Appendix Petitioners Brief — World Airways, Inc. v. Pan American World Airways, Inc.

Supreme Court brief1968

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<. APPENDIX TO. PETITONERS’ BRIEF

LEGISLATIVE MATERIALS 3

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_ Suen Court of the Bnited States

" OcrosEr TERM, 1967

, No. 800 : ; sia

"Wea Amwars, Inc, Er Bt, Petitioners, :

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Pay American. Wort PRA Ino., ‘tend Worta | see

: _ Amines, Ino. and a reed AIRLINES, Inc.,. 3

; "Respondents

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Crvm. AERONAUTICS Boann, Petitioner;

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Pan AMERICAN Wortp Airways, =~ -TRANS Wort ©

AIRLINES, Inc: and AMERICAN AIRLINES, Inc.,;

ee ; ues os “Respondents,

| “No, 969 So. Sheet

- AMpRIcay: Society or TRAVEL AGENTS, Inc. , Petitioner,

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- Pan Aoiaaatas Wort iii Tivo., Trans 1. Woatz

_ATRLINEs, Ino. ham AMERICAN Arun, Ino.,

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INDEX: TO LEGISLATIVE MATERIAL

‘Senate Bill, S..1969 ab

House of ‘Representatives Bill, H, R 7318 .. 7

House of Representatives Bill, HER 7512 - 13b

_- Housg Report No. 1177) ee 17>

Senate ‘Report No. 688 Vanna 91b

| Conference Report, House Report No. 1950 173b~

Hearings i in the House of — 267

Hearings in the Senate- 217%

Congressional Record: | .

. House of Representatives. — 229b

Senate - a 234b

‘Public Law 96-661". 240b

LEGISLATIVE MATERIALS *

- Senate Bill, S. 1969

87th Congress, 1st Session a

A BILL To amend the Federal Aviation Act of 1958, as

amended, to provide for a class of supplemental air

carriers, and for other purposes

Be at enacted by the Senate and House of Reoreainy

' tives F the United States of America in Congress ‘a

bled, That section 10i of the Federal Aviation Act of

- August 23, 1958, as amended, is amended by redesignating

paragraphs (32) and (33) as (34) and (35), respectively,

and inserting therein two new: paragraphs to. read as fol-

. lows:

“(32) ‘Supplemental air carrier’ means an air carrier

holding a certificate of public convenience and necessity

authorizing it:to engage in ‘supplemental air transportation.

*. (33) ‘Supplemental air transportation’ means air trans-

portation rendéred pursuant to a certificate of public con-

_ veniente and necessity which contains such limitations as

to freq lency of service, size or type of equipment, or other-

‘ wise, as will assure that the service so authorized remains

supplemental to. the service authorized by certificates of .

public convenience and necessity issued pursuant 0 sec- -

tions 401(d) (1) and (2) of. this Act.”*’.

Sec."2. Section 401 of the Federal Aviation Act is

amended by adding to subsection (d) thereof a new para-

' graph (3) to read:

Senate Bill, Ss. 1969 -

Pi “(3) (i) In the case of an gupltealion for 3 a certificate to

engage in-air transportation as a supplemental air carrier,

j _ the Board may issue a certificate authorizing the whole or.

i any part thereof for such peridds as may be required by.

the public convenience and necessity, if it finds that_the-

| applicant .is fit, willing, and able properly to perform the

can service of a supplemental air carrier and to conform to.

the provisions of: this Act and the rules, regulations, and -

requirements of the Board hereunder. “In determining :

| whether an applicant for such a certificate is fit, willing,

eee and able within the meaning of this paragraph the Board

shall give consideration to the conditions peculiar to sup-

. plemental air transportation, including the nature of the

public need found.to exist and the extent of the obligation

imposed on an air earrier engaging in such air transporta-

tion to provide the. service. authorized--by the certificate.

Any certificate issued: pursuant to this paragraph shall

“contain such limitations as the Board shall find necessary

to assure that the service rendered pursuant thereto will

‘be limited to supplemental air transportation-as defined

_ in this -Act. : = ne ae

~~ tifieate for supplemental air transportation within thirty

days after the date of ennenannan of this paragraph shall

show— - .

. “(A). that it, or its predecessor in interest, was an’

air carrier authorized to furnish service between places

'. within the United States either by a certificate of pub-

lic convenience and necessity issued by the Civil Aero-

nauties Board pursuant to order E-13436, adopted

“(ii) If any applicant. who makes application for a cer- *'-

oe a

Senate Bill, 8.1969

e January 28, 1959, or alia E- 14196, acehea July 8,

1959, or that it or its predecessor has: received interim

operating authority from the Board pursuant to sec-

tion 1(2) of Public Law 86- 66 l of July 14, 1960, 74

Stat. 527; ° A

' 4(B) that between the effective date of the patiteste

or interim operating authority and the date of enact-

. ment hereof, the applicant or his predecessor in interest

lawfully performed either (1) any portion of the sér-

‘vice authorized by the eertificate or interim operating -

authority, or (2) any operations for the Military Estab-

lishment of the United States — by: the Board ;

- and

“«(C) that: such certificate. er. tseies operating au- -

- thority had not been revoked or otherwise terminated m

by the Board: or had not otherwise expired prior to

the enactment of this. paragraph, and is held by the- »

original grantee or has been transferred .with Board

approval pursuant to sectien 401(h) ; Provided, That

- application under this paragraph may also be made by

- a person who on the date of enactment hereof had on

file an application to the Board: for the approval of

2 transfer to him of a certificate for supplemental air

- transportation or interim operating authority, in which °

- ease the Board shall i issue a certificate hereunder if it

approves the transfer pursuant to section 401(h) of

this Act; : ae a

_ the Board, upon proof of gach facts only, shall issue a: cer-

- tificate authori izing such applicant to <—ee in -supple- ©

Po At esent , Seo

_ upon certificates issued purs

rey Rae Ocner

Senate Bill, S. 1969

-—-mental air transportation e same extent ‘authorized in

the applicant’s certificate or interim authority and subject —

-- to the terms, conditions, and limitations attached thereto

' .for such period as the Board<deems proper: Provided,

That this period shall not extend beyond the effective date |

of an order of the Board denying renewal of the certificate

or interim operating authority in a renewal proceeding

dette at the time of enactment hereof. #4

Sec. 3 Gubsestion (e) of section 401 of the Federal -

Aviation Act is amended by adding the following text:

“A certificate issued under this section to engage in sup- >

plemental air transportation shall designate the terminal —

_ and intermediate points only insofar as the Board shall

deem practicable and may designate only the geographical

area or areas within which service may be. rendered. Noth-

ing in this subsection shall prevent the Board in specifying

_ the service to be rendered under: a certificate for supple- .

mental air transportation from placing ‘such limitations on

such certificate as it may find to be necessary to assure that

the services are limited to supplemental air transportation:

Provided, That the Board std such limitations

AO paragraphs (1) and (2)

of subsection (4). f

Src. 4, (a) Any air carrier entitled to certification under

section 401(d)(3)(ii) of the Federal Aviation Act, as

amended herein, may perform operations under its existing.

authority for thirty days from the date of enactment of

this Act, and if it has filed application pursuant to said sec-

tion 401(d) (3) (ii) within said thirty days, until the Board |

oP a

5b |

Senate Bill, S. 1969

has acted upon such application. Any air. carrier whose

application for, certification’as a supplemental air carrier

is’ pending before the Board and which (A) has operated

' in interstate air transportation” as a supplemfental air car-

rier’ pursuant to: authority: granted -under Board order

E-9744.of November 15, 1955, and (B) had an application

. for a certificate as a supplemental air carrier pending be-

fore the Board on July 14, 1960, may continue to operate

in interstate. air transportation under its existing authority

until the. effective date of an order of -the Board disposing

of such application. Any carriér whose operating authority

in interstate air transportation under Board order E-9744

is continuing solely by virtue of a judicial stay of a Board

order, insofar as such order would otherwise terminate.such

operating authority, i is hereby authorized to continue to op-

erate, subject to all conditions and limitations contained in

order E-9744 or imposed by. the court, until the court shall

lift such stay or until the final disposition of judicial review

proceeding, whichever shall first occur.

(b) The provisions of this Act shall in in no way affect any

enforcement or compkance proceeding or action against the

holder of a certificate of public convenience and necessity

‘issued pursuant to order E-13436 or order E-14196 or .

against the holder of-interim authority issued under section

_. 1(1) of Public Law 86- 661 pending before the Board on the |

‘date of enactment of Public Law 86-661 or this Act, or the

power of the ‘Board to institute any enforcement or com-

pliance action against such holder subsequent to the date

of enactment of this Act with respect to violations of the:

Federal -Aviation Act or provisions of the certificate or

ih,

“

Senate Bill, S. 1969

; |

interim authority or ‘the Board’s. regulations which may

have occurred prior to such date. Any sanction which the

Board might lawfully have imposed ‘on ‘the operating au- °

thority of an air’ carrier for violations occurring prior to

“* the issuang tp such cagrier of a certificate of public con- -

venience and eet, Fi supplemental air transportation

under paragraph (3)(i) or (ii) of ‘section 401(d) of the

Federal Aviation Act as amended by this Act may be’ im-

posed upon a. certificate issued to ‘such air carrier under

~ such paragraph.

. &) Any application of an air carrier heretofore consoli-

dated into the Board proceeding known as the Large Irregu-

lar Air Carrier Investigation, Docket Numbered 5132 et al.,

‘shall be deemed to have been finally disposed of by the |

Board insofar as said application seeks authority to engage

‘ in interstate air transportation, (1) upon the effective. date

of’a certificate of public convenience and‘necessity issued

to such. carrier pursuant to the provisions of seétion. 401

(d)(3)(i) or: (ii) of the Federal Aviation Act; (2) upon

the effective date of an order of the Board denying any

application of such carrier for a certificate of public eon:

venience and necessity ‘under section 401(d)(3)(i) or (ii) ;

- or (3)°in the event such carrier was issue@ authority: by

. order E-13436 or E-14196 or interim authority under Public

‘Law 86-661 and ‘fails to file application for a certificate pur- .

- guant-to said section,on the thirty-first day after the date

of enactment of this Act.

graph &) to read:

. Tb

om of Representatives Bill, H. R. 7318

87th Congress, Ist sre

-A BILL To amend the Federal Aviation Act 0f”1958, as

amended, ‘to provide for a class’ of supplemental air

carriers, and for other purposes:

“Bett ‘oie by the Senate and House of Representatives :

. of the United States of America in Congress assembled;

. That. section 101 of the Federal Aviation Act of. August 23,

1958, as amended, is amended: by redesignating paragraphs

(32) and (33) as (34). and (35), respectively, and inserting

therein two new peragrapns: to read as follows:

(32). ‘Supplemental air carrier’ means an air carrier

7 holding a certificate of public convenience and necessity au-

thorizing it to engage in’ supplemental air transportation.

(33) ‘Supplemental air transportation’ means ait trans-

portation rendered ptirsuant to a certificate of public con-

venience and necessity which contains such limitations as

> . . %) .

to frequency of service, size ar type of equipment, or other-

_wise, as will assure that the service so authorized remains

supplemental to the service authorized by certificates of |

public convenience and necessity issued pursuant to sec-

. tions 401(d) (1). and (2) of this “Act.”

‘ Sec. 2.° Section 401 of the Federal Aviation. Act ig |

amended by adding to subsection (d) thereot a new para- |

‘ome

2 ? ‘Ny

: “(3)(i)> In the case of an application for a certificate to

- engage in air, transpor tation as a supplemental air carrier,

| Rome ‘a Representatives Bill, H. ‘AR. 7318

. the beard may. issue a curtifieate authorizing. the whole ¢ or

any part thereof for such periods as may be required bv

the public convenience-and necessity, if it finds that the

applicant’ is fit, willing, and able properly to perform the

service of a supplemental air carrier and to conform to the.‘

provisions of this Act and the rules, regulations, and re-

quirements of the Board hereunder. * In determining

whether. an applicant for such a certificate is fit, willing,

and:able within the meaning of. this paragraph the’ Board

shall give consideration to the conditions: “peculiar to sup- .

‘plemental air transportation, including the nature of the

ee public need found to exist and’the extent of the obligation

imposed on an air carrier engaging in such air transporta-

tion to provide the service authorized by the certificate.

Any certificate issued pursuant to this paragraph shall con-

tain such limitations as the Board shall find necessary to

assure that the service rendered pursuant theréto will be

limited , to supplemental air transportation as defines in

this Act.

| “(ii) If any applicant who makes application for a cer-

tificate for supplemental air transportation within thirty.

days after the oes of enactment of this paragraph ‘shall «

show— se

— “(A) that it, or its predecessor in interest, was an

. air carrier authorized to furnish service between places —

_ within the United States either by a certificate of pub-—

lic convenience and necessity issued by the Civil Aero-

nautics Board . pursuant to order E-15436, ° adopted

January 28, 1959, or order E-14196,. pinntind July 8,

1959, or that it or its predecessor has, received interim |

‘

House : ‘of Representatives Bil, i. R. 7318 :

operating authority from the Board pursuant to ‘see-

‘tion 1(2) of Public Law 86- 661 of July 14, 1960, 74 “.

Stat. 527; )

“(B) that. between the effective date of the eertifi-

cate or interim operating authority and the date’ of

enactinent hereof, the applicant or his predecessor in

: interest lawfully performed either (1) any. portion of |

the service authorized by the certificate or interim oper- —

ating authority, or (2) any operations for the Military

‘Establishment of the United States authorized ‘by. the

Board ; and eg ord Bares eee

“(C): that such certificate. or ‘interim operating au-.

thority had not been revoked or otherwise terminated

by-the Board or had not otherwise expired prior to —

the enactment. of this paragraph, and. is: held by the.

original grantee or has been ‘transferred with Boatd

approval pursuant to section 401(h): Provided; That.

| application under this paragraph may also be made by

a person who on the date of. enactment hereof had on

file an application to the Board for the approval of

‘transfer: to him of - a ‘certificate for supplemental air

transportation er interim operating authority, in which

‘ease the Board shall issue a certificate hereender if ‘it

approves the transfer pursuant to section 401 (h) ‘of.

this Act; eee ae yt

the Board, upon proof ‘of stats facts only, shall issue. a ‘cer-

, tificate authorizing such applicant: to engage in supplemen-

tal air transpor tation to the same extent autliorized in the

aepeeeets certificate. or interi im bamactncd ,and subject to

| House of Representatives &" ‘A. R. 7318

’ the terms, conditions; ‘and Sleidiatons. attached ther eto “for ;

‘ such period as the Board: deems: proper: “Provided, That -

this period sha]l not extend beyond the effective date of an

order of the Board denying renewal of the certificate or

interim operating authority in a renewal procecding ‘pend- 2h

ey ing at the time of enactment hereof. .

Oo: a:

‘Sue. 3. Siiseiiie (e) of section 401 of the Federal Avia-

eu \ tion Act is amended by adding the follow ing text: “A cer-

\ tificate issued under: this section to engage in supplemental |

air transpo~tation shall designate the terminal and inter-

“ mediate points only insofar as the ‘Board shall deem prac-. .

ticable and may designate ‘only’ the geographical area- or

areas within which service may be rendered. Nothing | in.

r ee ;

this subsection shall ‘prevent. the. Board in specifying the. -

‘service to be-rendered under a, certificate. for supplemental .

air transportation from. placing such limitations, on such

certificate as it may find’ to be-necessary to assure that the

serv riees are limited to supplemental air tr ansportation :

Provided, That the. Bogrd may not impose such Jimitations

upon cértificates issued pursuant to paragraphs: (1) and (2)

‘of subsection (d).” 3

-SEc. 4,- (a) Any air carrier entitled to eertlifieation un. :

der section 401(d) (3) (ii) of the Federal Av iation Act, as

amended ‘herein, may perform operations under its existing

Spurs for thirty days from the. date ‘of enactment of this

and if it has filed application pur suant to said séction’ _.

4014) (3) (ii) within said thirty days, ‘until. the Board has © ae

-acted \upon*such application. “Any: ‘air. ‘carrier w hose. ap- 3

plication for certiteatienty a suppleme ntal air catricr is.

11b

House of Representatives Bill,. H. R.7318 Noe

_ pending before the Board and which (A) has operated in

interstate air transportation as a supplemental | air carrier --

‘pursuant to authority granted: ‘under Board order 15-9744:

of; November: 15, 1955, and (B) yhad.an application’ for a

certificate as a supplemental air -carrier pending before

the Board on July 14, 1960, may continue to. operate. in

: interstate air transportation under its existing” authority

until the effective date of an order of the Beard’ disposing

of such application. Any carrier whose operating authority

in interstate air transportation under Board order E-9744

‘is continuing solely by virtué of a judicial sfay of a Board.

~order,. ‘insofar as sueh order would otherwise terminate.

~” such. operating authority, is hereby authorized to continue

_ to operate, subject to all conditions and. limitatiqns con-

‘ tained in order E-9744 or imposed by the court, until the

“eourt shall lift such stay or until the final disposition -

Judicial review: proceeding, whichever shall first-oceur.

