AMENDMENTS TO THE FEDERAL AVIATION ACT OF 1958 TO PROVIDE FOR A CLASS OF SUPPLEMENTAL AIR CARRIERS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP63T00245R000300360002-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 100
• Document Creation Date: December 23, 2016
• Document Release Date: February 4, 2014
• Sequence Number: 2
• Publication Date: August 8, 1961
• Content Type: REPORT

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, v4)
%)11962 CONGRESSIONAL REC
',Michael Zarin, Port of New York Authority; Joseph
Murphy, Inland Marine Underwriters Association; and
Arthur Murphy, Baer, Marks, Friedman & Berliner,
New York City.
SUPPLEMENTAL AIR CARRIERS
Conferees continued, in executive session, to resolve the
differences between the Senate- and House-passed ver-
sions of S. 1969, to amend the Federal Aviation Act so
as to provide for supplemental air carriers, but did not
reach final agreement, and recessed subject to call.
BILLS SIGNED BY THE PRESIDENT
New Law
(For last listing of public laws, see DIGEST, p. D255
(April 5, 1962))
H.R. 10573, to grant the American Numismatic As-
sociation perpetual succession. Signed April io, 1962
(P.L. 87-433).
COMMITTEE MEETINGS FOR THURSDAY,
APRIL 12
(All meetings are open unless otherwise designated)
Senate
Committee on Agriculture and Forestry, executive, on S. 2786,
farm bill, so a.m., 324 Old Senate Office Building.
Committee on Armed Services, Special Preparedness Sub-
committee, on the troop information and education phase of its
military censorship hearings, so a.m., 224 Old Senate Office
Building.
Central Intelligence Subcommittee, executive, to hear CIA
Director McCone, 10:30 a.m., 212 Old Senate Office Building.
Committee on Banking and Currency, Small Business Sub-
committee, on S. 2970, proposing amendments to the Small
Business Act, so a.m., 5302 New Senate Office Building.
Committee on Commerce, on S. 2854, providing for the estab-
lishment of a commercial communications satellite system, so
a.m., 1202 New Senate Office Building.
Committee on Finance, on H.R. 50650, Internal Revenue Act
amendments, so a.m., 2221 New Senate Office Building.
Committee on Foreign Relations, on S. 2996, the foreign aid
bill, open and executive, at so:30 a.m., on funds for European
programs, 4221 New Senate Office Building; and executive at
2:30 p.m., on contributions to international organizations,
MOM F-53, Capitol.
Committee on Governmept Operations, Permanent Subcom-
mittee on Investigations, on the pyramiding of profits and costs
in the missile procurement industry, 10:30 a.m., 3302 New
Senate Office Building.
Committee on Interior and Insular Affairs, executive, to meet
with members of the National Fuels Policy Study Group, so
a.m., 3110 New Senate Office Building.
Committee on the Judiciary, Constitutional Rights Subcom.
ORD ? DAILY DIGEST P275
mittee, on S. 480, 2750, and 2979, relating to literacy require-
ments for voting standards, so a.m., 457 Old Senate Office
Building.
Antitrust and Monopoly Subcommittee, on antitrust phases of
control and ownership of a space communications satellite sys-
tem, so a.m., 1114 New Senate Office Building.
Committee on Labor and Public Welfare, Subcommittee on
Education, on S. 2826, to improve the quality of elementary and
secondary education, to a.m., 4232 New Senate Office Building.
Committee on Public Works, on S. 2965 and S. 2817, author-
izing plans for accelerated public works progfams, 9:30 a.m.,
4200 New Senate Office Building.
House
Committee on Agriculture, executive, on general farm bill,
so a.m., 1310 New House Office Building.
Committee on Appropriations, Subcommittee on Public
Works, executive, so a.m., 313, east front, U.S. Capitol Building.
Subcommittee on Military Construction, executive, so a.m.,
228 Old House Office Building.
Committee on Armed Services, Subcommittee No. i on H.R.
7656, to amend the Uniform Code of Military Justice, so a.m.,
313?A Old House Office Building.
Subcommittee for Special Investigations, on procurement
practices in the purchase of M-113 armored personnel carriers,
2 p.m., 304 Old House Office Building.
Committee on Education and Labor, executive, on migratory
labor legislation, 9:45 a.m., 429 Old House Office Building.
Committee on Foreign Affairs, on the Foreign Assistance Act
of 1962, 10:30 a.m., G-3 U.S. Capitol Building.
Subcommittee on International Organization and Move-
ments, executive, 2:20 p.m., G-3 U.S. Capitol Building.
Committee on Interior and Insular Affairs, Subcommittee on
Indian Affairs, 9:45 a.m., 1324 New House Office Building.
Committee on Interstate and Foreign Commerce, executive,
on pending legislation, so a.m., 1334 New House Office Build-
ing.
Committee on the Judiciary, Subcommittee No. 2, on H.R.
9475, for the relief of victims of the Cal-Poly air disaster, so
a.m., 327 Old House Office Building.
Subcommittee No. 4, on H.R. 4855, to amend the Bank-
ruptcy Act; and H.J. Res. 261 and Res. 643, similar resolutions,
regarding establishment of the sesquicentennial commission for
the celebration of the Battle of New Orleans, so a.m., 346 Old
House Office Building.
Subcommittee No. 5, executive, on pending legislation, TO
a.m., 347 Old House Office Building.
Committee on Post Office and Civil Service, executive, on
pending business, so a.m., 215 Old House Office Building.
Committee on Science and Astronautics, on H.R. 10 100,
NASA authorization bill, so a.m., 214?B New House Office
Building.
Committee on Ways and Means, executive, on H.R. 9900, the
Trade Expansion Act of 1962, so a.m., committee room, New
House Office Building.
Joint Committees
Joint Committee on the Library, executive, on committee
business, 2 p.m., room G-53, Capitol.
Conferees, executive, on S. 205, educational television bill, 3
p.m., room F-82, Capitol.
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87TH CONGRESS
1st Session
SENATE
Calendar No. 664
REPORT
No. 688
AMENDMENTS TO THE FEDERAL AVIATION ACT OF 1958
TO PROVIDE FOR A CLASS OF SUPPLEMENTAL AIR
CARRIERS
AUGUST 8, 1961.?Ordered to be printed
Mr. MONRONEY, from the Committee on Commerce, submitted the
following
REPORT
[To accompany S. 1969]
The Committee on Commerce, to whom 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 amend-
ment and 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:
That (a) section 101 of the Federal Aviation Act of August 23, 1958, as amended,
is amended by redesignating paragraphs (13) through (31) as (14) through (32)
and inserting therein a new paragraph to read as follows:
"(13) 'Charter service' means air transportation performed 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 property on a time, mileage, or trip basis, but shall
not include transportation services offered by an air carrier to individual members
of the general public or performed by an air carrier under an arrangement with
any person who provides or offers to provide transportation services to individual
members of the general public, other than as a member of a group on an all-
expense-paid tour."
(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 carrier' means an air carrier holding a certificate of
public convenience and necessity authorizing 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 pursuant to section 401(d) (3) of this Act to supplement the
service authorized by certificates of public convenience and necessity issued pur-
suant to sections 401(d) (1) and (2) of this Act."
SEC. 2. Section 401 of the Federal Aviation Act is amended by adding to sub-
section (d) thereof a new paragraph (3) to read as follows:
72000-61-1
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ricoviph A l,LAbb ur SUPPLEMENTAL AIR CARRIERS
"(3)(i) In the case of an application for a certificate to engage in air transporta-
tion as a supplemental air carrier, the Board may issue a certificate, to any appli-
cant not holding a certificate under paragraphs (1) or (2) of this subsection, au-
thorizing the whole or any part of the transportation covered by the application,
and for such period, as may be required by the public convenience and necessity,
if it finds that the applicant is tit, willing, and able properly to perform such
transportation and to conform to the provisions of this Act and the rules, regula-
tions, 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 the type
of supplemental air transportation for which authority is sought, including the
nature of the public need therefor and the extent to which the applicant will be
required to provide such air transportation.
"(ii) 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 front any air carrier authorized to render service
bet ween the same points by a certificate or certificates of public convenience and
necessity issued pursuant to paragraphs (1) and (2) of this subsection."
SEc. 3. Subsection (e) of section 401 of the Federal Aviation Act, is amended
to read as follows:
"TERMS AN D CON DITIONS OF CERTIFICATE
"(e)(1) Each certificate issued under this section shall specify the terminal
points and intermediate points, if any, bet ween 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.
"(2) A certificate issued under this section to engage in foreign air transporta-
tion shall, insofar as the operation is to take place without the -United States,
designate the terndnal and interniediate points only insofar as the Board shall
deem practicable, and otherw iso shall designate only the general route or routes
to be followed. Any air carrier holding a certificate for foreign air transportation
shall be alit horized to handle and transport mail of countries of than the
United Stat es.
