.

All of us are, I believe, aware of the proposals to limit tax deductions for business meals and to restrict attendance at foreign conventions. It would probably surprise many, however, to know that the Bureau of Security and Consular Affairs which administers the visa program is operating under visa issuance regulations developed to implement legislation enacted in 1952. In other words, we have gone into the jet age and from there into the jumbo jet age with regulations designed to accommodate the volume of traffic which existed in the prop age.

Current policies and regulations regarding visas, customs and immigration procedures, and the quality of receptive facilities and services at U.S. ports of entry have caused many people to question whether these requirements and conditions do not, in fact, needlessly detract from the quality of a visitor's experience, and discourage travel to the United States.

According to testimony received during earlier hearings, if our visa requirement were abolished the United States could expect an additional 63,000 visitors from 9 European countries, another 33,500 visitors from South America: 20,500 more from Central America; an additional 41,700 from 10 Asian countries; and, 17,000 more from Australia and New Zealand. This is a total of 160,000 more visitors per year.

The USTS estimates that every incoming visitor is a "living $343 export" for the United States. Using that yardstick, our international travel deficit would be reduced by over $55 million annually if there were no visa requirements.

In response to a question during that hearing, the Immigration Service replied that the standards for visa issuance to tourists by the State Department and the standards for admissibility of tourists by Immigration are the same. If ever there were duplication, this, it seems to me, is it.

Another example of the failure of the present Federal effort which emerged from that hearing relates to the role of the DOT in international visitor facilitation.

That agency described its role to the committee as "one that emphasizes coordination and cooperation with other interested agencies of government."

In answer to our inquiry, however, the Department of Transportation said it "has not undertaken a comprehensive examination of the restrictive or deterrent effect that the policies of our inspection agencies may have on international visitors" because the agency did not feel inspection policies could be a substantial deterrent to travel.

I doubt if too many here would agree with this assessment. There are many other areas when Federal programs have been uncoordinated or failed to take into account the legitimate needs and interests of the States, cities, and those segments of the travel industry testifying today.

I would therefore hope that everyone will work together and assist the committee in making its recommendations to the Senate as required. by Senate Resolution 347.

Our first witness this afternoon is the Honorable Thomas P. O'Neill, III, Lieutenant Governor of the State of Massachusetts, and chairman of the National Association of Lieutenant Governors Conference. Governor, it's my pleasure, sir. Welcome.

STATEMENT OF HON. THOMAS P. O'NEILL III, LIEUTENANT GOVERNOR OF THE COMMONWEALTH OF MASSACHUSETTS, AND CHAIRMAN, NATIONAL ASSOCIATION OF LIEUTENANT GOVERNORS

Mr. O'NEILL. Thank you Mr. Chairman. It's good to be here. It's an honor and pleasure to be invited to testify before the Senate Committee on Commerce, Science, and Transportation. As the newly elected chairman of the National Association of Lieutenant Governors of the United States, may I convey to you our appreciation and respect for the work you are doing. Mr. Chairman, I think it ought to be pointed out to you that I also chair the Travel Advisory Committee of the Council of State Governments, funded by the USTS, and I would like to keep you attuned and abreast as to what our organization has been doing over the last 10 or 11 months.

We have a draft report which we are about to submit to you and to your committee. I hope you will inform us if you think our report can be improved, or perhaps how you think you can supplement or complement it in any way. We would deeply appreciate that. We have Mr. Chavez from the USTS himself.