= of enactment of Public Law 86- 661 or this Act, or the power -*

i of the: Board to. institute any enforcement or- compliance =

_attion against such holder subsequent to the date of enact- -

(b) The provisions of this Act shall in no way affect any

enforcement or compliance proceeding or action against the

holder of a certificate of public convenience and necessity is-

sued pursuant to order H-13436 or order E- 14196 or against

‘the holder of interim authority. issied under section 1(1)

of Public Law 86-661 pending before the Board on the date:

‘ment of this ‘Act with respect to violations of the Federal

tion Act or provisions of the certificate or interim au-

-thority or-the Board’s regulations which may have occurred

prior ‘to such date. Any sanction which the Board : might

‘lawfally have alien on the operating authority of an air

let od

fe Fe aidan vel reaba hegre Tce. arog Abe Bip,

LOR Sie hae Nabe esc ToRtiee eee hpi 2a 7th

Arcot

a ae

° . ; : ; ¢

House of pie ssinasarars Bull, H. R. 7318

: carrier for ‘Anlidiene occurring prior to the issuance to

such carrier of a certificate of public convenience: and neces-"

sity for supplemental air transportation under paragraph }

- (3) (i) or (ii), of section 401(d) of the Federal Aviation

Act as amended by this Act may be. imposed upon a.cer-.

tificate issued to such air carrier,under such paragraph.

(ec) Any application of-an air carrier heretofore ¢onsoli- .

dated into the Board’ proceeding known as. the Large Ir- .

regular Air Carrier Investigation, Docket Numbered 5132

et al.; shall be deemed to have been finally disposed of by

_ the hand insofar as said application seeks authority to.

engage in iriterstate air transportation, (1) upon the effec-

tive daté ‘of a certificate of public convenience and necessity

issued to such carrier pursuant to the provisions of section

401(d)(3) (i) or (ii) of the Federal Aviation Act; (2) upon

- the effective date of” ‘an. order of the Board dentine any

application of such carrier for a certificate of public con-

venience and necessity under section 401(d)(3) (i) or (ii) ;

or (3) in the event such carrier was issued authority py.

order K-13436 or E-14196 or interim authority under Public.

_ Law 86-661 and. fails to file application for a certificate pur-

‘ suant ‘to’ said section, onthe thirty-first day after = date

of — ofthis Act. | :

Sc siignasnrsbaartada

13b tae

House of Representatives Bill, H. R. 7512

87th Congress, Ist Session |

A BILL To amend the Federal Aviation Act of 1958, as i

amended, to provide for a class of supplemental air

- carriers, and for other purposes

Be at pa by the Senate and H ouse of iniasenbalices

the United States of America in Congress assembled,

That section 101 of the Federal Aviation Act of August 23,

1958, as amended, is amended by redesignating paragraphs

. (32) and (33) as (34) and (35) respectively, and =e

therein two new paragraphs to read as follows:

~“(32y ‘upplematal air carrier’ means an air carrier

holding a certificate of public convenience and necessity au-

thorizing it to engage in supplemental air transportation.

“(33) ‘Supplemental air transportation’ means air trans-

portation rendered. pursuant to a certificate of public con-

venience and necessity which limits the holder to perform- |

ance of (1) unlimited charter operations on a planeload

basis for the carriage pf passengers: ‘and property in inter-

state, . oversea, and territorial air transportation, with the

word atten’ herein being defined as air transportation

. performed . pursuant to an agreement for the use of the-

entire capacity of an aircraft, (2). individually ticketed

passenger or individually waybilled cargo operations - in

_ the frequency: of ‘one -hundred and _ ninety-two flights. per

year in the same direction between any single pair of points -

in any calendar year, in interstate, oversea, and territorial _

- air transportation, and (3) supplemental air carriers shall

have the right of first refusal in the operation of all charter

trips in interstate, oversea, and foreign air transportation.

ummm - caielamaian = iain

j ic...

Bes

14b-

ecrie House of Representatives Bil, H.R. 7512 |

‘The Board shall implement this section by appropriate |

regulations.”

| Src. 2. Seetion 401 of the Weders. Aviation Act is-

= amended by adding to subsection (d) thereof a. new. para-

4 graph (3) to read :

(3) (i). ‘te the case of an eer ees for a certificate o

engage in air transportation as a supplemental air carrier,

the Board may issue a temporary or permanent certificate

authorizing the whole or any part thereof if it finds that the.

applicant is fit, willing; and able properly to perform sup-

plemental air transportation: as defined herein, and to. eon-

form to the provisions of this Act and the rules, regulations,

and requirements of the Board hereunder and if the: Board

finds after public hearing’ that such certificate is required |

by the public convenience and necessity.

BRAN N M EOD! 5 88

“(ii) If’ any applicant who makes application for a cer-*

. tificate for supplemental air transportation within one hun-

; ae dred and twenty days after thedate of.enactment of this

| paragraph shall show (A) that, on such date it or its prede-

cessor in interest, was an air carrier furnishing services

between places within the United States authorized by. a

‘ certificate of public convenience and necessity issued by.

‘the Civil Aeronautics Board pursuant to order B-13436,

~ adopted January 28, 1959, or order E-14196, adopted July

_ 8, 1959, to render. such service, and that any portion of

.- gueh service for any class of traffic was performed pursuant-

to such certificate during such period and (B).that, such’

certificate had not been revoked or otherwise terminated

by the Board prior to the enactment of this paragraph, the

Board, upon proof of such facts only; shall issue ‘a cer-

- 15b

House of Representatives Bul, H. R. 7512

posed by: the court: until the court shall lift such i or

until the final disposition of the judicial review proceeding,

— shall first occur.

(b) The provisions of this Act shall inno’ way affect any

enforcement or compliance proceeding or action against

the .holder of a certificate of public convenience and neces-

sity issued pursuant to order E-13436 or order F-14196

pending before the Board on. the date of enactment thereof,

or the power of the Board to institute any enforcement or

compliance action against such holder subsequent to the

date of enactment of this Act with respect to violations of

thé Federal ‘Aviation Act or provisions of the certificate or

the Board’s regulations which may have occurred prior to

such date. Any sanction which the Board might lawfully

have imposed on the operating authority of an air carrier of

a certificate of public convenience and necessity for supple-

‘mental air transportation under paragraph (3) (ii) of sec-

_ tion 401 (d) of the Federal Aviation Act:as amended by this

” Act may be imposed upon a certificate issued to such air

carrier under such ae.

16b.

House of Represéntatives Bill, H. R..7512

er.

tificate or certificates of indefinite duration authorizing

such applicant to engage in supplemental air ss aed

tion, as defined herein.” *- 3

Src. 3. Subecction (e) of section. 401 of the —e Avi-

ation Act is amended, by adding. the following text: “A

| certificate issued under this section. to engage in supple-—

- mental air transportation shall designate the. terminal and

internfediate points-only insofar as the Board shall deem

practicable and may designate only the geographical afea

or areas within which service may be rendered. Nothing

‘in this subsection shall prevent the Board from placing .° —

- such limitations on such certificates as it may find to ‘be

- necessary to assure that'the services are limited to supple- :

mental air transportation as defined herein.”

Sec. 4. (a), Any air carrier presently operating: in in-

-terstate air transportation as a “supplemental air carrier” -

pursuant to, authority received under order of: the Board

: whose application for certification as.a supplemental air |

carrier is pending before the Board or is filed. with the °

. Board within a period of one hundred and twenty days

. from the enactment of this section, may continue to operate.

in interstate, oversea, and territorial supplemental air —

transportation as defined herein until the effective date of -

an order of the Board disposing of such application.. Any

catrier whose operating authority in interstate air trans-

_ portation. under Board Order E-9744, adopted November

15, 1955, is continuing solely by virtue of a judicial sta

hereby authorized to continue to operate, subject to all

conditions and limitations contained in such order or im- ©

_ Ciel ies ree

17b .

-- House, Report No. 1177

+ 87th Congress, Ist Session

SUPPLEMENTAL AIR CARRIERS

‘SErremeEn 13, 1961 —Committed to the Committee of the

‘Whole House on the State of the ‘Union and

. ordered to be —: hats 5

Mr. Harris, from the Committee on Interstate and Foreign

_ Commerce, submitted the following

REPORT

- [Zo accompany H. R. 7 518]

“The Cominittes. on Interstate and Foreign Commerce, to

_. whom was referred the bill (H.R. 7318) to amend the Fed-

eral Aviation Act of 1958, as amended, to provide for. a

_class of supplemental air carriers, and for other purposes,

having considéred the same, report favorably thereon with

an amendment and recommend that ‘the bill as amended’

do pass. —

~The amendment is as follows:

Strike oul all after the enacting clause and insert:

That section 101 of the Federal Aviation Act of. 1958 (49

U.S.C. 1301) is amended by redesignating paragraphs (32)

and (33) as (34) and (35), respectively, arid by inserting

immediately after paragraph (31) the ee new para.

graphs:

-. * Numbers within dase, used 0 on the right, are the ‘original

numbers ‘of the document. These are ‘ee numbers referred to in

Petitioners’ Brief..

~18b_

House Report No.1177,0—~C—iwi(“<C

a cas . yas |

_“(32) ‘Supplemental air carrier’ means an air carrier

holding a certificate of public convenience and necessity

authorizing it to engage in supplemental air ‘transportation. .

(33) ‘Supplemental : air transportation’ means charter

trips in air transportation, other than the’ transportation

‘of mail by aircraft, rendered pursuant to a certificate of

public convenience and necessity issued pursuant to sec- .

tion 401(d)(3) of. this’ Act to supplement the scheduled

service authorized by certificates of public convenience and

“necessity issued pur suant to sections a (1). and a): of ©

this Act.”

| SE. 2, Subsection (d) - of sachiien 401 of the Federal .

Aviation Act of 1958 (49 U.S.C. 1371(d)) is amended by

; adding at thé end thereof the-following new paragraphs,

—

“(3) In. the case of an application. for a certificate to

“engage i in. supplemental air transportation, the Board may

_ issue a.certificate, to any applicant not holding a certificate .

under paragraph (1) or (2) of this subsection, authorizing

the whole or any part thereof for such periods as may be

required by the ‘public convenience and necessity, if it finds

that the applicant, is fit, willing, and able properly go per-

form the transportation covered by the application and to —

conform to the provisions of this Act and the rules, ‘regula- |

tions, and requirements of the Board hereunder. Any cer-

tificate issued pursuant to this paragraph shall contain

such limitations as - Board shall find necessary to as-

_ sure ‘that the service rendered pursuant thereté will be

limited to. supplemental air transportation. as. defined ‘in

| sc Act. Piece

3 “ a5

a ae se ae

_— Report No. 77

Src. 3.. Subsection (e) of section 401 of the: Federal :

Aviation Act of 1958 (49 US. C. 1371(e)) is —_ ‘to

read as follows: .

: rae \

“TERMS AND CONDITIONS OF CERTIFICATE .

«(e) (1). ‘Kach 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 service to be rendered; and there -

shall be attached to the exercise of the privileges Sranted °

by the certificate, or amendment thereto, such reasonable

terms, conditions, and limitations as the public interest

may require. a a

; «(2) A certificate issued under this séction to engage in

foreign. air transportation shall, insofar as the operation

is to take place without tle United States, designate the

‘terminal and intermediate points only insofar as the Board /

shall deem practicable, and otherwise shall designate only

the general route or routes to be followed. Any air earrier

holding a certificate for foréign air transportation shall be |

authorized to handle and transport mail of countries other -

than the United States.

“(3) A certificate idened under this section to’ engage :

in supplemental air transportation shall designate the ter-

minal. and intermediate points only insofar as the Board

f ; shall deem practicable and otherwise shall .designate only

the g eographical area or. areas within or. between which

service may be rendered.

“(4) No term, condition, or limitation ‘of a certificate

shail restrict the right of an air carrier to aad to or change ae

* . . :

” id dedicat ussinam yi a Sens aan: ie Real sate Ae npent

.20b

crouse iapert No. 1177

schedules, equipment, ciscsimaanitiliainn: and facilities | for

performing the authorized transportation and service as

- the: development: of the business and the demands of the .

public shall require; except that the’ Board may..impose a

such terms, conditions, or limitations in a certificate for

supplemental air transportation when required by sub-

section (d) (3) of this’ section. .

«(5) No air carrier shall ‘be dient to have violated —

oe any term, condition, or limitation of its certificate by land-

ing or taking off during an emergency’‘at a point not named .

in its certificate or by operating in an emergency, under °

regulations which may. be prescribed by the Board, between

terminal and intermediate points other than. those specified

in its certificate.

«(6) Any air carrier, other than a supplemental ; air car- .

rier, may perform charter trips or any other ‘special ser-

vice, without regard to the points named in its certificate,

“under — prescribed by, the’ Board.” ¥

Sec. 4. “Title IV of the Federal Aviation Act of 1958 3 is

amended’ by adding at the end abe ok the — new"

Section: 3 ;

con

oa, “Srectay OpeRaTING AUTHORIZATIONS

“AUTHORITY OF BOARD TO. ISSUE

“Sec. 417. (a) It the Board finds upon an hesibiticaniien “a

conducted’ on ‘its own initiative or upon request of an air -

‘ earrier— * * |

‘. “(1) that the capacity for air. transportation being

‘offered by the holder of a certificate of seme ‘con-

~ ptt

iN)

2 1b

House Report No. 1177 es

venience and necessity batersen ‘particular points _

. the United States is; or will be, temporarily insufficient

‘to meet the Tequirements of the _— or ths postal

service ; or oy wD

«(9) that there isa temporary requirement for air

_transportation between two points, one or both of: *

which is not regularly served by any dir carrier; and

(3) that any supplemental’ air carrier can ‘pious:

the additional ser vice _ temporarily et in the - he

lie interest ; \ .

the Board may issue to, such supplemental air carrier a

special operating authorization to engage in air. trans-

portation ‘between such points.

“TERMS OF “AUTHORIZATION Ne ‘ens

; “(by A special operating, authorization issued under this

section—

- ‘(1) shall contain such. Itmitations « or requirements

: as to frequency of service, size or type of equipment,

~ or otherwise, as will assure that the ‘service so author- ;

ized ‘will, alleviate the insufficiency which otherwise.

would exist, without significant diversion - of traffic =

~ from‘the:holders of certificates for the route;

_ “(2). shall be valid for not more than thirty days and

—may be extefided for additional periods aggregating ..

not more than sixty days; and

‘

- ie

rem

Nat es eiaet oh Hola oe No. 117%

sed gare % 7 ' . Ata

7 ' a i: Baas ed “way. shalt! not: és ‘decndea a Wadage. within the mean-

a4 « *: ing 0 sectjopi 9(b). of the Administrative Procedure |

Se hg Act! HG U.S.C.~1008(b) )-

. °

’ es oF ee ee

' ; ‘ -_— ’ .

% Pope &(e) ‘The Boned: shall Pradeshon ssiablish procedures

cae a /for' the expeditious investigation and’ determination <of re-,

” quests for such-special ' ‘operating authorizations. Such

% ae, ; * procedures_, shall include written ‘wetice to ‘air. carrier's | ‘

hea Ls | ‘certificated to provide service between the points ‘involved, . -

8 and sha provide’ for such opportunity fo prote test'the appli-”

_ catiqn in Writing, and: ‘at the Board’s: discretion to be. heard

: ‘orally, i in Support of. 8 ch protest, as. will not: unduly. delay

- ma issuance’ of such ‘special operating hee ead taking.

Pi ~ into account the ee of er inivolved. me 3

a he ” Seo: ‘{. (a) If. -any ‘applicant ‘who allie Spptientias

ey ander: Section 401(d)(3)- of the Federal. Aviation Act of

See ae 1958: for aj certificate for supplemental air transportation: ae |

i ea } within thirty days after ‘the date of. enactment of this Act ie or

-shall show

* @ 6

ba i a : 8 fe 1) that, it, ‘or its’ predecgisor i in 5 intertet, was an air,

Se Te ie ee Se bovis : WGy ian Rin EFEgardas Rane

‘ “nadeoviin Be ool ars iN on

cartier authorized, to furnish service between ‘places. .

“, ‘within’ the ‘United States under ‘a certificate of public

convenience and necessity issued by the’ Civil Aero-

nautics Board pursuant ‘to order E-13436, adopted

ao a seek in interstate ; air. transportation as_a supplemental air

a eee \ carrier under’ Board order E-9744 of November 16,. .

ee aay ‘1955, pnd has- pending, before the Board an pcsiaioni

< bac eect sa eatin | j | “7 ; em eae ' :

: ‘

aay ae

“ January 28, 1959, or order E-14196, adopted July. 8,

1959; Or that it, was. given interim authority | to operate’

a a

°23b.

House Report No. 1177

for certification as: a isi air carrier: which ©

was filed prior to J uly 14, 1960;

. (2) that, during the period besitning on. the date 7

such certificate was issued or such. interim operating

authority was conferred by the. Board. and ending on

the date of enactment of this Act, such applicant or his

j “predecessor i in: interest lawfully performed (A) ’ a sub-

stantial portion of the transportation authorized by »

sueh certificate ‘or interim operating authority, ' (B)

substantial operations i in overseas or foreign air trans-

‘portation, as a supplemental or large irregular air

“- earrier, authorized by the Board, or (C) substantial

operations for the Military Establishment of the

United States authorized by the Board; | one

(3) that such certificate or interim epetatinn au-

oe thority had not been revoked or otherwise terminated

by the Board or had not otherwise expired prior to the se

_ ‘ enactment of this Act: Provided, That for the purposes -

_. of Ahis section such certificate or operating, authority

- shall be considered to have been revoked or terminated.

if the Board has issued a final order to that effect on

Or. before the date of enactment.of this Act, notwith:

standing a pending judicial review of such order; and —

(4) that such certificate or interim operating author- .

ity: is held-hy the original grantee or has been trans-

‘ ferred to the applicant with’Board approval pursuant,

to section 401(h) of the Federal Aviation Act of 1958:

Provided, That application under this section may also — -

be made by 4 person who. on the date of énactment of

this Act had | on file with the Board an. application for

et Bia ete GRANADA GE bes Y

AREA AS me ik aan a

' 24b

_ House Report No. 1177

the’ sii of, transfer to him of a s sertifichtt for

. supplemental air transportation or. interim operating

_ authority, in which case the Board shall issue to such

| person a new interim certificate or new interim oeper-

ating authority under this section if it approves. the

transfer pursuant to section 401 (h) of the: Federal

< Aviation Act of 1958 ;

‘the Board, _— proof of. such facts, shall issue a new in- *

terim certificate or new interim authority to such applicant _

to engage in supplemental air transportation to the same

extent authorized in the. applicant’ s certificate or interim

‘ authority, or both, and subject to the terms, conditions, and

limitations attached thereto, pending issuance or denial of

a certificate pursuant to section 401(d)(3) of the Federal

Aviation Act of 1958 authorizing the whole or any part of

the transportation covered by the application.