"(3) A certificate issued under this section to engage in supplemental air trans-
port at ion shall, with respect to charter service, designate the terminal and inter-
mediate points only in as the Board shall deem practicable and may designate
only the geographical area or areas within or between which service may be
rendered.
"(A) NO term, condition, or limitation of a certificate shall restrict the right of
an air carrier to add to or change schedules, equipment, accommodatiors, and
facilities for perforniing the not transport it ion and service as the develop-
ment of the business and the dellIttlids of the public shall require; except that the
Board may impose such terms, conditions, or limitations in a certificate for supple-
mental air transportation when required by subsection (d)(3)(ii) of this section.
"(5) No air carrier shall be deemed to have violated any term, condition, or
I imitation of its certificate by landing or taking off during an emergency at a
point, not named in its certificate or by operating in an emergency, under regula-
tions which may be prescribed by the Board, between terminal and intermediate
points other than those specified in its certificate.
"(I1) Ally air carrier, other than a supplemental air carrier, may perform
charter service or any other :=,)ecial service, without regard to the points named in
its certificate, under regulations prescribed by the Board."
SEc. 4. Clause (3) of section 406(b) of the Federal Aviation Act is amended by
inserting after "each such air carrier" the words "(other than a supplemental air
carrier)".
SEC. 5. Title IV of the Federal Aviation Act is amended by adding at the end
thereof a new section to read as follows:
"SPECIAL OPERATING AUTHORIZATIONS
"Authority of Board To Issue
"SEc. 417. (a) If the Board finds upon an investigation conducted on its own
initiative or upon request of an air carrier---
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_ _ LEMENTAL AIR CARRIERS
3
"(1) that the capacity for air transportation being offered by the holder of
a certificate of public convenience and necessity between particular points in
the United States is, or will be, temporarily insufficient to meet the require-
ments of the public or the postal service; or
"(2) that there is a temporary requirement for air transportation between
two points one or both of which is not regularly served by any air carrier; and
"(3) that any supplemental air carrier can provide the additional service
temporarily required in the public interest;
the Board may issue to such supplemental carrier a special operating authoriza-
tion to engage in air transportation between such points.
"Terms of Authorization
"(b) A special operating authorization issued hereunder shall?
"(1) contain such limitations or requirements as to frequency of service,
size or type of equipment, or otherwise, as will assure that the service so
authorized will alleviate the insufficiency which would otherwise exist, without
significant diversion of traffic from the holders of certificates for the route;
"(2) be valid for not more than thirty days and extended not more than
twice; and
"(3) not be deemed a license within the meaning of the Administrative
Procedure Act (5 U.S.C. 1001, et seq., as amended).
"Procedure
"(c) The Board shall by regulation establish procedures for the expeditious
investigation and determination of requests for such special operating authoriza-
tions. Such procedures shall include written notice to air carriers certificated
to provide service between the points involved, and shall provide for such oppor-
tunity to protest the application in writing, and at the Board's discretion to be
heard orally in support of such protest, as will not unduly delay issuance of such
special operating authorization, taking into account the degree of emergency
involved."
SEC. 6. Section 901(a) of the Federal Aviation Act of 1958 is amended to read
as follows:
"CIVIL PENALTIES
"Safety, Economic, and Postal Offenses
"SEc. 901. (a)(1) Any person who violates (A) any provision of title III,
IV, V, VI, VII, or XII of this Act, or any rule, regulation, or order issued there-
under or under section 1002(i), or any term, condition, or limitation of any permit
or certificate issued under title IV, or (B) any rule or regulation issued by the
Postmaster General under this Act, shall be subject to a civil penalty of not to
exceed 81,000 for each such violation. In the case of a violation of a provision
of title IV or VII or any rule, regulation, or oder issued thereunder, or under
section 1002(i), or any term, condition, or limitation of any permit or certificate
issued under title IV, if such violation is a continuing one, each day of such viola-
tion 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 I htpartment of Defense who are subject to 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 action with respect thereto and for making to
the Administrator or Board, as appropriate, a timely report of any such . action
taken.
"(2) Any such civil penalty may be compromised by the Administrator in the
case of violations of title III, V, VI, or XII, or any rule, regulation, or order issued
thereunder, and by the Board in the case of violations of title IV and VII, or any
rule, regulation, or order issued thereunder, or under section 1002(i), or any term,
condition, or limitation of any permit or certificate issued under title IV, or 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 compro-
mise, may be deducted from any stuns owing by the United States to the person
charged."
SEC. 7. (a) If any applicant who makes application under section 401 (d) (3) of
the Federal Aviation Act for a certificate for supplemental air transportation
within thirty days after the date of enactment of this Act shall show?
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rriVV.Luti uyazo yr SUPPLEMENTAL AIR CARRIERS
(1) that it, or its predecessor in interest, was an air carrier authorized to fur-
nish service between places within the United States either by a certificate
of public convenience and necessity issued by the Civil Aeronautics Board
pursuant to order E-13436, adopted January 28, 1959, or order E-14196,
adopted July 8, 1959, or that it was given interim authority to operate in
interstate air transportation as a supplemental air carrier under Board order
E-9744 of November 15, 1955, and has pending before the Board an applica-
tion for certification as a supplemental air carrier which was filed prior to
July 14, 1960;
(2) that between January 1, 1960, and May 25, 1961, the applicant or his
predecessor in interest lawfully performed either (A) any portion of the
service authorized by the certificate or interim operating authority, or (B) any
operations for the Military Establishment of the United States;
(3) that such certificate or interim operating authority had not been
revoked or otherwise terminated by the Board or had not otherwise expired
prior to the enactment of this Act: Provided, That for the purposes of this
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, notwithstanding a pending judicial review of such order; and
(4) that such certificate or interim operating authority is held by the
original grantee or has been transferred with Board approval pursuant to
section 401(h) of the Federal Aviation Act: 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 or interim operating
authority, in which case the Board shall extend the authority hereunder if it
approves the transfer pursuant to section 401(h) of such Act;
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 author-
ized in the applicant's certificate or interim authority and subject to the terms,
conditions, and limitations attached thereto pending issuance or denial of a
certificate pursuant to section 401(d) (3) of such Act authorizing the whole or any
part of the transportation covered by the application.
(b) If any applicant who makes application under section 401(d) (3) of the
Federal Aviation Act for a certificate for supplemental air transportation within
30 days after the date of enactment of this Act shall show that it or its predecessor
has received interim operating authority from the Board pursuant to section 1(2)
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 supple-
mental air transportation to the same extent authorized in the applicant's interim
authority and subject to the terms, conditions, and limitations attached thereto
pending issuance or denial of a certificate pursuant to section 401(d) (3) of such
Act authorizing the whole or any part of the transportation covered by the
application.
SEC. S. (a) /f any air carrier, or its predecessor in interest, was an air carrier
authorized to furnish service between places within the United States either by a
certificate of public convenience and necessity issued by the Civil Aeronautics
Board pursuant to order E-13436, adapted January 28, 1959, or order E-14196,
adopted July 8, 1959, or it or its predecessor received interim operating authority
from the Board pursuant to section 1(2) of Public Law 86-661 of July 14, 1960
(74 Stat. 527), it may pertorm operations under its existing authority for thirty
days from the date of enactment of this Act, and if it has filed application pursu-
ant to section 401(d) (3) of the Federal Aviation Act within said thirty days, until
the Board has granted or denied interim authority under section 7 of this Act.
Any air carrier whose application for certification as a supplement air carrier is
pending before the Board and which (A) has operated in interstate air transpor-
tation as a sunplemental air carrier pursuant to authority granted under Board
order E-9744 of November 15, 1955, and (11) had such 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 for
thirty days from the date of enactment of the Act, and if it has filed application
pursuant to section 401 (d) (3) of the Federal Aviation Act within said thirty days,
until the Board has granted or denied interim authority under section7 of this Act.
The certificates of public convenience and necessity issued by the Board pursuant
to order E-13436 adopted January 28, 1959, and order E-14196, adopted July 8,
1959, and the interim operating authority issued by the Board pursuant to sec-
tion 1(2) of Public Law 86-661 of July 14, 1960 (74 Stat. 527), and the exemption
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PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
5
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 Board under order E-10161 of April 3, 1956, shall terminate on the date of an
order of the Board granting or denying interim authority under section 7 of this
Act, or if the carrier files no application under section 401(d) (3) within 30 days
from the date of enactment of this Act, at the end of said 30-day period. Any
carrier whose operating authority in interstate air transportation under Board
order E-97-14 is continuing solely by virtue of a judicial stay of a Board order
which would otherwise terminate such operating authority, is hereb: authorized
to continue to operate, 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 no way affect any enforcement or com-
pliance 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 a(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 compliance action against
such holder subsequent to the date of enactment of this Act with respect to viola-
tions of the Federal Aviation Act or provisions of the certificate or interim author-
ity 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 for violations occurring prior to the extension of its authority
under section 7 or the issuance to such carrier of a certificate of public convenience
and necessity for supplemental air transportation under section 401(d) (3) of the
Federal Aviation Act may be imposed upon such extension of authority or certifi-
cate issued to such air carrier.