-(b) If any applicant’ who makes application under. sec-

tion 401(d)(3) of.the Federal Aviation Act of 1958 fora

_ certificate for supplemental air transportation within thirty -

.days after the date of enactment of this Act-shall show.

that it or its predécessor has received interim operating

authority from the Civil Aeronautics Board pursuant to - -

paragraph (2) of the. first section of Public Law 86-661 of.

- July 14, 1960 (74 Stat. 527); the Board, upon proof of such

facts, shall issue new interim authority to such applicant

- ‘to.engage in supplemental air transportation to the same -

~“extent authorized in the applicant’s interim authority, and

subject to theoterms, conditions, and limitations attached’.

- thereto, pending issuance or denial of a certificate pursuant

to. section 401(d)(3) of the Federal Aviation Act of 1958 °

25b-

House Report No. |. rae

“ authorizing the whole or any part of the transportation :

— by the =

) A new interim sevtiiineke or new interim authority -

issued under this section shall not be deemed a license

_ within-the meaning of section 9(b), of the Administrative *

Procedure Act (5 US. e. 1008(b)). . |

Sec. 6. (a) If any _ air. carrier, or its predecessor. in.

_ interest, was an air cqrrier authorized to furnish service

-between places within the United. States: by a certificate of |

public convenience and necessity issued by the Civil Aero- -

-nautics-Board pursuant to order E-13436, adopted Jan-

- uary 28, 1959, or order E-14196, adopted July 8, 1959, .

or it or its predecessor received interim operating authority ;

from the Board pursuant to paragraph (2) of the first

section of Public Law 86-661 of J uly 14, 1960 (74 Stat 527),

it may perform operations under its existing authority for

_ thirty days from the. date of enactment of this Act, and if

it has filed application pursuant to section 401(d) (3) ‘of

the Federal Aviation Act of 1958 within said thirty days,

until the Board has granted or denied a new interim

- eertificate: or new interim authority under’ section 5 of ,

this Act. Any air carrier whose application for certification |

as a supplemental air carrier is pending before the Board - ?

and -which (A) has operated in interstate air transporta- _

tion as a supplemental air carrier pursuant. to authority

granted under Board order E- 9744 of November 15, 1955,

and (B) had such application for a certificate as a supple-

mental air carrier pending before the Board on. July 14,

1960, may continue to operate in interstate air ti anspor-

tation under its existing authority for thirty days from

s ‘ . .

as Wf. ** Z eo a a ee at oe Be ae ee ee in gs ae eT ihn 3 ~* ~ vb eh a wee we

: C

- ‘wee :

House Report No. 1177.

a in of enactment. of this Act, and iif ‘tt ‘bie filed ,

application pursuant to section 401(d)(3) of the Federal

Aviation Act of 1958 within said thirty. days, until the

-Board has granted or denied a new interim certificate or

new interim authority under section 5 of this Act.

(b) The certificates of public convenierice and necessity |

jssued by the Board pursuant to order E- 13436 adopted “a

January 28, 1959, and order E-14196, adopted Paly 8, 1959, -

and the interim operating authority issued by the Board ~

pursuant to paragraph (2) of the first section of Public

Law 86-661 of July 14, 1960 (74 Stat. 527), and the

exemption authority issued by the Board under_ order

E-9744 of November 15, 1955, and prior authority: under

individual exemptions or Letters of Registration reinstated

by the B Board under order E-10161 of April 3, 1956, ‘shall

‘terminate on the date of an order of the.Board granting or.

denying a new interim certificate or new interim authority

under section 5 of this Act, or.if the carrier files n& appli- -

cation under section 401(d) (3) of the Federal Aviation Act

of 1958 within thirty days from the date of enactment of |

this Act, at the end of said thirty-day period.

state air transportation under Board order -B-9744 is — :

continuing solely by virtue of a judicial stay of'a Board -

order which otherwise would terminate such’ operating

authority, is hereby authorized to continue to operate, sub- ~

- ject to'the condifions and limitations contained in order -

E-9744 or imposed by the court, until the court shall lift os

such stay or until the final disposition of thé judicial review -

proceeding of such Board order, whichever shall first occur.

% .. ,

. ; J 27b .

House Report No. 1177 ;

Sse. 7. The provisions of this Act shall i in no way affect |

the authority of the Board— - :

(1) to maintain any enforéement or compliance

proceeding or action against the holder of a certificate

of ‘public convenience and necessity issued pursuant to

‘Board order E-13436 of January 28, 1959, or Board

order E-14196 of July 8, 1959, or against the. holder

of any interim operating authority conferred by the

Board under paragraph (2) of the first section of

Public Law 86-661 or. under Board order E-9744 of

November 15, 1955, which proceeding or action is

pending before the Board on the date of enactment

of this Act; or

this Act, any/enforcement or compliance proceeding or

~ action against the holder of any certificate or interim

operating authority referred to in paragraph ( 1) -. .

, this section with respect to any violation of—

(A) the Federal Aviation Act of 1958,

(B). the provisions of such certificate, _

,(C) the terms of such operating’ authority, or

_{D) the regulations. of the Board,

without regard to —_ such — oceurred.

any sanction Wehaieh the init lawfully could have imposed

on the operating authority of the holder- of any certificate

or interim operating authority referred to in. paragraph

(1) of this section for any violation referred to in para-

. graph (2).of this section, which violation occurred prior. to

(2) to cae on or after the date of enactment of

aya 4

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- eu = / °

ee ‘ . a Se at Ate eee)

——" — “ Miao Raina saul ’ bier Bai tint :

if - = ®

4 oa / - [eS - 7

28b

House: si ide No. 1177,

; the i issuance to such holder of a new rae en cortifiente or .

new inteqm authotity under section 5 of this Act of the

eee

issuance to such holder of a certificate of public convenience -

and necessity to engage in supplemental air transportation

under paragraph (3) of section 401(d) of the. Federal

Aviation Act of 1958, may. be imposed on the certificate or

other operating authority issued to such holder under

section 5 of this Act or under paragraph (3) of section

401 (d) of the Federal Aviation Act of 1958.

“fhe: 8. “Any apeliestion of an air carrier heretofore con-

solidated into the Board proceeding known as the Large

Irregular Air. Carrier Investigation, Docket _Numbered —

5132 and others, shall be deemed to have beeh finally dis-

posed of upon the date of enactment of ‘this Act.

‘Sec. 9. Section 901 (a) of the Federal. Aviation “s of

1958 Sa U.S.C. 1471(a)) is amended to read as follows:

“SAFETY, ECONOMIC, AND POSTAL OFFENSES

“Seo. 901. (a)(1) Any person who violates (A) any pro- |

‘vision of title III, IV, V, VI, VII, or XII of this Act, or

any rule, regulation, or order issued thereunder, or under

section 1002(i), or any terim, condition, or limitation of any

permit or certificate issued under title LV, or (B)-any rule

or tegulation issued by the Postmaster General under this

Act, shall be subject to a civil penalty of not to exceed

$1,000 for each such. violation. In the case of a violation of

_a provision of title IV.or VII or any rule, régulation, or

order issued thereunder, or under section 1002(i) or any

term, condition, or limitation of any permit or certificate.

e =z

*-.

——

.29b

5 : House Report N 0. 1177

issued under title IV, if such violation is a continuing one,

each day of ,such violation shall constitute a separate

offense: Provided, That this subsection. shall not /apply to.

members of the Armed Forces ,of the United States, or

those civilian employees of the Department of Defense who

are subject fo the ‘provisions of the Uniform Code of

* Military Justice, while engaged in the performance. of

their official duties ; and the appropriate military authorities

shall be responsible for taking any necessary disciplinary

“ aetion with respect thereto and for making to the Adminis-

trator gr Board, as appropriate, a —— — of any

such action taken.

“(2) Any such evil penalty may 7” compromised by the a

Administrator in the case ‘of violations . of titles III, V,

‘VI, or XII, or any rule, regulation, or order issued there-

under, or by the Board in the case of violations ' ‘of titles

IV or VII, or any rule, regulation, or order issued’ — .

thereunder, or under section’ 1002(i), or any term, con-

dition, or limjtation of any permit or certificate issued

under title IV, or by the Postmaster General in the case of _

regulations issued by him. The amount of such penalty,

when finally determined, or the amount agreed upon in |

compromise, may be deducted from any sums owing by the

United States to the anaes eileen ‘di °

. Sec. 10. Section 902(a) of thea Federal Aviation Act of .

1958 (49 US. C. 1472(a)) is amended to read as follows:

V: “gpneraL Q .

- &Sg0, 902. (a) Any person who knowingly and willfully

violates any provision. of this Act (except titles III, V, VI,

F } 30b ;

House Report No. 1177.

-. VII, and XII), or any order, rule, or regulation issued -

under. any such provision or any term, condition, or .

_ limitation of any certificate. or permit issued under title

IV, for which no penalty is otherwise provided in ‘this

section, shall be deemed guilty of a misdemeanor and ‘upon

ol conviction thereof shall be subject for the first offense to

- a fine of not more than $500, and for any subsequent

offense to a fine of not more than-$2,000.. If such violation

is a continuing one, each day of such violation’ shall con- .

_ stitute a nr offense.”

"Sie. 11. (a) That portion of the taple of contents con-

tained in the first'section of the Federal Aviation Act of

1958 which appears under the heading “TitLe TV—Arr

- Carrrer Economic RecuLation” is amended by adding at

the end thereof the followi ing:

“Sec.* 417... Special operating authorizations. 6 |

| (a) Authority of Board to issue.

“(b) Terms of authorization.

““(¢) Procedure.’ ceil ae a |

(b) That portion of such table of contents which appears _

under the heading “Sec. 901. = penalties.” is amended

by striking out

~“(a) Safety gnd postal senna. ” and inserting in lieu |

thereof

“(a) Safety, economic, and postal ha

4 7

31b

oe ee ;

House Report No. 1177

PURPOSE OF LEGISLATION oni

_ This legislation is needed to stabilize the supplemental

air carrier industry. The reported bill would do this by

‘giving the Civil Aeronautics Board authority to issue a

new type’ of limited air carrier charter certificate. and: to.

grant permits to carriers holding such certificates to con-

duct, on: a temporary basis, individually ticketed service

to meet the public needs for air transportation in ‘special

situations..

- Permanent legislation — is needed ‘so “that the affected

7 carriers can make longer range plans and financial arrange-

~ Rmited operations to supplement the’ services provided by ~

ments for future operations.

As a result of court decisions, the Civil Aatonsatics™ <i

Board now lacks authority to license air carriers to conduct

’ the scheduled route carriers. Thé reported bill provides a

“means of accomplishing this without ‘undermining the

financial stability of the scheduled route carriers, a situation ~~

with could result in the curtailment of essential .service

or@alls for additional subsidy, or both.

SUMMARY OF: REPORTED SILL

The depatiad bill would—

(1). Authorize the Board to issue certificates to sup--

_ plemental carriers to conduct charter operations;

(2) Provide a method whereby holders of supple-

mental certificates may furnish individually ticketed

‘service on a temporary basis under regulations of

the Board; |

an A

ie te ih A

‘ ‘ <

Seat sinis ieca RAE pide SeAhC$

a ae Se RN fee

32b.

H ouse Report No. 1177

(3) Permit the Board to expedite procedures i in ‘the: |

issuance of Special operating permits authorizing such

) temporary service; | - -

» (4) Grant interim operatirig. authority in the nature

of grandfather rights to permit operations until the

: Board ean passupon applications for new certificates ?

airs for by this legislation; = | i ee

- (5) Permit the Board to impose civil pone for .

violations of the economic provisions of existing law ©

and regulations issued thereunder, thus providing an

effective method of deterring illegal operations detri-

mental to the public. interest, which have penalized ~

carriers operating in compliance with existing law.-

alties would follow the pattern set in existing<law

‘to enforce safety regulations.

COMMITTEE ACTION

a - ‘The committee is reporting atin a substitute for

H.R. 7318, a bill drafted by the Civil Aeronautics Board to.

permit the granting of limited certificates to supplemental

air carriers, authority which. the U.S. Court of Appeals

for the District of ‘Columbia has held the Board does not :

have under existing law. H.R. 7318, as introduced, would |

have granted the Board the authority which the court held

it didnot. posséss and would have permitted’ the Board: to

authorize supplemental operations to continue along the:

lines a present operations.

' The

; committee substitute, drafted after careful’ ealentihen: -

ation by the full committee and the Subcommittee _ on

Transportation and Aeronautics, would give the Board ‘

Gos -”

~~. . House Report .No. (1177 + le

some, ‘but not “Pll, of the authority requested by it. The

committee substitute would ‘establish guidelines for the ©

poard to follow in exercising ifs authority. to certificate

an : —Te-

supplemental car riers, especially, in the field of individually ,

ticketed operations. , | : is aaa

‘yt

The subcommittee conducted hearings on June 20; 21, —

, cand 23, 1961, on H.R. 7318 by Mr. Williams, H.R. 7512. by

Mr. Moulder, and H.R. 7679 by. Mr. Collier, all members.

of this committee. Testimény was received from the

following witnesses: Alfred F. Blatz, president, Blatz .

. Airlines, Inc.; Hon. Alan S.-Boyd, Chairman, Civil Aero- }

' . nauties Board: Clayton: L. Burwell, president, Independent

Airlines Association ; Ralph Cox, Jr., president, United

- States Ov erseas Slade: Ine.; Robert E.-Fraley, on behalf

of Quaker City Airways, Inc., and Paul Mantz Air Services,

Inc.; Ross I. Newman, Associate GeneraF Counsel for Rules ;

and ingisletion, Civil Aeronautics Baard; George S. Pat-

terson, general manager, President. Airlines, Inc. ; Reed

Pigman, Independent Airlines Associatjon ; J. W. Rosen- ©

thal, Routes and Agreements Division, Bureau of Economic

Regulation, . Civil Aeronautics Board; Jesse . Stallings,

Independent Airlines -Association ; Cliff Stratton, Jr., Air

-. Transport Association of Avourien: Stuart G.; Tipton,

president, .Air Transport Association of America; a ohn H.

“Wanier, general counsel, Civil Aeronautics heaud- and |

- DeWitt T. Yates, — counsel, Independent Airlines

Association.

34h

oe 5 rs OK °

{ House Report 1 No. 1177

a”

BACKGROUND INFORMATION

_ Origin of supplemental air saitiors:

The supplementals, also known. as “aicaiephads,” did ot:

-make an appreciable impact on air commerce ‘until after

® World War Th, although Such carriers had been i ‘in existence a

. several years. . a

~~ The Civil Aeronautics Act of 1938 ‘stabilizéd the vehen

existing route structure by giving “grandfather”. rights to

the 16 ‘major, or trunklines, in existence at that time. :

Shortly ‘after passage of this act, the Civil Aeronautics

a Board issued an. order under section 416(b)* exempting

ee A610), 98 : a Sa ae

'; EXEMPTIONS ° 7

. (b) (1). The -Board,..from time“to time and to the. extent necés- |

sary, may may (except as provided in paragraph (2),of this subsec-

_ tion).exempt from the requirements-of. this title or any. provisio’

_ ‘thereof, or any rule, regulation, terni} condition, or limitation pre-

" scribed thereunder, any air carrier or class of air carriers, if it

' finds that the enforcement of this title or such provision, or such

- Yule, regulation, term, condition, or limitation is or would be an

- \andue burden on such air carrier or class of air carriers by reason

.. of the limited extent of, or unusual circumstances affecting, the .

‘ operations of such air carrier or class of air carriers: and is hot in

the public interest. ©

(2) The Board shall not exempt any air carrier rein any pro- —

vision of subsection (k) of section 401 of this, title, except that

(A). any air carrier not engaged in scheduled air transportation, a

and (B), to the extent that the operations of such air carrier are

conducted during daylight hours, any air carrier engaged in sched-

uléd air transportation, may be exempted from the provisions of

paragraphs (1}-and (2) of such subsection if the Board finds, .

. after notice and hearing, that, by reason of the limited extent of, or

: unusual circumstances affecting, the operations of any such air

earrier, the enforcement of such paragraphs. is or would be such

‘ ari: undue burden on’ such air carrier as to obstruct its development —

and prevent it from beginning or continuing operations, and that-

the exemption of such air carrier r from such paragraphs would not

- @ . . ax : .