(c) Any application of an air carrier heretofore consolidated into the Board
proceeding known as the Large Irregular Air Carrier Investigation, Docket
Numbered 5132 et al., shall be deemed to have been finally disposed of upon the
date of enactment of this Act.
Amend the title so as to read:
A bill to amend the Federal Aviation Act of 1958, as amended, to provide for
supplemental air carriers, and for other purposes.
SUMMARY OF THE RILL
The present measure would make it clear that a carrier may request
and he authorized to perform limited services supplemental to those
I urnished by the regular air carriers and would authorize the Board to
issue certificates of public convenience and necessity for supplemental
service. containing limitations on the type and extent of service
authorized. This authority was requested by the Civil Aeronautics
Board as a result of the decision of the ITS. Court of Appeals for the
District of Columbia in United Airlines et al. v. Civil Aeronautics Board,
winch determined that the Board lacked authority under existing law
to issue limited certificates.
The bill would (1) grant statutory interim operating rights, in the
nature of temporary "grandfather" rights, to existing holders of
supplemental air carrier certificates who have performed a portion of
the service authorized by their present certificates, (2) make clear that
a supplemental certificate is primarily a certificate for charter service
and provide that the Board may, when the public convenience and
necessity requires, also authorize individually ticketed service, (3)
make clear that supplemental air carriers are not eligible for subsidy
payments, (4) permit the Board to issue a special operating authoriza-
tion for temporary service between particular points during periods
when regular service is inadequate, (5) permit the Board to impose
civil penalties for violations of title IV of the act relating to economic
regulations, (6) amend the act to provide for a statutory definition of
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6 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
charter service, (7) make clear that a regularly certificated carrier
cannot also be certificated as a supplemental carrier, and (8) enable
the Board to make a determination of fitness based upon considera-
tions peculiar to the type of supplemental transportation for which
authority is sought.
HEARINGS
Your committee conducted hearings over a period of 3 days and
received testimony from the following witnesses: Senators John
Sparkman and Howard W. Cannon; Alan Boyd, Chairman, Civil
Aeronautics Board; Robert Fraley, Quaker City Airways, Phila-
delphia, Pa., and Mantz Air Services, Burbank, Calif.; Jesse StalliDgs,
president, Capitol Airways, Nashville, Tenn.; Dr. Ralph Cox, Jr.,
president, U.S. Overseas Airlines, Wildwood, N.J.; George Patterson,
president and general manager, President Airlines, Inc., Burbank,
Calif.; Reed Pigman, president, American Flyers, Fort Worth, Tex.;
Alfred Matz, president, Matz Airlines, Burbank, Calif.; Angus
McDonald, assistant director, National Farmers Union, Washington,
D.C.; Stuart Tipton, Air Transport Association, Washington, D.C.;
James Anton, Quaker City Airways: Clayton L. Burwell, president,
Independent Airlines; Robert E. Commerce, president, Airline Dis-
patchers Association; and Robert C. Goodman, Saturn Airways.
With the exception of the Air Transport Association and the Airline
Dispatchers Association, all witnesses strongly supported the objec-
tives of the bill.
SECTION-BY-SECTION ANALYSIS
Section 1
This section would amend section 101 of the Federal Aviation Act
to include additional statutory definitions. "Charter service" would
be defined as air transportation where the entire capacity of one or
more aircraft has been engaged on a time, mileage, or trip basis, but
specifically excluding transportation services offered by an air carrier
to individual members of tile general public or performed by an air
carrier under an arrangement with any person who provides, or offers
to provide, transportation services to individual members of the gen-
eral public other than as a member of a group on an all-expense-paid
tour. This definition would be applicable to all certificated air
carriers including both route carriers and supplemental carriers.
"Supplemental air carrier" would be defined as an air carrier holding
a certificate of public convenience and necessity authorizing it to
engage in supplemental air transportation.
"Supplemental air transportation" would be defined as charter
service and other air transportation rendered pursuant to a supple-
mental certificate.
Section 2
Subsection 401(d) of the act would be amended by adding a new
paragraph which would authorize the Board to issue a certificate to
engage in air transportation as a supplemental air carrier to any
applicant other than certificated route carriers. The Board could
authorize the whole or any part of the transportation covered by the
application, and authorize it for such periods, as the public convenience
and necessity may require, provided the applicant is found to be fit,
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willing, and able to properly perform such transportation. This
provision would permit the Board to make a finding of fitness on the
basis of the type of supplemental transportation for which authority
is sought. The Board would be permitt ed to authorize individually
ticketed or waybilled services but would be required to include in
the certificate such terms and limitations as it finds are necessary to
insure that such services will not result in significant diversion of
traffic from the certificated route carriers authorized to render service
between the same points.
Section 3
Section 401 (e) of the act would be amended to permit the Board, in
issuing certificates for supplemental air transportation for charter
service, to designate terminal or intermediate points only insofar as
the Board deems practicable and otherwise permits the Board to
designate only the geographical area, or areas, within or between
which service may be rendered.
Individually ticketed operations would be permitted only between
designated points.
The Board would be permitted to impose terms, conditions, or
limitations as to frequency of schedules and as to equipment in a sup-
plemental certificate to insure that such individually ticketed service
is supplemental to the service being provided by the certificated route
carriers. Such limitations are prohibited in certificates issued to
route carriers. This section would continue the present authority of
a certificated route carrier to perform charter service under regulations
prescribed by the Board.
Section 4
Seciion 406(b) of the act would be amended to specifically exclude
supplemental air carriers from eligibility for subsidy.
Section 5
A new section 417 would be added at the end of title IV of the act
to permit the Board to issue "special operating authorizations" to
supplemental air carriers. Such authorizations would be limited to pe-
riods when the capacity of the certificated route carriers was insufficient
to meet the requirements of the public or the postal service. Certifi-
cated route carriers would not be eligible to receive such authoriza-
tions. Specifically, the Board could issue this special operating au-
thorization upon a finding that (1) the service of a certificated route
carrier is temporarily insufficient to meet the requirements of the
public or the postal service, (2) there is a temporary requirement for
transportation between two points, one or both of which is not regu-
larly served by any air carrier, and (3) any supplemental an carrier
can supply the additional service temporarily required in the public
interest.
Such authorizations must contain limitations as to frequency and
types of equipment so as to assure that the service authorized will
alleviate insufficiencies which would otherwise exist without significant
diversion of traffic from certificated route carriers. The authorization
would be limited to 30 days. However, the Board would be per-
mitted to extend it, but not more than twice. The authorizations
would not be deemed licenses within the meaning of the Administrative
Procedures Act.
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8 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
The Board would be required to establish procedures for the
expeditious investigation and determination of requests for such
authorizations. The bill would require written notice to air carriers
certificated to provide service between the points involved and afford
such carriers the opportunity to protest the application in writing.
This section contemplates that procedures will be adopted so as to
avoid undue delay in the issuance of special operating authorizations
and that the Board shall take into account in investigating such
applications the degree of emergency involved.
Section 6
Section 901(a) would be amended to give the Board jurisdiction to
impose the same civil penalties for violations of the economic provisions
of the act as are now provided for violations of other provisions of
the act. This jurisdiction would extend to all of the provisions of
title IV and would include violations by the certificated route carriers
as well as those committed by the supplemental air carriers and other
persons.
Section 7
This section would require the Board to issue interim operating
authority in the nature of temporary grandfather rights to any appli-
cant who, within 30 days following enactment of this legislation,
applies for a supplemental certificate and shows: (1) That it has been
authorized to engage in supplemental air transportation, by certificate,
interim operating authority, or exemption; (2) that it has operated
under the authority or performed transportation for the Military
Establishment; and (3) that this authority has not been terminated
or expired. Upon proof of these facts, the Board would be required
to issue interim authority of the applicant to engage in supplemental
air transportation to the same extent authorized in the applicant's
present certificate or authority until the Board disposes of its applica-
tions under section 401(d)(3) the new provision for supplemental
certificates effective upon enactment of this bill.
This section also contains a provision which would enable a carrier
who received interim operating authority under Public Law 86-661
to qualify automatically for the grandfather interim authority.
Section 8
This section would permit any supplemental carrier who previously
received a certificate or interim operating authority under Public Law
86-661, to continue its operations under existing authority for 30
days after enactment of the bill, and, if it has filed an application
under section 401 (d)(3) for a supplemental certificate within said 30
days, to continue to operate until the Board passes upon its request
for the interim authority provided for in section 7 of the bill.
This section also has a similar provision for those carriers who were
not certificated but were still authorized to conduct interstate air
transportation as a supplemental carrier pursuant to the Board's
original exemption order, and who (1) had an application pending
before the Board for a certificate on July 14, 1960, and (2) filed an
application for a certificate under section 401(d) (3) within 30 days
after enactment of the bill. This latter provision is designated to
continue the operations of only those supplemental carriers who
received authority under Order E-9744 whose applications for a cer-
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tificate in docket 5132 have not yet been finally disposed of by the
Board.
Section 8(a) also contains a provision which would cancel (a) the
certificate previously issued to the supplemental carriers by Order
E-13436 and Order E-14106, (b) any interim operating authority
issued under Public Law 86-601, and (e) the exemption authority
issued under Order E-0744 or prior orders. Such authorizations would
terminate on the date of an order of the Board granting or denying
grandfather rights?i.e., the interiin authority provided for in section
7. If the carrier did not file an application under section 401(d) (3)
within 30 days after enactment of the bill, such authorization would
terminate 30 days after enactment.
In addition, a provision is included to permit the continuation of
those supplemental carriers operating under Order E-9744 which are
operating solely by virtue of a judicial stay of a Board order revoking
their authority. Their operations would continue until the court
lifts such stay or until final disposition of judicial review, whichever
occurs first.
Section 8(b) would preserve the Board's power to institute enforce-
ment proceedings for violations which occurred before enactment of
the bill. it would also permit the Board to impose sanctions for past
violations, either upon the interim extensions of authority issued under
section 7 or upon new certificates issued pursuant to section 401(d) (3).
Section 8(c) would clear the Board's docket of applications filed in
docket 5132 by declaring that they shall be deemed to have been
finally disposed of upon the date of enactment of the bill.
BAC KGB OUND
The origin of the supplemental air carrier industry traces back to the
period shortly following the enactment of the Civil Aeronautics Act
of 1938. It was during this period that the Board issued an exemp-
tion order authorizing nonscheduled operations. Initially, and up
until the end of World War II, nonscheduled operations were generally
conducted with aircraft of smaller size than those utilized by the
certificated route carriers. Following the end of World War II surplus
transport-type aircraft became available and were acquired in signifi-
cant numbers by the nonscheduled operators. With larger aircraft
of increased capacity their cargo and passenger operations substan-
tially expanded. As a result, the Board, in 1947, revised its exemp-
tion regulations to require letters of registration as condition precedent
to operations and to distinguish between operators of transport-type
aircraft and operators of small aircraft, which were termed, respectively,
"large irregulars" and "small irregulars."
The large irregular carriers were precluded from operating "regularly
or with a reasonable degree of regularity." Under criteria and regula-
tions prescribed by the Board, the carriers could operate between 8
and 12 flights per month between the same 2 points. Charter,
individually ticketed, and wa,ybilled flights were all counted in deter-
mining whether operations between the same two points were exces-
sive. Operations were permitted in interstate, oversea, and foreign
air transportation for the carriage of property and in other than foreign
air transportation for the carriage of persons.
S. Rept. 688, 87-1--2
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10 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
Subsequent changes in the regulations proved inadequate to meet
the various problems confronting the Board in its effort to satisfactor-
ily determine the appropriate role of the nonscheduled carriers. As a
result, in 1951 the Board instituted the large irregular air carrier
investigation, docket 5132, to determine :
(1) Their role in the air transportation system and the extent of
the operations which should be permitted;
(2) The carriers which were to receive authority; and
(3) Whether the authorization should be by certificate or
exemption.
After protracted hearings, with some 30 applicants still to be heard,
the Board in 1954 determined it was necessary to expedite the proceed-
ing by first deciding the issue as to the role of the carriers and the scope
of their operations, leaving for future decision the remaining two
issues. As a result, on November 15, 1955, in Order E-9744, the
Board found that irregular carriers comprise a "separate class of
carriers" performing varied and flexible services, and being "un-
hampered and unrestricted by schedule and route requirement * * *
make themselves available to serve whenever and wherever the demand
exists." The Board further found that their operations would not
adversely affect the regular route carriers and that unlimited charter
authority should be granted, together with individually ticketed
authority not to exceed 10 flights per month in the same direction
between any two points. The 10-flight limitation was derived from
an average of the 8 to 12 flights permitted under the prior regulations.
Its purpose was to remove uncertainties as to the extent and scope of
operations permitted, with the resulting and obvious benefits to the
carriers and the Board in administration and enforcement.
The Board decided to grant new authority to all members of the
class on an interim exemption basis pending its final decision as to the
qualifications of individual carriers and as to whether the final author-
ization should be by certificate or exemption.
The order granting interim exemption authority was set aside by
the Court of Appeals for the District of Columbia Circuit on July 19,
1956, on the ground that the Board had not made sufficient subsidiary
finding to sustain the statutory finding required for exemption that
a requirement for certification would be an undue burden on the
carriers. A petition for writ of certiorari was denied by the Supreme
Court. On December 21, 1956, the court of appeals stayed the issuance
of its mandate until 60 days after the date of final Board decision in
docket 5132.
On January 28, 1959, in order E-14196 the Board granted temporary
certificates of public convenience and necessity for supplemental air
service to 23 carriers found by the Board fit to receive them. Sub-
sequently, on July 8, 1959, in Order E-14196, the Board issued two
additional certificates. These 25 certificates authorized the supple-
mental carriers to render unlimited planeload charter service and to
conduct, without specified terminal or intermediate points, individ-
ually ticketed flights not to exceed 10 between the same 2 points
during any month. Authority was limited to operations conducted
in interstate air transportation. Applications of five other carriers
remained to be decided pending further consideration of their
qualifications.
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11
The Board's decision was contested and the -U.S.. Court of Appeals
for the District of Columbia found, in United Air Lines et al. v. Civil
Aeronautics Board, that the order of January 28, 1959, was legally
deficient in three respects:
1. The certificates issued by the Board do not specify the
terminal and intermediate points between which air trans-
portation is authorized but grant a blanket authorization to
operate between any two points in the United States.
2. The certificates issued by the Board contain a limita-
tion of 10 flights per month in the same direction between
the same two points. In the opinion of the court, this limi-
tation was in violation of section 401(e) of the act which
provides:
"No term, condition, or limitation of a certificate shall
restrict the right of an air carrier to add to or change sched-
ules * * *"
3. In referring to the determination of fitness required by
section 401(d) of the act, the court pointed out?one judge
dissenting the Board gave the same nationwide cargo and
passenger authority to each of the applicants to which it
issued certificates. The court stated that in many instances
the prior operations of the individual applicants had been
small or specialized and that their financial resources were
inadequate for the newly authorized operations. It would
thus appear that the court's standard of fitness that each
carrier must establish would be greater than that found by
the Board to be necessary for supplemental service.
In view of the fact that it was the same court which, on July 19, 1956,
had invalidated the Board's efforts to authorize supplemental air
transportation by means of an exemption order, it became a serious
question whether supplemental carriers could operate under either
exemption or certificate of authority. Consequently, the Board, on
April 28, 1960, submitted to Congress proposed legislation (S. 1543
and H.R. 7593) to provide the authority which the court found the
Board lacked.
Your committee favorably reported S. 1543, with amendments, on
June 13, 1960. However, the House Interstate and Foreign Com-
merce Committee in its report (No. 1877) of June 15, 1960, stated
that it did not have sufficient time to adequately study the entire
question of supplemental air transportation, and recommended enact-
ment of temporary legislation to maintain the status quo for 1 year
since without immediate action by Congress, the supplemental carriers
might not be able to continue operating. Thereafter, Congress en-
acted Public Law 86-661, approved July 14, 1960, granting temporary
operating authority to the supplementals until March 14, 1962.
BASIC CONCEPTS
The Civil Aeronautics Board has always treated the supplemental
carriers as a class, each member of which was given substantially
identical authority?the right to provide charter service and to per-
form no more than 10 scheduled trips a month between any two
points. As a matter of fact, the type of operations conducted by
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12 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
these carriers has been almost as va?ied as the number of carriers.
Many have porformed charter operations for the _Alilifiiry Establish-
ment. Others have derived almost their tot ii revenue from civil
chaII er. A few have conducted h?iv balanced operat ions, deriving
substantial revenues from military chertcr, civil charter, and sched-
uled passenger service.
There is also great variation in the capability of these carriers, in
their financial resources zind in the number and types of aircraft which
they own and operate. Many have operated continuously and grown
steadily. Others have operated only sporadically or on a very limited
scale. To sonic extent, these variations reflect the differences in
interest, experience, and managerial skill of their owners.