SP Ree sre ea ane

House. Report No 0. ‘77,

* othe little. nonsckeduled. operators who were ‘offering now- *

and-then flights in Small planes from their home bases: to

scattered destinations over the’country. . *

Generally these: operations were conducted with aireraft -

smaller than those used in regular scheduled service,

But after the war three new - factors entered the picture.

The military had a surplus of Psy aircraft for sale at

ent rates. Thousands of. trained and experienced pilots

_ were discharged from the services. The esjablished airlines

. ‘were hard ‘pressed, to meet the boom in demands for air

transportation following the war. -- ;°

The result was a substantial increase in passenger-

carrying opératioris by the rionscheduled ° operators. In. a.

short time there were almost 150 of these operators in ‘the-

field, \\ 3. ee a:

ia an effort to provide more effective regulation of . this -

transportation, the Board, in ‘1947, revised its exemption

regwlations to. require these operators to obtain letters of

“~-yegistration. ‘Two classes were established, designated

“large irregulars” and “small. irregulars.” ‘The carriers

operating large, transport- type aircraft were prohibited"

from operating, or advertising to the public that they were

operating, regularly or with-a reasonable degree of regu-

larity.” These revised s#egulations established criteria under |

* which the carriers could — as many as 8 to 12 flights

——

adversely affect the public interest : Provided, That. nothing in

this subsection sha}l bé deemed to authorize the Board to exempt

any air carrier from ‘any requirement of this title; or any provision

thereof, or. any rule, regulation, term, condition, or . limitation

prescribed thereunder which provides for maximmn flying hours °

for pilots. or co-pilots. (Identival with sec. 416(b) of the Federal .

ser - -

Aviation Act of 1958.)

36b

“House Report No.’ 1177

: per month carrying individually ficketed passengers s bed

- tween the same 2 points, depending on the spacing. of

flights and “breaks” in service.

Large irregular air carrier investigation oe

iS - When it became apparent that the revised procedure w was -

= inadequate to cope with tlie reguiatory probleiis en¢oun-

- tered the. Board in September 1951 instituted the large —

-. irregular air carrier. investigaticn (docket 5132). ‘Tn that —

investigation, where 66 nonskeds Sought: operating rights,.

the Board sought to determine—

(1) The future role of the latge irregular catriers

_ ahd the extent of operations which would be permitted ;

2) The selection . of carriers to receive ‘Operating

-au ofity; and |

‘(3) Whether the cemnd should be a hy certificate 7

“or by exemption. ° Wa ,

‘After eiteaied hearings, the ery in 1954, with some

30 applicants remaining to be heard, decided to expedite |

, the proceedings by splitting it into two parts—

(1) ‘The public ager issues (the Tole ‘to be i

assigned the irregular carriers and the scope of oper-

~ ations to be authorized) ; and.

%»

(2) Consideration of individual qualifications.

- Exemption authority for supplementals

an On -November 15, 1955, the Board, with three inembore

- for and two against, issued a decision (order }-9744) on

° \

. . > e 4 ;

e “Re

. ° ‘ 2

—

cae

38%

| “oan ;

House Report No: 1177 -

the public interest aspects of the. cage, finding that ‘the

-. irregulars: -comprise a “separate: class of carriers” perform-

Certification of Aipplementals

". ing varied and flexible sérvices. The Beard found that the

-operations ofthese carriers would not adversely affect the

certificated route carriers.’ The— Board. determined that”

unlimnited charter authority ‘should: be_ granted, ‘together

with authority | to perform individually ticketed or waybilled

service not to exceed 10 flights per month in. each directions?

between any 2 points. The 10-flight limitation. was arrived.

at by averaging. the 8 to 12 flights permitted under igs

regulations... ‘

This new authorization was granted to all ineiabiers of

the class on an interim exemption ° basis, pending the -

Board’s final decision on the qualifications of individual

carriers and the SS of whether the final authority

should be by certi ate or by, exemption.

The - ‘Board’s. decision of, November °15, 1955, was: _

» challenged. by the certificated - industry, ahd on July 19,

1956, the Court of Appeals for the: District of Columbia’

—. Cireuit held the order invalid’ beeause th the Board had not

-made appropriate findings to support its conclusion that

a requirement of certification would be an undue burden on, |

the carriers. The Supreme: Court denied a petition for

—9—

writ of certiorari. On- December . 21, 1956, the court of

appeals stayed the issuance of its mandate until 60 days:

after the date of the final Board Yecision , tothe Tange <a

Trreguat Carrier case, docket 5132.

On January 28, 1959, with two members, the Board

issued its decision in docket 5132 granting temporary:

. ;

. House Report- No. 1177 3

certificates of public convenience’ ant necessity for supple- |

mental air service to 23 carriers ‘found by the Board to be

— fit to provide the service. authorized (order -B-13436): On.

iy uly 8, 1959, the Board issued 2 additional certificates

(order E- 14196) for a total of 25 such. éertifieates. Under

"these certificates, supplemental a air carriers. wereauthorized agg

to. . provide unlimited -planeload, charter service; and to

~ conduct, without refefence to’ any specific terminal or °

* intermediate points, not more than 10: flights carrying ‘

‘ individually ticketed~passengers or individually waybilled

property - in the same direction between any single

_ pair of: ‘points in any. calendar month in interstate air» .

_ transportation;

“ Court decision on certification of. suptilénentile

This. decision was challenged in the U.S. Court of Appeals

" for the District of Columbia Circuit, and on April | 7, 1960,

the court found (Uni d Air Lines et al. v. Civil Aeronautics

Board), that the Board’s action “was legally deficient in

three respects: '

a The certificates issued by the Board did. not specify.

the terminal and intermediate points. betw een which air

transportation was authorized . bot granted a blanket

authorization to operate between any tw ee in ‘the at

nee emcee : r

United States —__———

2. The court held that the 10-fighte-a-month limitation

was in violation of séction 401(e) of the act which provides: |

“No term, condition,. or limitation of a certificate shall

réstrict the right of an air carrier to add to or change:

schedules e* 09 sp :

39 “¢ 3 | x

“House Report. No. 177.

3. In referring to the. determination of fitness required rary

by section 401(d) of. the: act,.the: court pointed out (one

judge dissenting) that the Board: gave. ‘the same nationwide

cargo and passenger authority to each of the applicants <.

to which it issued ificates. The court stated ‘that. in

many instances the prior operations of the individual 7

- applicants had been small or specialized. and’ that: their

- finaneial resources were inadequate for the newly authorized

. openeiiane. . \ :

' Concerning what should be done about the matter, the s \

court said: . a

= the senbdomiiaiie of section 401(e) inrterpode

an insuperable obstacle ‘to :the . full development of—--

‘supplemental air service, which they. may well do,

the problem i is for the — The Board should

prewunt it there. ghey 7

History = congressional eotion

The Board: then submitted to Congress proposed legis

lation to’ give the Board the. authority which the ‘court ——

be held it did not have and’ this was introduced inthe House

and Senate (H:R. 7593 and S. ‘1543, 86th Cong., 2d sess.).

Hearings were held on May 23 and - -24, 1960, but after ,

‘ .. consideration of the.testimony, it was . decided that the *

issues involved could not be considered adequately in the

short time remaining before adjournment, ‘and. the com-

‘mittee recommended the enactment of temporary legislation |

maintaining ‘the status quo to permit further consideration

during the. 87th Congress ( H.. —_ ed 86th Cong. x aa. :

sess.). : .

So hage oo

| Howe Report No. 1177 .

Subsequently Public Law 96. 861 was enacted to permi

14, 1962: , .

» . Karly in the present sessi0r ie Bona again submitted’ :

a draft bill to autho yrizethe i issuance of, limited certificates

\ for supplemental operations. This proposed legislation was. .

= duced as H.R. 7318 and S. 1969. ; a

eens oard Member Gurney did not “join in the recom- |

endation: His views are explained in a letter. included

of; hereafter inthis report: Se

J. SL Cae gees | ROLE OF SUPPLEMENTALS._

: pA N eed for charter service

Witnesses who testified in the. heatings: were in agree-

‘ment that:the basic role of the supplementals in the air

transportation picture is s her ‘provide charter service. |

_. Even the witness for the Air Transport ' Association, .

: speaking for the scheduled airlines, while strongly opposing

the granting of authority to the Board to, issue. certificates

permitting’ individually ‘ticketed, route- type service, sup-

ported legislation to @arify the Board’s authority to issue

certificates to the supplementals for all-charter operations. |

__ That charter service is the:mainstay of the supplementals

is shown by statistics supplied the committee by the Civil

_ Aeronautics Board during the hearings. .

These’ statistics show that during fiscal year 1960, the

certificated supplemental carriers generated approximately .

1.8 billion revenue passenger miles as compared with 1

billion revenue passenger miles. for fiscal 1959. This con- -

stituted 4.3 percent of the total revenue’ passenger miles

- generated by .the air carrier industry, including the —

BO get e ne a Hows Report No. 1177

certificated: route air carriers, . 1959. the. capipleniental

carriers obtained only 2.7 percent of the total. revenue

c passenger miles. ogee

.The domestic traffic of the’ ‘supplemental carriers: in-..

: ecreased from 312 million passénger miles ‘in --fiscal 1959

to 346 million i in 1960. This traffic was 40 percent civilian.

and’60 percent inilitary. ‘The international traffic of the ae

~-supplementals increased. from 696 tnillion passenger miles

in 1959 to 1.4 billion in 1960, 18 .pereent of which was -

civilian and 82 percent military. This. includes all traffic, .

i.e., individually ticketed, charter, and contract. .

The supplemental carriers: increased their total transport

| operating revenues from $5t million in 1959 to $59 million

_.in 1960. Contract and chartér services, both military and -

‘ .eivilian, accounted for $40 million in 1959 and. $48 million

in 1960. Reventy from individually ticketed services, both: a

\ passenger and freight, was $11 million in 1960, the same.

asin 1960. <« _ 1

Thus, it is clear that charters are the* Principal source.

of revenue for the supplenientals. :

The basic concept written into the substitute bill repented sat

; herewith is is that the supplementals essentially. are charter

- Operators. The committee ‘recognizes that under special

'. eireamstances - -and in: temporary -situations, individually”

. ticketed supplemental service fills a definite need in our. -

+N transportation system. * The committee recognizes also

that ‘individually ticketed - stipplemental service must

necessarily be subject to close scrutiny by. the Civil Aero- «.

nauties Board to make certain that such sery ice is restrieted

—lt— :

to supplemental ne die and does. not provide unfair or

discriminatory competition | to scheduled carniere, whose

42b poet AS

~ House Report. No. ey

. sontes and operating conditions are haley to a large is

: extent inflexible because. of conditions. which. must: be met

to provide the service required for public convenience ‘and

‘necessity: |

The supplementals recommended: that a definition ‘of

-echarter be written ‘into the bill and this was given. consid-

eration by-your committee. The bill Reseed by the Senate .

has suchadefinition, . -. - g

Your committee, however, after eenaidarigag the peeiiin .

» eame ‘to the’ conclusion that under the circumstances,

authority: to define charter services should ‘be left, as at

present, - with the Board, subject to. the- limitations con: » - |

tained in the reported bill. This i is-a very difficult subject -

and any effort to freeze a definition of charter service into.

law could well wed to complications,

Individually ticketed operations

H.R. 7318, as introduced, would have withartanh ‘the.

Board to issue certificates’ witho specifying. the terminal

and intermediate points, and with such limitations -as to

_ frequency . of service, size or _type. of equipment, or other--

“wise, to assure that the service so authorized remained

supplemental to the service of the certificated route carriers.

How. much, if any, individually ‘ticketed ‘service supple-

mentals should be authorized to perform is a very difficult

and controversial question» : | 3

Supplementals now operating under Board. elitist .

©. are permitted to sell individually ticketed service, but in

_ . * rendering such service are limited to. not more than 10°

i ' _ trips per month between any two Sueno :

¥ = , e ; . > ~

OP er q een 5 “

Y ‘ “ . ’ .

. : 22 ABD

v4 ...

’ 8 ‘

‘House Report No. 177. at Catan oe

The Legislation: proposed hy the Board. woudl have per-”

mitted the issuance of certificates authorizing individually —

ticketed Service “for sygh ‘periods as _ be required for |

‘the public’ convenience and necessity.” °

One. of the. principal reasons which the ein iad

* in its opinion in United Airlines v. CAB for invalidating

. the Board’s | action in granting supplemental - certificates.

was that the certificates permitted operations between

" points selected by, the. carrier and did not speqify the

terminal points between whith’ the carrier was-authorized

=) engage in| air. _transportation | as required by! section

| 401(e) of the ‘act. The limitation on: the: number of trips,

. by the court/to violate the provisions. -of . that subsection $n ES

in Tiea of mene the terminal points, was likewise held*

prohibiting he ‘Board from. placing a limitation in.a

certificate restricting the — of an air cartier to add to...

'_ orchange schedules. — -

‘In the hearings, hoth. the Civik “‘Kircudetics. Board. and -~

: the supplemental air carriers testified that such limited

individually ‘ticketed operations to supplement service by

the scheduled carriers filled a real public need, were essen-

. tial to’ ‘the continued survival of the supplementals, and.

resulted i in no demonstrable injury to the scheduled carriers.

The scheduled carriers opposed any authority for supple-

mentals to’ conduct individually ticketed oper ations as a . :

Serious threat to the health and prosperity of the scheduled

fe industry, citing the poor earnings of the scheduled carriers,

for the past 5 years. A w itness for the industry testified .

that i in 1960 the 12 domestic trunklines had a net profit of

$1,188,000 on gross ‘operating revenues of almost $2 billion.

mere aii ei Renee acta ow a e inmnbemmmaninahandes 2

;

ie eeey eer em ‘ . ‘s

as ; eC \ :

be ee

: oe : ee P

nate , 44b.

a A s e ee 2 a = ie a - bok Ree ar

-*. House Report No..1177 . .

Regulatory concepts of existing law .

The. ‘s0-called certificates issued ‘by the Civil hinsitiititiien

Board to thé supplementals were illegal. This illegality |

"was not. a mere technical infraction of the act. It was

fundamental. The 10-flight individually ‘ticketed grant

: violated basic principles of, the economic regulatery philos-

ophy of the Federal Aviation Act of 1958. Thus,.the. act

recognizes that a carrier’s ability to provide good -public _

- service should not be hampered by artifieial limits on the

_ number of regular schedules for. ticketed traffic it can.

' operate: over its routes. The act rejects the restrictionist

philosophy. prevalent -in, some foreign countries that. a-

governmental bureau should divide the market’ by tan

each carrier an allowed.number of flights. -

The committee has carefully considered the testimony

and ajl- ‘available evidence and failed to: find any Sound ©

reason why these fundamental principles of the act should

‘be changed. From the standp®int of good public service,

and from the standpaint of opportunity ‘for each carrier to

‘ compete and deyelop its business, any air carrier certificated

to operate individually ticketed ser rvige over a route should

| _be able to do so without: CAB-imposed limitations on’ the

‘frequency of service. If there is room for.competition over

a route, the CAB has authority in section 401 to certificate

additional carriers. If there is not room for such com. |

petition, the Board should not be free to avoid the con-

. sequences of competition by limiting the volame of eral

to be provided by ane, some, or ‘all of ‘the carriers in th

market. Moreover, the committée does -not consider it

either feasible or desirable to authorize_an air transpof .

nein Drege a Dt

ee ee

House: Report No. 17 |

_ &

and Walf unregulated.

€ committee recognizes, however, that: there may be

* exceptional circumstances ir which, for a limited period of.

-. time} it’ may be desirable for a carrier’ not regularly —

certificated for a route to, be authorized to condutt ticketed

operations over the. route. ‘Thus, during fhe /Christmas

holidays and other periads of peak or. unusual traffic de-

_ mand, where, the eapacity yf the carrier 6r carriers serving

the routé may be insufficieht to meet thd demand, it may

be desirable and economicglly: sound fgr: the’ Board to

permit’ another carrier: to pro 4 ppplemental service for

a temporary period.. The special operating authorization

‘under the new section 417 is designed to meet this situation.

“~< . Inthe committee’s view, this Type of special authority to

supplement the service over a certificated route should be | |

strictly limited in nature and of short duration—normally,

not over 30 days. — -

It is the committee’s View that the granting of such -

- temporary special operating authority by the Board should

'. not be regarded as constituting any vested right or interest. .

in the’route by the’ carrier so authorized. If the insufficiency

of capacity is a chronie pr ‘oblem over the particular Pate,

and can be solved only. by‘an additional carrier, the sition

should be in permanent or temporary certification under

. section: 401(d) (1) or (2) of existing law. )

The new section 417. would require that an’ authorization —

under that section contain limitations as to the arfount of.»

service or the type’ of equipment used to assure that it will

meet the requirements for: additional transportation: with4

Er in| which the amount of’ service is half regulated

46b

~ House Report No: 1177

‘out significant diversion of traffic from the carriers holding

certificates for the route. .The section. provides ‘that such

authorization shall be for not more than 30 days, but can

be extended for additional periods aggregating not more

than 60 days.

The Board is directed to establish a procedure for ex-

eS sige ae ik eee + 1g

peditiously handling these situations, It is required to

give written notice to the air carriers certificated to pro-

vide service between the ‘points involved and to provide an,

opportunity for:such carrier to protest the issuance of such

- operating authorization in writing. W hether the carrier

would. be heard orally in support of the protest would be-

a matter for the Board’s discretion, taking into account

~ the degree of emergency involved in meeting the shortage.