The committee is aware that to some extent these carriers must be
treated as a class. All of them are certificated to provide transporta-
tion to supplement the existing air transportation system, which will
be based in the future as it has been in the past on scheduled route
carriers. Under the committee bill, many aspects of this class
characteristic are retained. None of these carriers will be eligible for
subsidy. None of them will be permitted to provide scheduled service
except subject to limitations of a type which could not be imposed by
the Board on scheduled route. carriers. All of them will probably
depend for a substantial part of their revenue on charter operations.
They have had and will continue to have problems and perform
services distinct from the scheduled route carriers.
However, the committee has carefully analyzed the reports of all of
these carriers to the Board over the past few years. It is impressed
by their variety and is convinced that they will achieve a permanent
and stable place in our air transportation system only when the Board
begins to issue individual certificates more specifically designed for
the individual carrier. It is only by this means that the Board call
insure that each piece which it fits into the mosaic of the supplemental
industry will properly contribute to the final total picture.
In deciding what authority should be given each carrier the Board
should certainly start with what the carrier wants to do; what its
experience has been; what its capability is in terms of financing,
personnel, and equipment. A supplemental industry constructed on
tins basis requires courage and imagination on the part of the carriers
in developing and proposing how they can best serve the public in-
terest. It requires on the part of the Board a sense of liberality and
experimentation and zi willingness to undertake a trial, even at the
cost of occasional error.
CHARTER SERVICE
Every witness who discussed the subject in the hearings on this
measure agreed that the basic role of the supplemental carriers is the
provision of chart er service. Even the spokesman for the Air Trans-
port Association, representing the scheduled route carriers, while
strongly opposing LlIV authority for the supplemental carriers to
perform scheduled service, supported the supplemental carriers being
given charter authority. The supplemental carriers themselves were
unanimous in their view that charter service represented both their
greatest potential contribution to air transportation and their great est
potential source of revenue. A substantial part of their revenues in
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13
the past have come either from civil charter or charter service per-
formed under contracts with the Military Establishment of the
United States.
The keystone of the committee bill is the concept that the authority
to provide charter service should be the basic ingredient of a certificate
as a supplemental air carrier. The committee has defined "supple-
mental air transportation" to mean
charter service and other air transportation rendered
pursuant to a certificate of public convenience and necessity
issued pursuant to section 401(d) (3) * * *.
The committee has also defined "charter service" as being "air trans-
portation" which under section 401 of the Federal Aviation Act no
air carrier can perform except pursuant to a certificate issued by the
Board.
Because the committee is convinced that individual certificates as a
supplemental air carrier must be tailored to the public need and to the
capability and interests of the particular carrier, the bill does not
require the Board to grant every supplemental carrier any particular
charter authority. The Board is specifically authorized to designate
the geographical area or areas within or between which charter service
may be rendered. The charter authority of one carrier may be quite
different from that provided to another, but charter authority re-
mains in the view of the committee the basic, if not absoluetly in-
dispensable, ingredient of the supplemental certificate. It is the
type of service which most clearly supplements the scheduled route
service provided by other carriers.
The committee is also strongly of the opinion that the Board's
practice of routinely permitting continual large-scale charter opera-
tions by exemption is not only unwise, but illegal, because not within
the "unusual circumstances" contemplated by section 416. The
committee hopes that hence forth charter service will be provided by
the certificated carriers authorized to provide it and not provided
under an exemption by anyone who professes a desire to do so.
A charter, by common law and general practice in the transportation
industry, means essentially the lease of the entire vehicle, in this case
the aircraft, for a period of time or for a particular trip. Because the
development of the charter market has been inhibited by artificial
restrictions which have been imposed by Board regulations on a legal
charter, particularly in inteniational air transportation, the committee
has incorporated the common law definition of charter in the statutory
definitions contained in the Federal Aviation Act. The bill thus pro-
vides that?
"charter service" means air transportation * * * where the
entire capacity of one or more aircraft has been engaged
* * on a time, mileage or trip basis * * *.
However, it is not the intention of the committee to permit indi-
vidually ticketed service to be offered to the general public under the
guise of charter. The proposed statutory definition, therefore, pro-
vides that charter shall not include such individually ticketed service
whether offered by an air carrier directly or by a travel agent.
This restriction is subject to one exception because there is one
circumstance in which a carrier or travel agent may offer the services
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to individual members of the public and still conform to the tradi-
tional concept of charter. This is in connection with an all-expense-
paid group tour. If a travel agent charters an aircraft for an all-
expense-paid tour and then offers to individual members of the public
the right to participate as a member of the group, this is a very dif-
ferent sort of service from individually ticketed transportation.
The proposed statutory definition incorporates this exception by
providing that charter shall not include transportation offered to
individual members of the general public "other than as a member of
a group on an all-expense-paid tour." The committee has received
representations that this exception is open to the abuse that it might
be used as a guise to offer individually ticketed service. However,
the Civil Aeronautics Board has ample authority, because of its power
to specify the terms, conditions, and limitations of the certificate
under section 401 and its gerpral power to make any necessary rules
or regulations to carry out the provisions of the act under section 204,
to prevent any violation of the clear intent of the statute. This the
Board can accomplish by specifying in its regulations the minimum
requirements which must be met before the service offered qualifies
under the statutory exception.
However, several members of your committee have expressed the
desire that the Board submit reports setting forth its experiences in
administering the provision pertaining to all-expense-paid tours.
Accordingly, your committee requests the Board to report annually
on this subject for the next 3 years, either in a separate report or in
its annual report to the Congress. If the Board's experience in ad-
ministering tins section should demonstrate that additional statutory
authority is necessary, your committee will expect the Board to
incorporate appropriate recommendations to that end in its report.
INDIVIDUALLY TICKETED SERVICE
A far more controversial aspect of the present authority of supple-
mental carriers is their right to sell individual tickets for scheduled
service subject to the limitation that not more than 10 trips per month
be performed between any two points. The scheduled route carriers
have expressed grave apprehension over this authority.
One of the principal reasons which the court assigned in its opinion
in United Airlines v. C.A.B. for invalidating the Board's action in
granting supplemental certificates was that they permitted operations
between points selected by the carrier and did not specify the terminal
points between which the carrier was authorized to engage in air
transportation as required by section 401(e) of the act. The limita-
tion on the number of trips, in lieu of specifying the terminal points,
was likewise held by the court to violate the provision of that sub-
section prohibiting the Board from placing a limitation in a certificate
restricting the right of an air carrier to add to or change schedules.
The bill originally submitted by the Board had as its primary purpose
amendment of the act to permit the Board to grant just this kind of a
certificate to supplemental air carriers, that is, authority to provide a
limited number of trips between any two points without specifying,
them.
The committee has determined that the act should not be amended
to permit the Board to issue a certificate authorizing scheduled service
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without specifying the terminals, although it has relieved the Board
of this necessity with reference to certificates authorizing charter
service. The committee recommends this position for two reasons.
First, the points between which there is a demonstrable need and a
ready market for supplemental air transportation are sufficiently
limited that it appears perfectly feasible for the Board to specify
these terminals in the certificate. Second, only by specifying where
such service will be provided and which supplemental carriers shall
furnish it can the Board insure that a largo number of carriers will not
elect to furnish service between the same points with possible serious
effect upon the scheduled route carriers certificated to render service
between such points.
The committee has provided the Board with authority to limit the
number of schedules or the type of equipment employed by a supple-
mental an carrier, adopting in tins regard the amendment offered by
Senator Morris Cotton. The proposed new paragraph 3 of subsection
401(d) is thus amended to provide that any supplemental certificate
which authorizes individually ticketed service shall contain such
limitations, including limitations as to the term of the certificate, as
the Board finds are required to insure that the service will not result
in significant diversion of traffic from any scheduled route carrier
certificated to serve between the same points. Section 401(e) is
amended to permit the Board to impose such terms and conditions in
a supplemental certificate as are required by the foregoing provision.
Both the Civil Aeronautics Board and the supplemental air carri(rs
made strong representations to the committee in the hearing that such
limited scheduled service to supplement that provided by the regular
carriers served a real public need, was essential to the continued sur-
vival of the supplemental industry, and had resulted in no demon-
strable injury to the scheduled carriers. It is the committees con-
sidered view that the Board should be empowered to provide this type
of operating authority and that the limitations contained in the com-
mittee amendment as described above insure that such operations
will in fact supplement and not undermine the scheduled air transpor-
tation system.
TEMPORARY REQUIREMENT FOR SITPPLEME NTAL SERVICE
The conimittee concluded as a result of its hearings that neither the
type of certificates heretofore issued to the supplemental carriers nor
the more specialized certificates contemplated under the committee
bill were well adapted to provide supplemental air transportation to
meet a temporary need for additional service, such as that which
frequently occurs between major traffic points during holiday seasons.
Neither were they well adapted to meet the need for temporary service
to points, such as resort areas, not regularly served by any air carrier
but which might require service for a brief period during a particular
season of the year.
Therefore, in section 5 of the bill the committee proposes the addi-
tion of a new section 417 of the Federal Aviation Act providin, for
"special operating authorizations" to meet these situations. That
section would provide that if the Board finds that the air transport
capacity being offered between particular points is or will be tempo-
rarily insufficient to meet the needs of the public or the postal service,
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10 I'llUVIDT, A l_LAb ur SUPPLEMENTAL AIR CARRIERS
or that there is a temporary requirement for air transportation between
two points one or both of which is not regularly served by any air
carrier, it may issue such special operating authorization to a supple-
mental air carrier to provide service between those points.
The new section would require that such an authorization contain
limitations as to the amount of service or the type of equipment used
to assure that it will eliminate the shortage without 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 like periods not more than twice.
It is the committee's intention that the Board should take steps to
keep itself informed as to the need for such temporary additional
service. The committee believes that it is practical for the Board to
maintain representatives at key traffic centers during some or all of
each year whose responsibility it would be to advise the Board of
any actual or anticipated shortage of capacity so that the Board could
immediately issue the necessary authorization to provide temporary
additional service.
The Board is directed to establish a procedure for expeditiously
handling these situations. It is required to give written notice to
the air carriers certificated to provide service between the points
involved and to provide an opportunity for such carrier to protest the
issuance of such operating authorization in writing. Whether the
carrier would be beard 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.
The committee believes that a conscientious effort to make maxi-
mum use of this section will provide the Board with greater flexibility
in meeting, seasonal traffic peaks than it has ever had heretofore, and
that it will also provide the supplemental air carriers with an effective
means of providing a needed public service to supplement the existing
air transportation system. Th.e committee 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.
THE ENFORCEMENT PROBLEM
One cause for apprehension as to the possible adverse impact on
the scheduled industry of the supplemental carriers, which was
reflected in the committee's hearings, was the difficulties which have
been encountered by the Board in effectively enforcing the limitations
on supplemental operations which it has imposed in past orders.
There have been rather notorious examples of supplemental carriers
entering into illegal combinations resulting in a de factor pooling of
their operating rights to provide scheduled service of far greater
frequency and regularity than had been authorized by the Board.
Efforts of the Board to end such practices by cease-and-desist orders
or revocations of authority have been frustrated by protracted appeals
to the court during which the Board's orders have been stayed. This
has permitted the con t inflation of palpably illegal but highly profitable
operations by carriers using every conceivable means to delay the
inevitable legal sanction.
Such operations have never been conducted by more than a handful
of supplemental carriers. The vast number of such carriers have prob-
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1-'11UVIDP, A CLAS U1 urPLEMENTAL AIR CARRIERS 17
ably suffered more from such activities than have the scheduled
carriers, for they have found it impossible to compete on a legal basis,
offering a severely limited number of trips, with carriers who have
illegally combined to provide daily scheduled service. Unfortunately,
they have probably suffered even more from the less tangible damage
done by such operations to the reputation of the supplemental indus-
try. It is implicit in the committee's action on this bill that it regards
the vast majority of supplemental air carriers as responsible, safe, and
useful operators who have made and will continue to make a major
contribution to the development of air transportation, and particularly
to national defense. The committee is determined that the supple-
mental industry, as well as the scheduled industry, be more effectively
protected from the depredations of illegal operators.
In recommending the means to accomplish this end the committee
has accepted the recommendations of the Civil Aeronautics Board,
made continually over several years, that the civil penalties now
provided in the Federal Aviation Act for violations of safety and other
provisions of the act be made applicable to violation of the economic
provisions under title IV and of certificates issued thereunder. Sec-
tion 901 of the act now provides a civil penalty not to exceed $1,000
for each violation and provides that in the case of a continuing viola-
tion each day shall constitute a separate offense subject to the $1,000
penalty. The committee bill would amend this section to make it
applicable to the provisions of title IV and certificates issued there-
under, and would thus provide the Board with the weapon it has
lacked--the ability to take the profit out of illegal operations per-
formed over a long period of time under a judicial stay.
THE GRANDFATHER PROVISIONS
The grandfather provisions as amended by the committee are
designed to permit the existing supplemental carriers to operate until
such time as the Board can issue new certificates conforming to the
principles heretofore discussed. The committee regrets that the
grandfather provisions cannot be more simply stated than they are in
sections 7 and S of the bill. Their complexity is the result of an
unbelievable hodge-podge of exemptions, orders, and stays which
have marked the Board's activity in co:mection with the supplemental
air carriers. The committee believes that the provisions of sections 7
and 8 will have the effect of clearing the accumulated debris without
injustice to the carriers that have been more its victims than its
beneficiaries.
Section 8 of the bill requires any carrier desiring to continue to
operate in the future as a supplemental air carrier to file a new appli-
cation under section 401(d) (3) seeking such certificate within 30 days
from the time of enactment of the bill. If no application for a new
certificate is filed within that period, the carrier's present authority
will terminate, whether derived from an exemption, a certificate, or
interim operating authority under Public Law 86-661. Any carrier
which files an application for a certificate within 30 days is permitted
to continue to operate under its present authority until the Board acts
under section 7 of the bill. When the Board acts under section 7, the
existing authority of a carrier will terminate, whether that authority
is derived from a certificate, an exemption, or interim operating
authority under Public Law 86-661.
S. Rept. 688,87-1 3
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.1.0 rito% ivy. A LA.dfib UT SUPPLEMENTAL AIR CARRIERS
If a carrier files a new application for a certificate as a supplemental
air carrier under section 401(d)(3) within 30 days after enactment of
this bill, the Board will next consider whether such carrier should be
issued new interim authority to engage in supplemental air transpor-
tation pending Board action on the certificate application. The
committee is aware that the issuance of new interim authority iden-
tical to that winch the carriers now hold, rather than an extension of
their present certificate or exemption, may appear to be an unneces-
sary 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 operations pending action on their certificate applica-
tions.
Tile Board is directed to issue new interim authority to four cate-
gories of carriers. The first category 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 months, the bill requires the
automatic issuance by the Board of new interim operating authority
without any further showing by the carrier.
The remaining three categories of carriers holding some form of
operating authority from the Board must satisfy certain specific
requirements before the Board is required to issue new interim operat-
ing authority to them. These requirements have been included in
section 7 by the committee to insure that the effect of the grandfather
provisions is to avoid hardship by permitting legally operating carriers
to continue to operate, and not to revive dormant carriers which have
not operated. A carrier which is not 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.
A carrier in one of these three categories must be able to show that
between January 1, 1960, and May 25, 1961 (the date of introduction
of the bill), it performed any portion of the service authorized by its
certificate or other operating authority or operations for the Military
Establishment; that such certificate or operating authority has not
been revoked or otherwise terminated by the Board; and that the
certificate or operating authority is held by the original grantee or
or has been transferred with the Board's approval. Special provision
is made for an application for transfer which may be pending 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 7. The categories are mutually exclusive. A
carrier is in one category, and one only, or in none.
The following carriers were authorized to furnish service between
places within the United States by a certificate issued by the Board
pursuant to order E-13436, of January 28, 1959. Special circum-
stances 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.
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PROVIDE A CLASS UY SU ePLEMENTAL AIR CARRIERS 19
CARRIERS
American Flyers Airline Corp.
Arctic-Pacific, Inc
Associated Air Transport, Inc.
Aviation Corp. of Seattle, d/b/a West-
air Transport
Blatz Airlines, Inc.
Capitol Airways, Inc.
Coastal Air Lines
(formerly Coastal Cargo Co., Inc.)
Conner Air Lines, Inc
General Airways, Inc
COMMENT
Certificate expired May 30, 1961; no
application for renewal was filed.
Authority terminated by Board
Order E-16734 of April 28, 1961.
Application for transfer and renewal of
certificate pending.
No transport operations performed in
supplemental air service during test
period.
Certificate sold by trustee in bank-
ruptcy but no application for transfer
to the purchaser has been filed.
Imperial Airlines, Inc.
(formerly Regina Cargo Airlines, Inc.)
Johnson Flying Services, Inc.
Paul Mantz Air Ser vices
Modern Air Transport, Inc.
Overseas National Airways
President Airlines, Inc.
(formerly California Eastern Aviation,
Inc.)
Saturn Airways, Inc.
(formerly All-American Airways, Inc.)
Sourdough Air Transport
Southern Air Transport, Inc.
Standard Airways, Inc.
Stewart Air Service
Transocean Air lines
United States Overseas Airlines, Inc.
World Airways, Inc.
The following carriers were authorized to furnish service between
places within the United States by a certificate issued by the Board
pursuant to order E-14196, of July 8, 1959. The committee is aware
of no circumstance which would prevent their receiving interim
operating authority.
Trans International Airlines, Inc.
(formerly Los Angeles Air Service, Inc.)
Quaker City Airways, Inc.