A conscientious effort to make maximum use of this .sec-

tion will provide the Board with greater flexibility in meet-

ing seasonal traffic peaks than it has ever had heretofore, .

and it will also provide the supplemental air carriers with

an effective means of providing a needed public setvice to

supplement the existing air transportation systém. The |

committée believes that there is no provision of the bill

which, if properly used, would. contribute more directly

to providing ‘the public with more ‘convenient and adequate

air transportation.

PROVISIONS FOR ENFORCEMENT

The grants of individually ticketed authority i in the, past

led to a multitude of enforcement problems and. evasions, 3

which the Board has been anne: to cope with under exist

‘ing law. :

. 3

“47

House wigs No. 1177

Supplemental carriers on occasion have entered into

illegal pooling arrangements to provide whats, amounts to.

scheduled service ¢ontrary to the intent of the Board.

. Board efforts to end such practices have been frustrated

by protracted litigation. Judicial stays of Board orders

have permitted the continuation of highly profitable, al-

though palpably illegal, operations by some of the’ carriers.

_ Although such operations have never been conducted by

. any large number of carriers, the record shows that the.

resultant diversion of traffic from carriers operating le-

_gally has been substantial, to the detriment not only. of

scheduled carriers but of those Patan operating |

' legally.

~ In an effort to protect both the vniidieaatade and the

~ scheduled industry by making such illegal operations un-

- profitable, the committee has accepted the recommenda-

tions of the Civil Aeronautics Board by extending the civil

penalty provisions of the Federal Aviation Act of 1958 . >

to cover violations of the economic provisions of title IV

~-and of certificates issued thereunder. This has been ac-

complished by incorporating into the reported bill the ~.

. provisions of H:R. 7303, a bill, recommended by the Civil

Aeronautics Board to authorize the imposition of civil pen-.

alties in certain cases, to permit a civil aed of not to

exceed$1,000 for each violation.

INTERIM OPERATING AUTHORITY

| ' The interim operating authority in the nature of “orand-

_ father” provisions in sections 5 and 6 of the reported bill

are designed to permit the existing supplemental carriers

"48 ee

House ~— No. 1177

to operate. until such time as the Dent: can pass upon:

_earriers involved.

‘applications for new certificates. under the terms of this

| legislation.

‘The committee believes that the provisions of sections

5 and 6 strengthen the bill and will have the effect of

eliminating various ‘complexities resulting from a series

of exemptions, orders, and stays, without. injustice. to the

som : - —14—

Section 6 of the bill requires any carrier desiring to con-

tinue to operate in the future as a supplemental air carrier

to.file a new application under section 401(d)(3) seeking

such certificate within 30 days from the timé of enactment

. of the bill. If no application for a new certificate is filed

within that: period, the carrier’s present: authority will

terminatg, whether derived from an exemption, a. , certifi. ——_.

_ cate, _or interim - operating authority. ‘under Public Law

‘86-661. Any carrier which files an application for a certifi. .

cate within 30.days is permitted to continue to operate

’ under its present authority until the Board acts under: | =

section 5 of the bill. When the Board acts under section 5,

. the existing authority of a carrierawill terminate, whether

that authority is derived from a certificate, an. exemption,

7 or. interim operating authority under Public Law 86-661,

If a carrier files a new application for a eertificate as a~ ,

... supplemental air carrier under section 401(d) (3) withm 30

days after enactment of this bill, the Board will next con-

sider whether such carrier should be issued new interim

_ authority to engage in supplemental air transportation

pending Board action on ‘the certificate application. The

committee is aware that the. issuance of -new interjm au- |

thority identical to that which the carriers now hold, rather

4 9b

| "ewe ‘Report No. 1177

than an . extension of their’ present certificate o or exemption,

may appear to be an ‘unnecessary step.. Only those who

have been forced to wind their. way through the Chinese

‘maze of orders and exemptions can appreciate how directly

the: public interest would be.served"by the issuance of a

new single order clearly specifying what carriers are

permitted. to conduct what — pending action on

- ‘their certificate ‘applications.- |

The Board is directed to issue. new interim’ authority to .

. four categories of carriers. As of this time the first cate-

gory .consists of a single carrier, Vance Roberts, which -

was given operating’ authority by, the Board pursuant to —

section 1(2) of Public. Law 86-661. Since the Board has __

just acted on this application: within the last few w months, - aoe

the bill requires the automatit-issuance by the Board of

jean A

"eee ae oper ating authority without any further show-

ing by ‘the carrier... . Ried

‘The. remaining three categories. of carriers s holding some

form of operating authority.from the Board must satisfy

certain specific requirements before the Board is required

toissue new interim operating authority. to them. These

requirements have been included in section 5 by: the com-

mittee to insure that. the effect of the grandfather provi-

sions is. to avoid hardship by permitting legally operating —

° carriers to continue to operate, and not to revive dormant /

2 —earriers which have not operated. A earrier which is not je

now operating will have the same right as a new applicant

to apply for and receive a certificate as a supplemental

air carrier.- Justice does not require that such a carrier

be permitted.to begin operations® prior to the time that

the Board has passed on its application for a certificate.

® ~/

. .

_ °5Ob

House Report No. 1177

A carrier in one of these three categories must hi dita

to showghat between the’dates of issuance of its operating’

authority and of the enactment of this bill, it performed a

substantial portion of the servicetfputhorized by its certifi-

cate or other oper ating authority or substantial operations

in overseas or foreign. air transportation authorized by the -

Board or substantial operations for the Military Estab-- —

lishment as authorized by the pick oa certificate

or operating ‘authority has-no been revoked or otherwise.

terminated b¥ thé Board; and that the certificate or operat-

ing authority: is held = the eens grantee or has been

/ ifm ‘

‘qematorred with the Board’s approval. Special provision

is made for. an application for transfer -which may be pend- °

ing at the time of enactment of‘ the bill.. The following, .

then, are the three categories of carriers which may be”

entitled to receive new operating authority under section

. §, The categories are mutually exclusive. A earrier is in

one category, and one only, or in none.

' The following carriers were authorized to furnish ser- .

vice between places: within the United States by a certifi- .

cate issued ‘by the Board pufsuant. to order E-13436, of

‘’ January 28, 1959. Special circumstances relating to such

carriers. are noted. In the absence. of such notation; the

committee is aware of no circumstance ‘which would pre-.

‘vent their receiving interim ‘operating authority.

ier |

S1b

- House Report No. 1177 oh

CARRIERS >

American “Flyer s “Airline.

Corp. Seg

a Inc. hasanabi

Ine.

Aviation Corp.: of Seattle,

d/b/a Westair Transport

- Blatz Airlines, Inc.

Capitol Airways, Inc.

Coastal Air Lines (formerly

Coastal, Cargo Co., Inc.)

_ Conner Air Lines, Ine. .......

| Sas ee

General Airways, Inc. ..... cee

Imperial. Airlines, Inc. (for-

merly Regina Cargo Air-

lines, Inc.)

- - Johnson Flying Services, Ine. ~

Paul Mantz Air Services

“Associated Air Transport, ;

COMMENT

Certificate expired May. 30,

1961; no application for

: renewal was filed. Author-

ity terminated by Board |

Order . E- -16734 of. April

28, 1961. |

e ,

“Application for transfer and

renewal of certificate pend--

ing. : 3

No transport operations per-

formed in supplemental —

air service’ during” test

period. :

Certificate sold by trustee in

_ bankruptcy but no appli-

cation for. transfer to the

purchaser has been filed.

eles

PTE Are RIE LEC

President Airlines, Inc. (for- - Ce ues:

- Stewart-Air Service —.

i ad

°.

4 .

FLOR! NGI ELE LRAT OILY PITS DAG iE PRB ie aT

‘operate i in interstate air a as a ) pannel

52b. . ar - :

House Raper No: 1177

.! “CARRIERS | # % ‘wonibinte

~. Modern Air Transport, Inc. *

Overseas National Airways

merly California Eastern .

Aviation; Ine.) — c

Saturn, Airways, Inc. (for- :

merly All-American ,Air- rs

ways, Inc.) ° as

Sourdough Air Transport

” Southeln. Air Transport,

ee eee

Standard Airways, Inc.

‘Transocean Airlines 2 ¢ °° |. <a

rae United States Overseas Air.’

lines, Inc. eee ay 3 por

World Airways, Ine. |

‘The following carriers were authorized to furnish ser-..

_ vice-between places within the United. States bya certifi-

_ .eate i8sued by the Board pursuant to Order 1-14196, ‘of

. July 8, 1959. ‘The committee: is-aware of. no circumstance.

Which would prevent their. receiving interim operating au-

thority.

Trans International Airlines, | )

Inc. (formerly Los’ An- meee 3

°geles Air Service, Inc.) . Catt. dies @

: Quaker City Airways, Ine. & Trg: cee ‘

The following carriers were given interim authority to

53b

| House Report No. 1177

air carrier water Board Onder E- 9744, of November 15,

1955, and have pending before the Board. - applicgtions for

, v. ‘ ~ —16— -

- a certificate.as a a sufflemental air carrier which were filed”

prior to July 14,.1960. Special cireiimstances relating to

such carriers are noted In the absence of such notation,

the committee’ is aware of no circumstance which would,»

prevent their receiving interim operating authority.

CARRIERS “tt _) COMMENT |

Air Cargo hia Ine.’... No transport operations _

: _ performed in supplemen- *_

tal air service during test’

| period.

Airline Transport. Carriers, Dba eate

- Ine., d/b/a California Ha- —

waiian Airlines.

Argonaut Airways Corp... pis 7

* Meteor Air Transport, Tes. Operating authority termi-

eo as ' + nated by Order E-15183 of

-May 4, 1960.

Miami Airline, Ine. ............. ax,) iH ee

"BBWS Tne, acecdanceeeceeneereeres an Operating authority termi-

| nated by Order E-15252 of

iene ars May 20, 1960.

| _— Ww ide aioe, Ine. .... :

There remains one additional category of carriers for

: whicli the bill makes ars provision. Four carriers were

The certificate snetloation -of Air Cargo Express, Inc., was

denied in’ Order E-13436, but the "Board action reversed and the

application. remanded for ‘further proceeding by .the Court of

_ Appeals for the District of Columbia in the case of Great Lakes

Atrlines et al. Vv. C.A.B. » decided Feb. 24, 1961:

2 , o

=" pa

. . the Board’s ‘or,

: exemption |

“Sab

i ousé “Report No. 1177 >

given exemption authority: for suppléimental air service by

Order E-9744, but lave. no ‘applications | for. certificates *

- pending before: the Board because their operating author-

ity under the exemption order was specifically. terminated

- by the Board ih Order E-13436. .These carriers. appealed '

er denying a certificate and. revoking their

thority to the courts and are now operafing

» under a judigial stay pending review. Certiorari has been.

denied by, the Supreme ‘Court, but a petition for recon-.

sideration of this action is pending. Cc riers. in this cate-

. gory are Central Air Transport, Inc., Curry: Air: sTransport,

Ltd., Great Lakes’ Airlines, Inc., and Wans-Alaskan ‘Air- :

* lines. Section 6 provides that these carriers ure ‘author-

to continue Yd operate subject to all conditions: con- | *

‘inka rer E-9744 or imposed by the.court until the: .

‘court shall lift its’ stay or until final disposition of the

jateinlgpeeanting: )

NEED FOR LEGISLATION ip

The supplemental carriers, constitute an * important ele- °

ath in national defense. During -the Berlin airlift; with.

~ only 5 percent of: the Nation’s civil air transport capacity,

_ these carriers’ moved approximately 25 percent of the pas-

sengers and 57: percent of -the cargo, carried by civilian

aircraft. In 1950, the supplementals supported the Korean a

airlift by supplying over half the commercial capability

_ requested by the military. The supple entalfew the first . =

d planes to Vienna in 1956 to provide airlift for

: refugees. In the Lebanon crisis, the suppleme als offered

the military 38 four-engine, aircraft within 4 hours. .

a : : . . 9

° ‘ - 3 %

a Section : pA

House Report No. 1177 7

The Départment of the Air Foree, in a letter fiateded

, hereafter in this report, stated that continued existence of ©

the supplementals is a real value in terms of national > vers

fense. | |

The Civil Aeronautics Board in ‘December 1955 shenen:

terized the supplementals as: oN ‘Yeserve air fleet, capable

_°. of being called into’ action to meét emergency. transporta-

- tion needs witha minimum 1 amqunt of notice.”

Enactment of .this legislation will give the eiiiiiabaiteelt

| industry a more permanent role in ait transpoftation. It

will permit the industry to make plans for the future and

to complete financial arrangements , for the purchase of |

modern. equipment requiring” amortization over a period

of years., A more: permanent status will brighten the eco-

nomic outlook for the industry which, a witness testified «i an’ | E

the hearings, has shown losses from 1957 to ‘daté, after

: making a profit in 5 of the’7 on between 1950 and 1957.

o o

maniens Fy ii 6: TION E XPLAN ATION OF THE

“COMM ITTEE AMEN DMEN'’ t

os The’ legislation por pheoneiik 3 is ; needed to stabilize © as

‘the supplemental industry, which has existed i in an. atmnee-

phére of uncertainty for many years-

The delbivitsine is a section-by-seetion sinihdaininltan of the —

substitute amendment repor ‘ted by the committee. Unless-

otherwise indicated, existing: law- airs ict to is the Federal

: Aviation Act of 1958. -

| an

eo . O

This section would ‘amend section 101 of existing law by :

adding a new paragraph (32) defining the term “supple; - °

‘

a eh

\ i or

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House Report No. 1177

mental air carrier” anda new ‘paragraph (33) defining

' the term “supplemental air transportation.” Pet ys

“Supplemental.air carrier” would ‘be defined as an air

- carrier holding a certificate of public convenience and ne-

‘cessity authorizing such air carrier to engage in supple-—

mental‘air transportation. sa one

- “Supplemental air transportation” would be’ defined as

‘charter trips in air transportation rendered pursuant to a.

certificate. issued by the. Civil Aeronautics Board to sup-

plement the scheduled service authorized to be performed :

by. the certificated route air « riers, but would not:ifelude

the transportation of-mail ‘aircraft. . i! nee

Section 2 7 ee

This section would amend section 401(d) of existing

_ law by adding a new paragraph (3) which‘would authorize

the Civil Aeronautics Board to issue to any applicant, other

. than a certificated route air carrier, a certificate of public

convenience and necessity to engage in all or any part of

the supplemental air transportation covered by the appli-

‘ cation. The Board could issue .such certificate for such

periods as it determines that the transportation for which _

authority is sought is required by. the public convenience

and necessity: Before issuing such a certificate, the Board |

_ would be required to make a détermination that the appli-

- ¢ant is fit, willing arid able to perform ‘the transportation

authorized by the certifieate and to conform to the provi- « ,

Sions of existing law and the regulations of the Board

issued thereunder. Under the Amendment to ‘éxisting§ law

made by section 3 of the committee substitute, each supple-

" mental gertificate. would designate the terminal and inter-

35 ;

m we 2

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ws . House Report No. 1177 ®

mediate points between which the air carrier concerned

‘could operate, or, if the Board determines that such desig- .

nation is not preticable, the certificate would designate

the geographical area or-areas: within or betweén’ which

such air carrier éould operate. The standard of fitness to -

be. applied by the Board'to an ‘applicant for a supplemenfal

certificate could vary according to the scope of the trans-

portation authority granted by the certificate. It is-obvious,’’

for. example, that fhe fitness requirements of the Board

os -. @ - |

with respect to the nancial resources of? an applicant

.- eould vary considerably as between an applicant seeking

- unlimited authority to engage*in supplemental air trans-

portation within a large geographical: area and an appli- -

cant seeking limited authority to engage in such transpor- .

‘tation between two specific points. The Board also wefild

be required to include-in each, supplemental certificate such

limitations as it finds necessary: to insure that the service

_rendered thereunder will be supplemental to.the scheduled

service authorized . be performed by certificated route air

carriers.

Section 3

This section would amentl section 401(e) of existing. aie

by dividing it into’ six numbered paragraphs as follows:

e &, Paragraphs (1) and (2) would repeat “provisi

"presently contained in section 401 (e) ofexisting law *

lating to terms of certificates held d by air carriers) without :

substantive change.

2: Paragraph (3) woud be added to such section 401(e)

a of existing law. sO as to require that each ee

: ‘ .

/ é : ‘ Ly

/ ' : : : : ,

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_ House Report No. 1177

certificate towne’. -by the Civil Xeronauties Board designate

the terminal and intermediate ‘points between which. the |

air carrier is authorized to operate, unless the Board de-

termines that such designation of points is not practicable.

If the Board determines that such designation of points is |

not practicable, it would’ be required to designate the ©

geographical area or areas within or between. which’ the

’ air carrier is authorized to operate.

. Paragraph. (4) would repdat the provision of such

section 401(e) of: existing law which prohibits the imposi-

tion of limitations on a certificate of public convenience. 3

and necessity restricting the right of an air carrier to

change schedules, equipment, accommodations, and facil- -

ities for. performing the authorized transportation as may

' be required by the development of the business and the

public demand. This provision’ would be amended so- as

to permit the Board to impose such limitations on a sup-

plemental certificate whenever the Board deems it neces-

A sary in order. to insure that the service’ rendcred there-

under will be supplemental to the service authorized to be

rendered by-certificated route air carriers. The imposition

of such limitations would: continue to be prohibited with .

respect to certificates, issued to scheduled route air earriers,

4 Paragraph (5) would repeat the provisions of section |

401(e) of existing law (relating to operations of air car- |

riers — an: emergency) neces substantive change.