The following carriers were given interim authority to operate in
interstate air transportation as a supplemental air carrier under Board
Order E-9744, of November 15, 1955, and have pending before the
Board applications for a certificate as a supplemental air carrier which
was filed prior to July 14, 1960. Special circumstances relating to
such carriers are noted. In the absence of such notation, the com-
mittee is aware of no circumstance which would prevent their receiving
interim operating authority.
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rnuNiu.n A LAJAb Ut SUPPLEMENTAL AIR CARRIERS
CARRIERS
Air Cargo Express, Inc.'
Airline Transport Carriers, Inc., d/b/a
California Hawaiian Airlines.
Argonaut Airways Corp
Meteor Air Transport, Inc
Miami Airline, Inc
S.S.W., Inc
World Wide Airlines, Inc
The certificate application of Air C -o Eicore3s, Inc., was denied in Order E-13136, but the Board action
reversed and the applicatio a re.uande I f ni further procee Ii so by Ole Court of Ai peals for the District of
Coltunbia in the case of Creel Lak2s Airlines et at. V. CAB., decided Feb. 24, 1961.
COMMENT
No transport operations performed in
supplemental air service during test
period.
Operating authority terminated by
Order E-15183 of May 4, 1960.
Operating authority terminated by
Order E-15252 of May 20, 1960.
There remains one additional category of carriers for which the bill
makes special provision. Four carriers were given exemption author-
ity for supplemental air service by order E-9744, but have no appli-
cations for certificates pending before the Board because their oper-
ating authority under the exemption order was specifically terminated
by the Board in order E-13436. These carriers appealed the Board's
order denying a certificate and revoking their exemption authority
to the courts and are now operating under a judicial stay pending
review. Certiorari has been denied by the Supreme Court, but a
petition for reconsideration of this action is pending. Carriers in this
category are Central Air Transport, Inc., Curry Air Transport, Ltd.,
Great Lakes Airlines, Inc., and Trans-Alaskan Airlines. Section 8
provides that these carriers are authorized to continue to operate
subject tu all conditions contained in order E-9744 or imposed by the
court until the court shall lift its stay or until final disposition of the
judicial proceeding.
NEED FOR LECISL.A.TION
The Civil Aeronautics Board, after many years of deliberate con-
sideration determined that the public interest required the unique and
flexible services of supplemental air carriers (order E-9744, November
15, 1955) and that certain carriers found fit to perform these services
should be granted temporary certificates of public convenience and
necessity (order E-13436, January 28, 1959; E-14196, July 8, 1959).
Although the court found certain provisions of the statute prevented
the grant of the type of operating rights which the Board attempted to
give to these carriers, it did not question the Board's judgment in
determining the issue of public need for their services. The court, in
United Airlines v. Civil Aeronautics Board (278 F. 2d 446, Apr. 7, 1960)
observed:
If the requirements of section 401(e) interpose an insuperable
obstacle to the full development of supplemental air service,
which they may well do, the problem is for the Congress. The
Board should present it there.
The Board, quite properly, has done just as court suggested. In
testimony before your committee, both last year and this year the
Board has reaffirmed its confidence in the soundness of the 1955 deci-
sion, and has strongly urged enactment of legislation to provide for
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i'l-COVILh A u.Las oir urt'LEMENTAL AIR CARRIERS
21
the continued existence of the supplemental air carrier industry.
Your committee shares the Board's view as to this need.
The supplemental carriers constitute an important element in
national defense. During the Berlin airlift, while representing only
5 percent of the Nation's civilian air transport, these carriers moved
approximately 25 percent of the passengers and 57 percent of the cargo
carried by civilian aircraft supporting this strategic operation. They
contributed materially during the Korean war, and were the first to
airlift Hungarian refugees out of Vienna in 1956. They have supplied
a substantial part of the airlift needs of the Arctic DEW line, and stood
ready, after only a few hours of notice, with 38 four-engine aircraft to
assist the military in the Lebanon crisis.
These carriers have been instrumental in expanding the horizon of
air commerce. To a large extent they are responsible for the tremen-
dous expansion in the charter field which has taken place in the last
few years. They pioneered the military contract business and the
airfreight or all-cargo field. They were the first to develop aircoach
travel and as a result opened a vast new field of air transportation by
encouraging people to travel by air who had never done so previously.
Since its origin, the supplemental air carrier industry has existed in an
atmosphere of uncertainty from one month to the next as to whether
operating authority would continue. It has been an era of continued
court challenges, protracted, costly, and tedious Government delibera-
tions, anxiety and frustration. Your committee is unanimous in its
conviction that the supplemental air carriers have a vital role to play
in meeting the air transportation needs of this country. After con-
siderable study your committee prepared an amendment in the nature
of substitute to S. 1969, which it is convinced without exception,
meets every reasonable objection to the original bill. The bill, as
amended, will provide firm assurances as to operatinc, authority with
the resultant stability essential to the health of any industry, while at
the same time incorporating adequate safeguards to protect the
regularly certificated route carriers from unreasonable competition
and traffic diversion.
CHANGES IN EXISTING LAW
In compliance with subsection 4 of rule XXIX of the Standing
Rules of the Senate, changes in existing law made by the bill are
shown as follows (existing law proposed to be omitted is enclosed in
black brackets; new matter is printed in italic; and existing law in
which no change is proposed is shown in roman):
THE FEDERAL AVIATION ACT OF 1958
(72 Stat. 731)
TITLE I?GENERAL PROVISIONS
DEFINITIONS
SEC. 101. As used in this Act, unless the context otherwise re-
quires?
(1) "Administrator" means the Administrator of the Federal Avi-
ation Agency.
(2) "Aeronautics" means the science and art of flight.
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(3) "Air carrier" means any citizen of the United States who
undertakes, whether directly or indirectly or by a lease or any other
arrangement, to engage in air transportation: Provided, That the
Board may by order relieve air carriers who are not directly engaged
in the operation of aircraft in air transportation from the provisions
of this Act to the extent and for such periods as may be in the public
interest.
(4) "Air commerce" means interstate, overseas, or foreign air com-
merce or the transportation of mail by aircraft or any operation or
navigation or aircraft within the limits of any Federal airway or any
operation or navigation of aircraft which directly affects, or which
may endanger safety in, interstate, overseas, or foreign air commerce.
(5) "Aircraft" means any contrivance now known or hereafter
invented, used, or designed for navigation of or flight in the air.
(6) "Aircraft engine" means an engine used, or intended to be used,
for propulsion of aircraft and includes all parts, appurtenances, and
accessories thereof other than propellers.
(7) "Airman" means any individual who engages, as the person in
command or as pilot, mechanic, or member of the crew, in the navi-
gation of aircraft while under way; and (except to the extent the
Administrator may otherwise provide with respect to individuals
employed outside the United States) any individual who is directly
in charge of the inspection, maintenance, overhauling, or repair of
aircraft, aircraft engines, propellers, or appliances; and any individ-
ual who serves in the capacity of aircraft dispatcher or air-traffic
control-tower operator.
(8) "Air navigation facility" means any facility used in, available
for use in, or designed for use in, aid of air navigation, including
landing areas, lights, any apparatus or equipment for disseminating
weather information, for signaling, for radio-directional finding, or
for radio or other electrical communication, and any other structure
or mechanism having a similar purpose for guiding or controlling
flight in the air or the landing and take-off of aircraft.
(9) "Airport" means a landing area used regularly by aircraft for
receiving or discharging passengers or cargo.
(10) "Air transportation" means interstate, overseas, or foreign air
transportation or the transportation of mail by aircraft.
(11) "Appliances" means instruments, equipment, apparatus, parts,
appurtenances, or accessories, of whatever description, which are used,
or are capable of being or intended to be used, in the navigation, oper-
ation, or control of aircraft in flight (including parachutes and includ-
ing communication equipment and any other mechanism or mechan-
isms installed in or attached to aircraft during flight), and which are
not a part or parts of aircraft, aircraft engines, or propellers.
(12) "Board" means the Civil Aeronautics Board.
(13) "Charter service" means air transportation performed 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 move-
ment of persons and their baggage or for the movement of property on a
time, mileage, or trip basis, but shall not include transportation services
offered by an air carrier to individual members of the general public or
performed by an air carrier under an arrangement with any person who
provides or offers to provide transportation services to individual members
of the general public, other than as a member of a group on an all-expense-
paid tour.
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PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS 23
[(13)] (14) "Citizen of the United States" means (a) an indi-
vidual who is a citizen of the United States or of one of its possessions,
or (b) a partnership of which each member is such an individual, or
(c) a corporation or association created or organized under the laws of
the United States or of any State, Territory, or possession of the
United States, of which the president and two-thirds or more of the
board of directors and other managing officers thereof are such indi-
viduals and in which at least 75 per centum of the voting interest is
owned or controlled by persons who are citizens of the United States
or of one of its possessions.
[(14)] (15) "Civil aircraft" means any aircraft other a public air-
craft.