_* Siiaiiad (6) repeats the 5 provision of section 401(e)

| of existing law authorizing any air carrier to perform

charter trips or any other special service, under Board

59>

House Report No. 1177_

regulation, without regard to points specified in its certif-

icate. This provision would be amended so as to exclude _

from this authorization any air carrier” hojding a supple-

~ mental certificate issued by the Board under the proposed ~ |

new section 401 (d) (3).

Section 4 :

‘This section would add a new section 417 to existing law ‘

to permit the Civ# Aeronautics Board to issue to a sup- |

plemental air carrier a special operating authorization -

under which such air carrier would have limited authority

. to eigage in air transportation, temporarily, between speci-

fied points. It would be under this provision of the com-

" mittee substitute that supplemental air earriers could be

authori to engage in individually ticketed and individ-

ually waybilled operations.

Subseetion (a) of the proposed tiew section 417 would

z grant the-Board authority to issue: a special operating au- —

thorization to a supplemental air carrier (but not to a

certificated route air carrier) to engage in air transporta-

tion temporarily between specified points. Such’ authoriza-

tion could be issued only if the Board finds, after an inves-

_ tigation, that the capacity for air transportation between

particular points in the United States is, or will be, tempo-.

rarily insufficient to meet the requirements of the public or

| the postal service, or, that there is a temporary require-

ment for air transportation between two points, one or both.

of which are not regularly served by any air carrier. The

Board also would be required to find that a supplemental

air carrier can provide the additional service temporarily

snes in the public interest.

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60b

_ House Report No. 1177

Subsection (b) of the proposed new section 417 would

require, in effect, that each’ special operating authoriza-

tion contain such limitations as the Board determines to

be necessary to insure-that the air transportation author-

ized thereunder will alleviate the temporary insufficiency

—

in air transportation found to exist; without a significant

_ diversion of traffic from certificated route air carriers hold- .

ing certificates authorizing them to engage in air transpor- ‘-

tation between-the points involved. No such special operat-

ing authorizatien could be issued for more than 30 days.

However, the Board could extend a special operating au- —

_ thorization for additional periods aggregating not more

than 60 days, thus enabling the holder of such authorization

to continue operations for a total of- not more than 90 days.

‘This subsection also would provide that a special operat-

ing authorization shall not. be deemed ‘a license within the

meaning of section 9(b) of the Administrative Procedure ©

- Act. The purpose of this provision is-to make it clear

that such authorization is not to be considered a license

to engage in ‘any activity of a continuing nature such as

_ would enable the holder thereof to file an applicgtion for . |

renewal before the expiration of the authority granted °

and continue to operate until the. Board could dispose ‘of

such renewal application. This provision. would not pre-

vent the holder of a. special operating authorization from

applying for a renewal thereof, subject to the limitations:

contained in the proposed new. section -417, but it would

' prevent such holder from continuing to operate after the

expiration of such authorization unless the Board had:

_ affirmatively renewed it.

Subsection (¢) of the proposed new section 417 would re- .

‘ . quire the Board to prescribe regulations establishing proce-

ear

61b-

House Report No. 1177

dures for the expeditious handling of requests for special wa

operating authorizations. ‘The Board would be required-to

include ‘in such procedures written. notice to certificated

/ Toute air-earriers authorized. to engage in air transporta- |

“tion between the points involved so as to give such air car-

riers»an opportunity to protest the issuance of a special —

operating authorization affecting. : such points. Since the |

issuance of a special operating authorization would de-

pend upon the fact that air transportation being offered

. between particular points had been found ‘to be tempo-

rarily insufficient to meet the needs of the public or the

postal. service, it is obvious that the Board must be able to

act with reasonable speed i in order to- alleviate such tempo-

~ rary insufficiency of air transportation. Therefore, there

is no specific requirement that the. Board conduct a hear-

| se | a a

_ ing at which it would be required” to. take evidence from

opposing parties, and oral argument before the Board is

left to its discretion. The Board could conduct such a

hearing and provide for oral argument if the circumstancés

of the case would permit such procedures without eausing

undue delay in the issuance of the special operating au- .

thorization involved. The diseretion vested in the Board ‘

_is necessary to enable it to carry out its duty, under the

‘proposed new section 417, of handling requests for special’

operating authorizations as expeditiously as possible, tak- .

~ ing into account the degree of emergenéy involved.

‘Section 5

Under. subsection (a) of this section the Board would be.

required to issue a new interim certificate or new interim

operating authority (in the nature of temporary grand-

oS ee

62b

House Report No. sai cs

' father rights) to any applicant who, within 30 days after:

“the enaetment. of.this legislation, app ies to the Board for a

certificate to engage in supplemental ir transportation

and can show the ae ‘ pial :

(1) that it holds authority previously granted by the

: Board to engage in interstate air transportation as a

supplemental air ¢arrier and has an application pend-

ing before the Board for certification as a supplemental

air carrier which was filed before July: 14, 1960 (the

date of eriactment of Public Law 86- €61, enabling -the

Board to authorize supplemental air transportation on —

_ @ temporary basis) ; 4

(2) that it has conducted substantial operations

under such authority, or substantial operations (au-

thorized by the Board) in oversea | 6 foreign air trans- .

portation as a supplemental or large irregular air car-_ zz

‘Tier, or’ substantial operations (authorized by the

Board) for the Military Establishment of the United -

States;

(3) that the operating authority held by the ap-

plicant had not been terminated by the Board, or had

not expired, before the enactment of this legislation

(such authority would be deemed to have been so ter-

‘minated if-the Board had issued a final order to that

effect on or before the date of enactment of this legis- S.

lation, notwithstanding a pending judicial review of

_ such Board order) ; and

- (4) that such operating authority is. held a the

original ee or "has been transferred to the ap-

- 63b

‘House Report No. 1177

" ° plicant with Board approval. (Provision is also made

forthe extension of grandfather rights under this see-

tion to a person who has an application pending before

the Board for approval of a-transfer to hiin of operat- |

ing authority referred to in this sectién, but the Beard

“gould not extend grandfather rights to such person

- unless it approves such bei sounded

. |

The new ‘Interim anitidaii or new interim authority is-

sued by the Board under this. section would replace the

certificate or interim operating authority held by-the ap-

plicant at.the time of the enactment of this legislation

and‘ would be valid until the Board. grants or denies the

applicant’s request for the supplemental certificate au--

. thorized to be issued by: the Board under the cia

new section 401(d) (3).

Subsection (b) of this saaidion would enable : an air carrier -

which holds interim. operating authority to engage in sup-

_plemental air arabe under Public Law 86- -661 to

qualify for new interim sethieatiy (in the nature of tem-

porary grandfather rights) by applying for a supple-

mental certificate under the proposed new section 401(d) (3)...

. within the 30-day period following the enactment of this

legislation ‘and by showing that it or its predecessor re-

ceived interim operating authority under such Public Law

- 86-661."

Subsection (c) of this. section ‘week prowide that a a new

interim certificate or new interinf authority issued under

this section shall not be deemed to be a license within the

. meaning of section 9(b) of the Administrative Procedure

_ Act. The purpose of,,this provision is to make it clear _

;

{

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"House ii No. ier

. that any ‘ugh certificate or authority would: be valid only ay

until the Board grants or denies the applicant’s request for

“@ supplemental certificate under the new section 401¢d) (3)

proposed by section 2 of- the committee substitute.. °In |

other words, the certificate or authority issuéd under sec--

tion 5 shall not be eghsidered a license to engage in any

activity of a continuing ‘nature sMas to enable the holder

thereof to file an application for renewal and continue- to’ °

operate until the Board can dispose of salle bcnsiumen ap- -

plication. , |

Section 6

Subsection? (a) sa (b) of this section’ would enable any -

air carrier, with certain exceptions noted in the. explana-

tion of subsection (c) of this section, which is presently

operating in air transportation as a supplemental air car-

rier under authority previously granted by the Board to

continue its operations, for a limite? period of time;. under

_ the terms of such authority. If such air carrier does not as

file an. application with the Board for a supplemental cer-

tificate under the. proposed new section .401(d) (3) within

the 30-day period following thé enactment thereof, its au-

- thority to operate i in air transportation as a suppleniental ;

air carrier, previously granted by the Board, would be:

terminated upon the expiration of such 30-day period. ‘If

such air carrier does file: such. an application within. such

- 30-day period, it would. be able to continue its operations *

_ under the terms of the authority previously granted, until -

’ the Board grants or denies the isstiance to such air carrier

of a new interim certificate or new interim _— ( tem.

ro 8

House Report No, 1177.

porary grandfather right) andes section: 5 of the. commit- |

tee substitute. As- noted previously in the explanation of.

such séction 5, the new certificate or authority issued there- :

“under would be valid until the Board grants or denies

such air carrier’s request for a supplemental certificate

authorized to be issued by the Board under the erponed :

new section 401(d) (3).

-. Subsection: (ce) of this: section would permit certain air.

carriers who pieviously received authority from the Board .

_ to operate in air transportation ‘as supplemental air car-

riers, and who are presently continuing. their operations

solely by virtue of a judicial stay of an order of the Board -

terminating such authority, to continue their operations ,

until such judicial stay.i is lifted or until the final disposition

of the judicial review proceeding of: such Board order, | |

~ whichever first occurs. The significance of this provision

is that it would permit a group of air carriers (referred

to’as ‘the “Great Lakes group”) to continue operations

operating authority of this group was previously ter-

“minated by the Board because they were found to’ have

operated. illegally. Of course, this provision does not.

- prevent any air carrier in the so-called Great Lakes group

from applying for a new supplemental certificate au-

thorized to pe issued by the Board under the proposed new

section aah (3)..

Section 7 \

This section would preserve to the Board authority to

—, or maintain enforcement proceedings against any

ten >

66D.

- House Report No..1177"

air carrier which titi a new. interim certificate or new

interim authority under the grandfather. previsions of this

legislation, or obtains a new supplemental: certificate

_ authorized to be issued by the Board under the -proposed

new section 401(d) (3), for violations committed by such

’ sair carrier: with respect to the provisions of existing law, :

_ the terms of .any certificate or other operating authority

held by such air carrier, or. Board. regulations, . without

regard to when such; violations occurred. This provision

also would permit the. Board to impose sanctions for such:

violations pon (1) the existing authority held by the air -

carrier concerned, (2) the new interim certificate or new mak

interim authority issued under the grandfather provisions

of this legislation, or (3) the supplemental certificate issued

under the Proposed new section weRSIKe

Section 8

This section seovidie that applications of. air carriers’

filed ‘in the Large. Irregular Air Carrier Investigation

(Docket No. 5132, and others) would be deemed to have

been finally disposed of by the Board on the enactment of °

this legislation. The investigation referred to was begun

by the Board in 1951 and had as one of its purposes the |

- determination by the Board of the proper role. of supple-

mental air carriers in this Nation’s system of air transpor- —

tation. Since this legislation would amount to a policy

_ declaration by the Congress as to the role of supplemental

' air carriers in our system of air transportation, it is appro-

' priate to provide for’ the termination of the Board’s

investigation into this question upon. the enactment of

this —— | ' | |

". House Report No. 1177

‘Section 9 |

'~—w

This section would aménd section 901(a) of existing law

so..as to enable the Board to impose civil penalties for»

| violations ‘of the economic provisions of existing law, and .

the regulations and orders of the Board issued thereunder.

At the present time such. violations are subject to criminal »

. “prosecution, under section 902(a) of existing law, if such

violations are committed-“knowingly and willfully. ” In the

-and willful misconduct, criminal prosecution may be too

drastic or inappropriate. The availability of the. civil

penalty wouldtenable the Board, in acting upon less serious °

violations, to improve the enforcement program with: .

respect to economic violations by speedily imposing civil’ ~

- penalties, thus avoiding situations such as have existed in

the ‘past where. offenders have been: able to persist in-

violations during the time required to prosecute a. formal

proceeding or court action. This section also would add to

.- the civil penalties section of existing law a’ provision.

( similar to the provision applicable ‘in. the case of criminal

penalties) that, if any economic vidlation is a continuing

one, each day of such violation shall constitute a separate

offense: No change is made in the amount of the: civil

penalty which could be imposed, which amount is set forth

- in existing law as “a civil penalty | of not to exceed $1,000”

for each violation. The Board would have authority to .

compromise any “eivil penalty imposed by. it. |

The amendments to the civil penalties section, of existing

law proposed by this section of the committee substitute

would. not be limited in application to violations com-

House Report ‘No. 1177

mitted by supplemental air carriers, but would include -

violations by ndasataiaes route air carriers or any other . ‘

_ person.

Since this section of the, committee suibatitate would not

~. take effect until the date of enactment of this. legislation,

‘the Board could not impose civil penalties for economic

violations committed before such date of enactment.

Section 10

so as to preserve the criminal penalties contained in such

section’ for knowing and willful violations ns. of the economic S

- provisions of existing law. ‘Such section 902(a) contains _

an exception clausé which excepts from. the provisions ‘of.

such section’ violations “for which no penalty is otherwise

herein provided.” Under the amendment miade by section

9 of this legislation, economic violations would be subject

. to the civil: penalties. provided for in section ‘901(a) of.

oe existing law. If the ‘phrase “for which no penalty i is other- .

wise herein provided” contained in section-902(a) of exist-.

‘This "tyetion would. arn section 902 (2) ‘of extntini law

ing law is.interpreted to refer to violations for which’no . |

penalty i is otherwise provided in the Federal Aviation Act

of 1958, rather than violations for ‘which no ‘penalty, is

oye i. otherwise provided i ‘in ‘such section 902(a), the application _

of civil — to economic violations would place such -

_ violations within the exception clausé of: such section |

_ 902 (a). To prevent the possibility of such an interpreta-- .

_ tion, the language ¢ of the exception clause ‘would be- changed. - - .

. oe

_ to read as. follows: “for which no penalty is. otherwise | -

. : provided i in this section. 4 Thus, it would be clear that the -

criminal penallties remain applicable | 0 economic violations.

a ag he ? . oA - 2 : iat

; . ; et a j

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-- House Report No, 1177 oe :

‘Bection.21 . Re ON ae EN pce Oh cS Roe eee

This section would make. technical amendments to. con-

form the table’ of contents contained in the first section ‘of

- existing law with the changes made. ’ ‘by the committee

substitute. a Pato

ater CHANGES IN EXISTING LAW

In aniline with clause 3 of Ryle XIII of the gules

of the House ~-of Representatives, changes in existing law

__made by the bill, as introduced, are. shown as follows

(existing law proposed | to be omitted i is enclosed in black -.

- brackets, new matter is printed i in italics, existing law in :

+ which no change is proposed is shown in roman):

|. "FEDERAL. AVIATION ACT OF 1958 Ee

& ease ®

‘TITLE I—~GENERAL PROVISIONS

a DEFINITIONS _

"Sze. 101, As wied in this. Act, unless the ‘context ig.

wise requires— “i A 2

_ * . « *.

“(32) ‘Supplemental au carviee” means an air carrier.

holding a certificate’ of public convenience and necessity.

; authorizin 4b 0 engage in ee: aur transportation.

33) “Supplemental air transportation” means. ar trans- :

aes portation rendered pursuant to a certificaté of public con-—

ventence and necessity which. contains such limitations as

, to frequency of service, sige or type of equipment, or

" obnerwosee, 4 as will assure that the service - -$0 authorized

Bier ee - aie

ee er Tn bee “-

70b

House Réport No. 1177

remains supplemental to the service authorized by certifi-

‘cates of publie convenience and necessity issued pursuant, —

to sections 401 (d) (2) and (2) of this Act. ow

[(32)] (34) “Ticket agent” means any person, not an air

carrier or a foreign air carrier and not a, boria fide employee

_of an air carrier or foreign air carrier, who, as principal or

agent, sells or offers for sale any air transportation, or

negotiates for, or holds: himself out by solicitation,

advertisement, or otherwise as one who sells, provides,

furnishes, contracts or arranges for, such transportation.

[(33)], (35) . “United States”: means. the several States, |

"the. District of Columbia; and the several Territories and

possessions of the United States, including the territorial

; , waters. and the overlying airspace thereof.

e * * * *

TITLE IV—AIR CARRIER ECONOMIC REGULATION

| ‘CERTIFICATE OF Pustic. ConVENIENCE AND > Necesstry

CERTIFICATE REQUIRED

“Gao. ‘401: (a) No air carrier shall engage in any air

transportation unless there is in.force a certificate issued

by the Board authorizing such air carrier to engage in such

transportation.

| APPLICATION FOR CERTIFICATE |

. Go

(b) Application for a certificate:shall -be made in writing

to the Board and shall be so verified, shall be. in such form.

and contain such information, and shall be accompanied: -_

by such proof of service upon such interested persons, as

_ the Board shall by regulation require. «

7b | ra

Ho ouse Report No. 117

NOTICE OF APPLICATION

~ (e) ‘Upon the filing of any such application, the Board

shall give due notice thereof to the public by posting a’

notice of such application in the office of the secretary of

thé Board and to such other. persons as the Board may by |

regulation. determine. Any interested person may file with -

the Boarda protest or memorandum of opposition to or in

support of the issuance of a certificate. Such application

shall be set‘for public hearing, and the Board shall dispose _

_of such application as speedily as possible.

ASSUANCE -OF CERTIFICATE

; (d) (1) The Board shall issue a ‘certificate authorizing

the whole or any part of the transportation covered by the

application, if it finds that the applicant is fit, willing, and

able to perform such transportation properly, and to con-

form to the provisions of this Act and the rules, regulations,

‘and: requirements of the Board: hereunder, and that such

transportation is weeiinell by fhe public convenience and

aie otherwise such application shall be. denied.

' (2) Inthe case: of an application for.a certificate to

_ engage in temporary air‘ transportation, the Board -may

issue a certificate authorizing the whole or any part thereof:

- for such limited periods as may be required by the public

convenience and necessity, if it finds that the applicant is

fit, willing, and able properly to perform such transporta-

tion and to conform to the provisions of this Act and the

Tules,’ regulations, and requirements of the Board here-

_ under.

m™«

712b

House Report No. 1177

~ (3)(i) In the case of an application jon a certificate to

“engage in air transportation as a supplemental air carrier,

the Board may issue a certificate. authorizing the whole

or any part thereof for such periods as-may be required by

the public convenience and necessity, if it finds that the

applicant is-fit, willing, and able properly to perform the.

_- service of a supplemental air carrier: and to conform to the

provisions of. this Act and the rules, regulations, and

requirements of the Board hereunder. In determining

‘whether an applicant for such a certificate is fit, willing, |

and able within the meaning of this paragraph the Board

shall give consideration to the conditions peculiar to supple-

mental air transportation, including the: nature of the’

public need found to exist and the extent of the obligation

imposed on an air carrier engaging in such air transporta- .

tion to provide the service authorized by the certificate.

Any certificate issued pursuant to ths paragraph’ shall. :

contain such limitations as the Board shall find necessary

to assure that the‘service rendered pursuant thereto will be

limited to supplemental air transportation as defined im

this Act.

(ui) If any applicant who makes ariptiontion for a

. certificate for supplemental air transportation within thirty: o

days after the date ei — of this paraoreen shall

show—" os

(A) that it, or its predecessor in interest, was an air

carrier authorized to furnish service between places -

within the United States either by a certificate of pub-

lic: convenience and necessity issued by the Cwil —

Aeronautics Board pursuant to order E-13436, ddépted

73b..

House ‘Report No. 1177

January 28, 1959, or arder E-14196, adopted July 8,.

1959, or that itor its predecessor has received interim

operating authority from the Board pursuant to sec- .

tion 1(2) of Public Law 86-661 of July 14, 1960, 7

Stat..527; . |

(B) that Kehooen the nil date of the Certificate

or interim: operating authority and the date of enact-

ment hereof, t the applicant or his predecessor in in-

terest lawfully performed either (1) any portion of * |

the service authorized. by the certificate or interim.

operating | authority, or (2) any operations for the

| Military Establishment of the United States authorized

by the Board; and

thority had not been revoked or otherwise terminated

by the Board or had not otherwise expired prior to the

enactment of this paragraph, and 1s held by the orig- _ -

imal grantee or has béen transferred with Board ap-

proyal pursuant to’ section. 401(h): Provided, That

application under this paragraph may also be made |

by a person who on the date of enactment hereof had.

on file an application to the Board forthe approval

_of transfer to him of a certaficate for supplemental

eo transportation or: ‘interim operating authority, im

which case the Board shall issue a certificate here-

under if it approves the transfer pursuant to section |

- 401(h) of inne Act; '

the Board, upon. proof of such habe only, ‘shall issue.a ~

certificate authorizing such ccd to engage in supple- —

- 74b

House. Report No. 1177

mental air transportation to. the same extent authorized

in the applicant’s certificate or interim authority and ‘sub- *

ject to the terms, conditions, and limitations attached

thereto for such period as the Board deems proper: -Pro-

vided, That this period shall not extend beyond the’ eff ec-

tive date of an order of the Board denying renewal of

the certificate or interim operating authority im a renewal

proceeding pending at the time of enactment hereof.

TERMS AND ) CONDITIONS OF CERTIFICATE,

(e) Each certificate issued ‘under this section shall spec- °

_ ify the terminal points and intermediate points, if any, be-

tween which the air carrier is authorized to engage in. air:

transportation and the service to be rendered; and there -

‘Shall be-attached to the exercise of the privileges granted

by the certificate, or amendment thereto, such reasonable

: terms, conditions, and limitations as the public interest

may require. A certificate issued under this ‘section to.en-

gage in foreign air transportation shall, insofar as the op-

| eration is to take place without the United States, designate

the terminal and intermediate points only insofar as -the

Board shall deem piacticable, and otherwise shall designate.

only the general route or routes to be followed. Any air

carrier holding a certificate for foreign air transportation

‘shall be authorized to handle and transport mail of coun-

tries other than the United States. No term, condition, or .

limitation of a certificate shall restrict the right of an air

carrier to add to-or change schedules equipmént, accom: -

modations, and facilities for performing thé authorized

transportation and service as the development of the busi.

R — a ee on seein

ps ti a nL ncn OTE OA cine 4 wisn sieves oe Fe

- '715b

House Report No. 4177

ness and ‘the demands of the public. shall require. N o air

carrier shall be deemed to have violated any term, condi- ’

tion, or limitation of its certificate by landing or taking

off during an emergency ‘ata point not named in its cer-

tificate or by operating in an emergency under regulations

_ which may be prescribed by the Board, between terminal

and intermediate points other than those specified in its

certificate. Any air carrier may ‘make charter trips or

perform any other special service, without regard to the

points named in its certificate, under ‘regulations pre-

scribed by the Board. A certificate issued under this.

section to engage in supplemental, air transportation shall :

_ designate the terminal and intermediate points only insofar

as the Board shall deem practicable. and may designate .

only the geographical area or areas within which Service -

may be rendered. Nothing inthis subsection shall prevent.

the Board.in specifying the service to be rendered under a

certificate for supplemental air transportation from placing

such limitations on “such certificate as it may find:to be

necessary to assure that the services are limited to sup-

plemental air transportation: Provided, That the Board

mgy not impose such limitations upon cértificates issued :

| “pursuant to paragraphs (1) and (2) of subsection (d).

—27—

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED.

For the information of the Members of the House of

; Representatives, changes in existing law made by the bill,

as reported, are shown as follows (existing law proposed he

‘to be omitted is enclosed in black ‘brackets, new matter is

printed in italies, existing law in which no change is pro-.

posed is shown in roman) :

‘ 76b

House Report No. 1177

* * * * * :

° | AGENCY REBORTS

The committee considered the following letters:

EXxecunNvE Orrice OF THE PRESIDENT, _

- Bureav: oF THE Bunce,

Washington, D. C., June 16; 1961.

-. Hon. i ny

Chairman, Conimittee on Interstate wal Foreign Commerce, —

House of Representatives, House _— Building, ° 2

_ Washington, D.C. : ras ie

_ My Dear Mr: Cramcay: This is in reply to your re-_

quests of June 8 and June 9, 1961, for reports on H.R. 7318

_ and H.R.°7512, bills to amend the Federal Aviation Act of .

1958, as amended, to provide fora class of — air -

. carriers, and for’ other purposés.

The Department of Commerce and the Grit hii it @ |

Board in statements to your committee indicate that the -

supplemental air carriers perform a useful public service

and help meet the Nation’s air transportation needs. The

Bureau of the Budget concurs generally in the statements

< oe ee é

. to authorize ‘the Civil Aeronautics Board to- issue limited

ca certificates of public convenience and necessity for air ser-".

vices supplemental to those provided by the regular com-

mon carriers. Since H.R. 7318 was drafted by the Board —

to give it the authority it believes necessary for this pur-

pose, we recommend it be enacted rather than H.R. 7512.

Sincerely. yours,

2 Pamup S. ‘Huauss,

_ Assistant Director for Legislative Reference.

MaA- .

77%

_ House Report No, 1177 eae

: sus eas \ ra

THe-SEcrRETARY OF CoMMERCE, ‘ .

- Washington, D.C.; June 19, 1961.

A . Ns

‘in OrEN een

_ Chairman, Committee on Interstate and Piircige Commerce,

' House of Representatives, Washington, D.C. a”

Dear Mr. Cnarrman: This is in response to your request

of June. 9, 1961; , requesting the views of the Department on

H.R. 7318 and H, R. 7512, bills to amend the Federal Avia:

tion Act of 1958, as amended, to’provide for a class of cal

plemental air carriers, and for other ‘purposes,

_ H.R. 7318 would amend the Federal Aviation Act so as

to provide: for certification of a class of direct air carriers

‘distinctive from ‘the class of air carriers historically cer’

tificated under sections 401(d) (1) and (2) of the act, the

. new class to he known as supplemental air carriers; that .

such carriers may request, and be. authorized .to haetoons,

limited services supplemental to'those furnished by the .

_ regular air carriers; that the Civil Aeronautics Board be

expressly anthirinel to. issue certificates of public con-

_ venience and necessity for supplémental service containing’

- limitations on the type and extent of service authorized; .

‘that the Board be authorized to grant blanket authorization

without having to designate specific points. ao

_ The act would also be amended to reduce the present

‘standards of fitness required for certification as’an air

carrier so that only general findings of fitness need be made

for supplemental service. H.R. 7318 would also provide for

grant: of statutory. operating rights to the existing holders

78b

Hoise — No. 1177 aaa

. of supplementai air carrier. certificates, in the nature of

grandfather rights.

H.R. 7512 would. ‘amend the Federal Aviation Act.so as

to provide: for certification of a class of direct air carriers |

distinctive from the class of air carriers historically certifi:

cated under section 401(d) (1) and (2): of the act, the. new

class to be known as supplemental air carriers; that such

carriers may request a certificate of public convenience and

" necessity which limits the holder to performance of unlim-

eted passenger or individually’ waybilled cargo operations,

‘ited planeload charter operations, limited individually tick-

_ and the right of first refusal in the operation of all charter

. operations ; that the Civil Aeronautics Board be authorized

to grant a blanket authorization without having to desig- ee

~ nate specific points. ‘

The act would also ‘be amended to reduce the present

standards of fitness required for certification as an air car-

--rier so that only géneral findings of fitress need be made

for supplemental service. H.R. 7512:-would also provide for‘

aaa of statutory Operating rights to’ ‘the existing. holders

of supplemental air carrier certificates, in the nature of

grandfather rights.

On January 28; 1959, in the Large. Irregular Air Carrier

Investigation, CAB docket 5132, the Board issued tempo-

‘rary certificates of public inion ts lleens ah for

supplemental air carrier operation-in interstate air trans-

portation. Under these certificates; , Supplemental air car- -

_ Tiers were authorized to ‘conduct without reference to any

specified terminal or intermediate points not more than 10 —

flights éarrying individually ticketed | passengers or: individ-

ually waybilled property in the same direction between any

ry Sige:

~ pret.

" - certificated. to render route- type service. On dae 7, 1960,

ie 79b

House Report No. 1177, -

single pair of points it in any calendar month, and to render 7" ee

unlimited planeload charter services. . see t é

The issuance of. such certificates was challenged in “the '

courts by regularly authorized air carriers, ie., air carriers

‘the U.S. Court of Appeals for the District. of Columbia

Circuit set. aside the’ Board action of January 28, 1999

United Air Lines et‘al. v. Civil. Aeronautics Board (27 A

_ F, 2d 446). The court found that the certificates issued for

supplemental air service did not specify the terminal and

intermediate points ‘between which air ‘transportation had

been authorized, contained limitation as to the number of; t

flights contrary to section 401(e) of the act, and were not ) |

based on standards of fitness for applicants for certificate ) /

required by section she 8 of the act. te .

Asa stopgap measure to avoid. immediate cessation of yen

25 supplemental air carrier authorizations, the Congressen- =f

acted Public Law 86-661, approved July 14, 1960. Such 7

législation was designed to maintain the status quo of'the :

supplemental air carriers for up to-20 months after enaet- ~~ ::

_&—

.ment so as to permit further consideration to be given the

entire matter of supplemental air transportation without

interim cessation of the then- -existing authority of. the car- :

_ Tiers i ed. ce (f.

| ~ This Dep tment is of the opinion ‘that the continued a

existence of ‘the supplemental air carrier fleét ‘is i

value in terms. of national defense. At the present time

eight supplemental air carriers have executed civil reserve — :

air fleet (CRAF). standby conttacts which provide for-the | |

furnishing of air transportation on an international seale .

_to the Department of Defense in the event of war or na-_

tional, emergency. ce ie. oN

i ? panies ae - .

ieee. Lee

PY = wa L. Ss, t in Rf y ; ae de

GaN tee a pes ere "House Re ot No. a7

oe) es b ‘ ° a a =

Cot ee % ‘

Detebee. “Air ‘Transportation Administration to’ the basig _

: , ie CRAF. program, 40 have been allocated from supplemental ;

a te, alr, carrier inventories. ‘In-addition, the aiteraft remaining. .

Te : im. such’ air.carriér. inventories | after-CRAF requirements" .

* -“have-been met (approximately 123°; in number) are. subjeet._

% a" at | to-DATA’s allocation ‘ authority ;fo fon purposes, ‘of: DOD do-::

ve) Xe mesti¢: wartime. requirements, sack 3 as’ ‘the Navy’ s quicktrans

a and the Air Force's logair oper ations,. ‘and for the needs of —

‘of a “total me 212 sirereht sttocataa by the islets ws

\ yy

eee “the! civil economy under the " war air ‘serxice Pattern pro-. aM

- gtam. ee.

sr acy peallattead well-as inherently. unsound, for’ the .cdiitinued —

¥ aoe dependent i in peacetime upon military | business. ‘Therefore, * ’

Caprese we agree that. supplemental ‘airlines. should: be. eligible’ to

ear operate their plaries tn peacetime i in commercial: air services.

the eee Blementa] eee tee right of first: réfusal i in the operation —

7 er oe Ny = aah bene A ie , - a

oe Wie _of all ‘charter: trie in intérstate, overseas, and foreign air.

: -: adyantae. over" the regularly: y authorized~air carriers and..

EA Cen could: cause undue burden on those persons desiring *

7” i - charter* flight by. Timiging. -at- beat se ‘their’ hoice . of

ae carrier. bo “

, (Furthermore, the provisions in : 7 R. 7512 limiting the fre.

<isener 3 of. ‘individually ticketed or ey: waybilled

| yates Cee ee

- ae

F id ° ” ,

se eo iggt aihsaye: women « ~~

y= aon j ee rs

/ . - . . ‘ ?

Te ‘e Dea

‘give the supplemental carriers an unwarranted competitive :

+ The Depat{ment: ‘alee etnithndes: ‘that. it BA be: an-' é

a The: Department. supports the purpose of these: two simi- ~

pe Ae Jar bills but considers the ‘provisions: of H.R. 7318 as being *

ie <i mote’ likely .to a hiéve their ‘desired aims. We récommend —

ae agairtst the provision if H, R. 7512 that would give the sup-:

Frnt Nat a ny Pas Mat his Dita peat eg Ne”

= House Resort No. ur7

cargo operations to 192. flights per year appears to be arbi-

trary. We are of the opinion that H.R, 7318 gives authority

to the Board to furnish thé necessary protection without

ad setting a limitation that may be harmful to the supplemental. Be

carriers, the er —— carriers ‘and the trereiing 7

public.

The Bareau of i Budget advises. that’there is no objee: ;

o : tion to the submission -of this. report from the standpoint i‘.

ork of the administration’ s page. | =

‘“ Sincerely yours, : a :

inet, te rae Epwarp GupEMAN,

ee. Lee ee eae Under Secretary of Commerce.

he AS oi. -*.. Civ Arronautics Boarp,

-%. ° Washington,.D.C., June 20, 1961.

‘Hon. J OHN BELL Wess,

Chairman, Subcommittee on Transportation

and. Aeronautics,

e Qommittee on.Interstate and Foreign Commerce,

| - "House: of: Representatives, Washington, D. Ce

Dear ConGREssMAN WituiaMs: While I agree with my el, |

| leagues ¢ on the Civil’ Aeronautics Board that legislation by

- the Congress i is-requi

to authérize the Board to issue —

certificates’ 6 Dp onvenience and necessity for sup-

- plemental air ty nsportation, I differ as to the type of cer- .

tificates which! e Board should<be empowered to, issue.

IT woyld urge the ongress to enact legislation authorizing

the Board td is e supplemental — limited to the “a

— 82b

House Report. No. Ae

operation of charter services only ‘without regard to the

other limitations i in the att. This’ opinion is based upon my

_ experience of over. 10° years as a member of the Civil.

_ Aeronautics Board supported by statistics which indicate

little need for supplemental air service other than charter

operations, — yk |

As you and the andi of your committe habe, the

need for this additional legislation has resulted from a

_ reversal by the U.S. Court of Appeals for the District

of Columbia Circuit (United Air Lines, et al. v. C.A.B.,

- 278 F. 2d 446) remanding the decision of a majority of the:

Board in the Large Irregular. Carrier Investigation, docket . ;

No: 5132. Further court proceedings on this matter have

been stayed pending the enactment of further legislation

"or thé expiration of Public Law 86-661 enacted by the Con-

gress last year to preserve the status quo for 20 months

| from July 14, 1960. In the Large Irregular Carrier case,

the Board awarded certificates of public convenience and — ;

necessity to 23 former ‘large irregular carriers‘to engage.

sin interstate air transportation limited to 10 round trip

| flights per month between any 2 points carrying individual

ticketed passengers or cargo, but unlimited as to charter

flights. Further proceedings were ordered with respect to

eight additional carriers. The’ 10- -trip‘ authority, for ex-

- ample, Permits a carrier to — 10 — trips monthly

between N ew York and Los Angeles i in addition to'10 round

_ trips per month between any other 2 points in the Uniféd

. States. The authority to operate between any two cities

- in the United States simultaneously is limited only by the

sine ad of equipment. by each carrier. With this au-

ermvisheass eee aes

‘line carriers depend for their financial success. Additional

‘ competition i in route-type operations by a substantial num-

ber of supplemental carriers is certainly not required or.

83b

‘House Report No. 1177

oe thority, the suppleméntal carriers » eoaid concentrate their

operations in the heavy traffic markets on which the trunk-

necessary. Tle financial condition: of the trunkline industry .

today as evidenced by the losses experienced ‘by several

of the carriers during the past year and the first quarter of

1961 shows that it cannot stand additional competition.

The certificated domestic air. carrier route system links

every major metropolitan area with each other and with

. more numerous smaller communities. The 11 trunkline

_ carriers and the 13. subsidized local service carriers cur-

Tently provide: air service to 576 cities and towns in the con-

tinental United States. Thus the trade and vacation routes

are more thar adequately served by these route-type-car-

"riers which are required by law to render adequate service

“according to the needs of the communities.

The supplemental -carriers enjoying the best financial ~

condition today are for the most part those carriers which et

have through the years concentrated on developing the ~

charter market rather than - helding: out to the individual

‘ticketholder. For example, the Board’s records show that

for the year ending June 30, 1960, the supplemental : car-

riers received operating revenues of $50,417,00C for their

‘civilian and military charter sales while grossing trans- 7

port revenues of $13,580,000 in operations other than char-

' ters. (These statistics do not include revenues of two car-

riers which are involved in. enforcement: proceedings for.

violations of their authority as large irregular carriers.)

Of all the carriers operating supplemental services, 76

nS eT ot eee

percent of the total noncharter revenues we

84D

| House Report Wa. 1177,

only three carriers.. Of these carriers, fs now bankrupt

and another is operatingonly pending appeal of the Board

decision denying it continuing authority. :The third car-

rier although receiving 40 percent..of its income from in-

dividual ticket operations, showed a net: loss-on all opera-

tions of $577,000 in 1960, and $1,350,000 in 1959.

A vast majority of the supplemental carriers, therefore,

are not engaging i in individual ticketing or ‘waybill @pera-

tions. In fact, 14 of these carriers engaged in no individual .

ticket or. waybill operations during the 12 ‘months’ preced-

_ ing June 30, 1960. It is my conclusion, therefore, that since

only a limited few carriers have used the individual ticket

and. -waybill authority from 1955 to the present, little need

exists for this is type « of service. If, at any time, an emergency

a should develop requiring the services of the supplemental .

earriers for purposes other than charters, the Board can

_ invoke its authority under section = of the act to au-

.thorize such operations. - |

The Board has encouraged the: daniiniii carriers to

develop the charter market by permitting these carriers to

‘operate a charter exchange whereby a charter group is as-

a . ees ; aes %

’ -,

_ sured of the availability of an aircraft to suit its needs by

negotiating with one central source which in turn-has avail-

. able the entire supplemental air carrier fleet. The Board -

_ disapproved a similar arrangement organized by the trunk-

—58—

line carriers .to protect the supplemental earriers from un- :

- warranted competition in developing the charter market.

It is-my firm belief that the future of the supplemental :

air carrier. —* lies in the’ — development of the

= tt aaa tha oe Disivine he a _ ri P oe:

. 85b

House Report No. 1177

. charter market—and not in attempting to engage m route- ;

type operations of any kind.

One additional point requires elaboration. One of the bills .

(H.R. 7318) under consideration proposes an amendment

of section 401 of the Federal Aviation Act to authorize the

Board to issue supplemental certificates for interstate,

oversea, and foreign air transportation. It is urged that

the amendment be limited to interstate operations only.

Currently, the international routes to and from the United *

States are served by several U.S.-flag carriers who are com- %,

peting with approximately 67 foreign air carriers. As a

result: of this competition, the market for the U.S.-flag car-.

riers has decreased substantially each year for several

years. In 1950 our flag carriers carried 74.7 percent of the

passenger traffic. Although the traffic in numbers of pas-

sengers. has increased congiderably during this period,. un-

' limited competition by the supplemental carriers eould very

"well cause the frequency and qualit?pf our flag services

to deteriorate. This in turn would: ee affect their

- financial condition, _ 0

. market, but in 1960 eu only 54.7 percent of the total.

The Board has certificated 10 all-purpose carriers -to.

- operate major international routes.: Five of these carriers

reported losses on their international operations for the

years 1959 and 1960: The U.S. international all-cargo car-

riers are also experiencing severe ‘financial difficulties as.

is an all-cargo carrier-on an oversea route. The certifica- |

~ tion of an unlimited number of supplemental carriers in

the international field may well pose a further threat tothe. —

financial condition of the. existing carriers on these routes.

ete

House Report No. 177°

- The — irregular carriers, viellenenitive to the supple-

‘mental air carriers, haye had authority to operate cargo

flights internatiqnally, but few have sought to use this au-.

- Hon. Oren Harris,

thority over the years. It is apparent, therefore, that little

need exists for oversea or foreign supplemental air trans-

portation of any kind and if is urged thas such’ authority

be deleted from the proposal. |

Failure to include oversea and foreign supplemental air

Yagi

| transportation in ‘the proposed amendment does. not mean

that the supplemental carriers will be excluded from par-—

ticipation in either civilian or military ‘international move-

ments—as again the Board has ample authority under sec-

tion 416(b) of the’ act to exempt air carriers for individual

flights or for operations for a limited time for any national

defense need or other emergency. |

Respectfully submitted. | _

: CHAN GURNEY.

DEPARTMENT OF THE Air Force,

| Washington, July 29, 1961. -

Chairman, Committee on Interstate a Foreign Commerce,

- House of Representatives.

Dear Mr. Cuarrman: Reference is made to your request

to the Secretary of Defense for the views of the Depart-

~ ment of -Defense with respect to H.R. 7512, 87th Congress,

a bill to amend the Federal Aviation Act of 1958, as

—_

sna’, to provide for a po of , supplenzhtal air car-

riers, and for other purposes. .The Secretary of Defense

87b

‘House Report No. 1177

has delegated to the Department of the Air Force the re- -

- sponsibility for —, the views of the. Department of ;

_ Defense.

The purpose of the er legislation i is. to sani the

Federal Aviation Act of 1958 to provide for ‘a class of

i supplemental air carriers, and for other purposes. This’.

proposed legislation is similar to H.R. 7318, 87th Con- .

gress, on which’a separate report has been written.

This ie atte legislation has been brought about by | ~

virtue of a decision rendered by the U.S. Court of Appeals

for the District gf Columbia Circuit in the case of United

Air Lines, ét al. v. Civil Aeronautics Board (278 F°2d 446

(1960)). (See 864 U.S. 297, where petition for certiorari

was granted.) In that case the court found that the Civil

Aeronautics. Board’s prior actions in certificating supple-

mental air carrier operations were legally deficient in three

separate areas. The effect of the court’s holding was that

the Board did not possess the legal power to grant cer- oy

tificates of public convenience and necessity to authorize

supplemental air transportation. Thus, those carriers who ~

held certificates. to engage in supplemental air transporta-

tion did not then have legal operating authority. Asa stop-

gap measure Congress enacted Public Law 86-661, approved

July 14, 1960, which measure was designed to preserve the

supplemental] air carrier industry for a period of 20 months,

and until the matter could be studied more fully. The-pro-

posed legislation is designed to be of a permanent nature

and, in effect, to replace the temporary stopgap legislation

which allows the supplemental air carrier industry to oper-.

ate for only 20 months from. July 1960. In effect, the Board

has found that supplemental air carriers have performed — -

88b

; House Report No. 1177»

a useful public service and that they have a definite place

ments. The subject legislation, therefore, is designed to

amend the Federal Aviation Act of 1958 in various respects .

in order that the Board can legally award certificates for

supplemental ‘air transportation to those carriers who would. .

be eats for such authority. under the proposed legisla- .

tion.

The amendments proposed in H.R. ‘T12 to the Federal

' Aviation Act of 1958 are all amendments of a ‘technical

nature designed to give ‘the Board appropriate legal au-

thority to issue certificates to carriers for supplemental air

transportation. These proposed technical amendments in- .

clude a so-called “grandfather” provision wkich would au-

thorize’ the issuance of & certificate for supplemental air

‘transportation to those carriers who were previously au- .

thorized to engage in such transportation (see line 5 and’

~ following on p. 3 of H.R. 7512). 7

The continued existence: of the irregular. air carrier fleet

is of real value in terms of national defense and it is evi-

" dent that the future ability of the irregular air carriers to

serviee the military, as they are doing,now and have done

so ably in the past, depends upon their ability to operate

their planes in commercial activities when not engaged“n

service for the military. In this regard, the current (April

1, 1961) allocation, of aircraft to the civil reserve air fleet —

-(CRAF) program shows that there are 8 supplemental air

carriers participating in this ee which now -ineludes

22 air carriers. v

The Department of the Air Force, on behalf of the De-

partment of Defense, has no objection t@ the- ‘enactment of.

89b - ©

House Report No. 1177 3

: =H

i. R. 7512, but defers to the views of the Civil hevcnstitinn

_ Board concerning the technical details of the bill.

__ This report has been coordinated within the Department :

of’ Defense in accordance with procedures saa aa by

the Secretary of Defense.

_ The Bureau-of the Budget advises that, fost the seed

point of the administration’s program, there is no objection

to the presentation of this report ‘for the. consideration of |

_ the committee.

Sinéerely,

; JOSEPH S. Inner, --

‘ Assistant Secretary of the Air Force.

* OFFICE OF THE PostMASTER GENERAL, .

_ Washington, D. C., June 20, 1961.

Hon. Onsts Hanns,

. Chairman, Committee on Interstate and Foreign Commerce,

House bf Representatives, Washington, DC:

- ports-on f 7318. and H.R. 7512 proposing to authorize -

the Civil Aeronautics Board to issue certificates of seep .

convenience and necessity to “supplemental air. carriers.” |. |

Each of these ‘bills would amend the Federal Aviation |

Act by authorizing the Civil Aeronautics Board to issue =

’ certificates.of public convenience and necessity to “sup

mental air carriers.” The bills differ, however, in the feo N\

“acifie type of service which could be authorized by the eae

. “in the certificates granted to “supplemental air ‘carriers.’

-H.R. 7512 does not include. authorization for the transpor-

Drar phe a an We reply to your. request for re-

Dec aa dda AN inc ct aie EGR Rast ANA HA ‘

. . .

Bb ccenmrtnidimsicces

.- 90b -

House Report No. 1177. -.-

| tation of mail. H.-R. 7318, on the other hand, ‘wean scott

_ the Civil Aeronautics . Board to grant: “supplemental air -

carriers” authority to transport mail.

To date the supplemental air carrier “operations author- °

ized by the Civil Aeronautics. Board: have not included any

grant of authority to transport mail. Nor has the Depart-

ment, ever supported any sueh ‘grant of mail authority in =

view of the very limited special type of operation that is

- characteristic of a supplemental air carrier service. No.

use would be made of this type of limited operation for the

transportation of mail except under very extraordinary

circumstances. . .

We have no objection to the enactment of this legislation ;

however, the use of “supplemental air carriers” as provided.

' for -in H.R. 7318 would be feasible for mail transportation ;

only under extraordinary circumstances since they would |

not be operating a daily point-to-point type of service. .

_ We have ose advised by.the Bureau of the Budget that

from the point of the administration’s program there

is no objection to the presentation of the repart to the com- .

mittee.

Sincerely yours, . ae Eee

ans _. J. Epwarp Day, Postmaster General.

- That (a) section 101 of the Federal Aviation Act of August

23, 1958, as amended, is amended by. redesignating para- -

' graphs (13) through (31) as.(14) through:(32) and ee

91b.

; K _ >. Senate Report No. 688

® , 87th Congress, let Session

_aMenpurtegs TO THE ‘FEDERAL AVIATION: ACT

OF 1958 TO PROVIDE FOR A CLASS OF SUPPLE-

MENTAL AIR ——.

Avavet 8, 1961.—Ordered to be printed

Mr. Monroney, from the Committee on / Commeree, :

“submitted the following

R E PORT

{to accompany 7S. 1969]

‘The Committee on Commerce, to ‘in was referred the

bill- (S. 1969) to amend the Federal Aviation Act of 1958, .

*as amended, to provide for a: class of supplemental air.

carriers, and for: other purposes, having considered the

same, report favorably thereon with an amendment. and s

recommend that the bill as amended do pass,

- The amendment, in the nature of substitute, is as follows:

Strike out all after the enacting clause and insert the

following:

me therein a new paragraph to read as follows:

* Numbers within dashes, used on the right, are ® the original page .

numbers of the document. These are-the numbers referred to in“

asrvramens il Brief.

ee °

> x; ¢ } ¥ | ; 4 te ; 92b

Aen fon ee _ anes ee No. 688 : . a

«(18) ‘Charter service’ means air ‘transportation per-

. formed by an air carrier holding a certificate of public

convenience and necessity where the entire capacity of one’

or more aircraft, has, been engaged. for the movement of

persons and their baggage or for the movement of \prop-. ; #3

erty on a time, mileage, or trip basis, but shall not include

" transportation Services offeréd by an air carrier to indi-

‘ vidual members of the general public or performed by an .

2 Air. carrier under an arrangement with any person who prov-

oe: vides or offers to. provide transportation. services: to indi- :

vidual. members of the general public, other: than .as_ a:

‘member of a group on an _all-expense-paid tour. ‘3

. (b) Section 101 of the Federal Aviation Act, as , amended,

is further amended by ‘redesignating’ paragraphs (32) and —

(33) as (35) and- -(36), respectively, and inserting therein

two new -paragraphs to. read as follows:

“(33) ‘Supplemental air ‘earréer’ means. an air earrier

| holding a certificate of public canvenience and necessity au-

thorizing it to. engage in supplemental air transportation.

|“ (34) ‘Supplemental air transportation’ means charter

service and other air transportation rendered pursuant to

‘a certificate of: public convenience and necessity issued put-

‘-suant to section 401(d)(3) of this Act to supplement the

service authorized by certificates of public convenience

and necessity ‘issued pursuant to sections 401(d) (1) and

_ (2) of this ark

‘ Ske. ». tli 401 of the. Federal Aviation Aet is

-samended by adding to subsection. (d) thereof. a new para-.

graph (3) to read as follows:

. 93b-

: ss Senate RefOrt No. 688

re r..

=~ \ r Ps

(3) (i) In the case of. an application forae rtificate to. -

engage in air transportati nasa supplemental air carrier,.

_ the Board may issue a certificate, to any applicant not, .

-holding a. certificate under pa raphs (1) or (2) of this

subsection, authorizing: the whold.or any part: of the traris-

portation covered by the application, and for such petiod,

as may be required by the public convenience and necessity,

it finds that the applicant is fit, willing,’ and able prop- |

erly, to perform such transportation and to conform to the ~.

provisions of this Act and the rules,- regulations, and re- .

“quirements ~of the Board ‘hereunder. In determining

whether an applicant for such a. certificate is fit, willing,

shall give consideration to the conditions pec ar to the

type ¢ of supplemental air transportation for which author-

ity is sought, including the“ nature. of. the public weed >=

_ therefor and the extent fo which the applicant: will be

: required to provide such air transpdrtation.

“(iy Any certificate issued pursuant to this paragraph

_authorizing individually ticketed or waybilled service shall

. contain. such limitations, including the term thereof, as

the Board finds are-required to insure that such. service.

will-not result in significant diversion of traffic from any _

“air carrier authorized to render. Service between: the same

and necessity issued pursuant to panegeages bade and (2)

of this: subsection.” 2

Sec. 3. Subsection (e) * séction 401 of the. eaten)

Aviation Act 1 is amended to read’ as follows :

: ah DH hsl a ih - ; : <

94b See? vette as

gaat ae Senate Report _ 688 = :

nas

SrERMS AND cuit: OF CERTIFICATE

“(e) (1). Back certificate issued under this ‘section shall’

“specify the terminal points and intermediaté points, if ¢ any,

between. which the-air carrier is authorized to engage in

. . Bir transportation and the service to be-rendered } and there

- shall be attached to the exercice of the privileges granted.

“by the certificate, or amendmeht: thereto, such reasonable

terms, conditions, and limitations as the public interest hey.

require. aa 3 oe Se Sayer

“(2) A-certificate silat said this section tofiengage i in

foreign air transportation shall, insofar as the. operation

is te take place without the United States, designate the”

terminal and initermediate points only insofar as the Board

‘ shall deem practicable, and otherwise shall designate only _

» the general route or routes to be followed. Any air carrier |

- holding a certificate for foreign air: transportation shall.

be authorized to handle and transport mail of countries .

- other than the United States.

x °

~ (3) A certificate issued enhar this section to engage ‘in @

supplemental—air—transportation_ shall, with respec to

charter service,. designate. the terminal and intermediate

points only ingofar as the Board shall. deem practicable

and may. designate only the geographical area or areas —

within or between whica- service may be rendered.

shall restritt the right of ar 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

2 9 «

—————__—

ROON OS ae B5bs.,

«*

* - Senate Report No. 688

\" . ae

shall’ require; ‘except: that, sthe Board may nis, pr ag

‘terms, conditions, -or’ limitations in a certificate for sup-

_ plemental air transportation when required by. subsection.

_ (d) (3) (ii), of, this’

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