[(15)] (16) "Civil aircraft of the United States" means any aircraft
registered as provided in this Act.
[(16)] (17) "Conditional sale" means (a) any contract for the sale
of an aircraft, aircraft engine, propeller, appliance, or spare part under
which possession is delivered to the buyer and the property is to vest
in the buyer at a subsequent time, upon the payment of part or all of
the price, or upon the performance of any other condition or the hap-
pening of any contingency; or (b) any contract for the bailment or
leasing of an aircraft, aircraft engine, propeller, appliance, or spare
part, by which the bailee or lessee contracts to pay as compensation
a sum substantially equivalent to the value thereof, and by which it is
agreed that the bailee or lessee is bound to become, or has the option
of becoming, the owner thereof upon full compliance with the terms
of the contract. The buyer, bailee, or lessee shall be deemed to be the
person by whom any such contract is made or given.
[171 (18) "Conveyance" means a bill of sale, contract of conditional
sale, mortgage, assignment of mortgage, or other instrument affecting
title to, or interest in, property.
[(18)] (19) "Federal airway" means a portion of the navigable air-
space of the United States designated by the Administrator as a
Federal airway.
[(19)] (20) "Foreign air carrier" means any person, not a citizen of
the United States, who undertakes, whether directly or indirectly or
by lease or any other arrangement, to engage in foreign air transporta-
tion.
[(20)] (21) "Interstate air commerce", "overseas air commerce",
and "foreign air commerce", respectively, mean the carriage by air-
craft of persons or property for compensation or hire, or the carriage
of mail by aircraft, or the operation or navigation of aircraft in the
conduct or furtherance of a business or vocation, in commerce between,
respectively
(a) a place in any State of the United States, or the District of
Columbia, and a place in any other State of the United States, or
the District of Columbia; or between places in the same State of
the United States through the airspace over any place outside
thereof; or between places in the same Territory or possession of
the United States, or the District of Columbia;
(b) a place in any State of the United States, or the District
of Columbia, and any place in a Territory or possession of the
United States; or between a place in a Territory or possession of
the United States, and a place in any other Territory or posses-
sion of the United States; and
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AU 11/11J A 1,111 or SUPPLEMENTAL AIR CARRIERS
(c) a place in the United States and any place outside thereof;
whether such commerce moves wholly by aircraft or partly by
aircraft and partly by other forms of transportation.
[(21)] (22) "Interstate air transportation", "overseas air trans-
portation", and "foreign air transportation", respectively, mean the
carriage by aircraft of persons or property as a common carrier for
compensation or hire or the carriage of mad by aircraft, in commerce,
between, respectively--
(a) a place in any State of the United States, or the District of
Columbia, and a place in any other State of the United States, or
the District of Columbia; or between places in the same State of
the United States through the airspace over any place outside
thereof; or between places in the same Territory or possession of
the United States, or the District of Columbia;
(b) a place in any State of the United States, or the District of
Columbia, and any place in a Territory or possession of the
United States; or between a place in a Territory or possession of
the United States, and a place in any other Territory or posses-
sion of the United States; and
(c) a place in the United States and any place outside thereof;
whether such commerce moves wholly by aircraft or partly by
aircraft and partly by other forms of transportation.
[(22)] (23) "Landing area" means any locality, either of land or
water, including airports and intermediate landing fields, which is
used, or intended to be used, for the landing and take-off of aircraft,
whether or not facilities are provided for the shelter, servicing, or
repair of aircraft, or for receiving or discharging passengers or cargo.
[(23)] (24) "Mail" means United States mail and foreign-transit
[(24)] (25) "Navigable airspace" means airspace above the mini-
mum altitudes of flight prescribed by regulations issued under this
Act, and shall include airspace needed to insure safety in take-off and
landing of aircraft.
[(25)] (26) "Navigation of aircraft" or "navigate aircraft" includes
the piloting of aircraft.
[(N)] (27) "Operation of aircraft" or "operate aircraft" means
the use of aircraft, for the purpose of air navigation and includes the
navigation of aircraft. Any person who causes or authorizes the
operation of aircraft, whether with or without the right of legal con-
trol (in the capacity of owner, lessee, or otherwise) of the aircraft,
shall be deemed to be engaged in the operation of aircraft within the
meaning of this Act.
[(27)] (28) "Person" means any individual, firm, copartnership,
corporation, company, association, joint-stock association, or body
politic; and includes any trustee, receiver, assignee, or other similar
representative thereof.
[(28)] (29) "Propeller" includes all parts, appurtenances, and
accessories thereof.
[(29)] (30) "Possessions of the United States" means (a) the
Canal Zone, but nothing herein shall impair or affect the jurisdiction
which has heretofore been, or may hereafter be, granted to the Presi-
dent in respect of air navigation in the Canal Zone; and (b) all other
possessions of the United States. Where not otherwise distinctly
expressed or manifestly incompatible with the intent thereof, refer-
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....'LEMENTAL AIR CARRIERS 25
ences in this Act to possessions of the United States shall be treated
as also referring to the Commonwealth of Puerto Rico.
[(30)] (31) "Public aircraft" means an aircraft used exclusively
in the service of any government or of any political subdivision
thereof including the government of any State, Territory, or posses-
sion of the United States, or the District of Columbia, but not in-
cluding any g.;overnment- owned aircraft engaged in carrying persons
or property for commercial purposes.
((31)] (3fl "Spare parts" means parts, appurtenances, and ac-
cessories of aircraft (other than aircraft engines and propellers), of
aircraft engines (other than propellers), of propellers and of appli-
ances, maintained for installation or use in an aircraft, aircraft engine,
propeller, or appliance, but which at the time are not installed therein
or attached thereto.
(33) "Supplemental air carrier" means an air carrier holding a
certificate of public convenience and necessity authorizing 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 pursuant to section 401(d)(3) of this
Act to supplement the service authorized by certificates of public con-
venience and necessity issued pursuant to sections 401(d)(1) and (2) of
this Act.
[(32)] (35) "Ticket agent" means any person, not an air carrier or
a foreign air carrier and not a bona 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 solici-
tation, advertisement, or otherwise as one who sells, provides, fur-
nishes, contracts or arranges for, such transportation.
[(33)] (36) "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.
TITLE IV?AIR CARRIER ECONOMIC REGULATION
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
Certificate Required
SEC. 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
(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.
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Notice of Application
(c) Upon the filing of any such application, the Board shall give
due notice thereof to the public by posting a notice of such applica-
tion in the office of the secretary of the Board and to such other
persons as the Board may by regulation determine. Any interested
person may file with the Board a protest or memorandum of opposi-
tion to or in support of the issuance of a certificate. Such application
shall be set for a public hearing, and the Board shall dispose of such
application as speedily as possible.
Issuance 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 trans-
portation properly, and to conform to the provisions of this Act and
the rules, regulations, and requirements of the Board hereunder, and
that such transportation is required by the public convenience and
necessity; otherwise such application shall be denied.
(2) In the case of an application for a certificate to engage in
temporary air transportation, the Board may issue a certificate au-
thorizing 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
transportation and to conform to the provisions of this Act and the
rules, regulations, and requirements of the Board hereunder.
(3)(i) In the case of an application for a certificate to engage in air
transportation as a supplemental air carrier, the Board may issue a
certificate, to any applicant not holding a certificate under paragraphs (I)
or (2) of this subsection, authorizing the whole or any part of the trans-
portation covered by the application, and for such period, as may be
required by the public convenience and necessity, if it finds that the appli-
cant is fit, willing, and able properly to perform such transportation and
to conform to the provisions of this Act and the rules, regulations, and
requirements of the Board hereunder. In determining whether an appli-
cant 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 the type of supplemental air transportation for which authority is
sought, including the nature of the public need therefor and the extent to
which the applicant will be required to provide such air transportation.
(ii) 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 sign ificant diversion of traffic .from any air
carrier authorized to render service between the same points by a certificate
or certificates of public convenience and necessity issued pursuant to
paragraphs (I) and (2) of this subsection.
Terms and Conditions of Certificate
[(e) Each certificate issued under this section shall specify the
terminal points and intermediate points, if any, between winch 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
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27
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 engage in foreign
air transportation shall, insofar as the operation is to take place with-
out the 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
carrier holding a certificate for foreign air transportation shall be au-
thorized to handle and transport mail of countries 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, equip-
ment, accommodations, and facilities for performing the authorized
transportation and service as the development of the business and the
,demands of the public shall require. No air carrier shall be deemed
to have violated any term, condition, or limitation of its certificate
by landing 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. 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.]
(e)(1) Each cert?ficate issued under this section shall specify the termi-
nal 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 granted by the
certificate, or amendment thereto, such reasonable terms, conditions, and
limitations as the public interest may require.
(2) A certificate issued under this section to engage in foreign air
transportation shall, insofar as the operation is to take place without the
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 carrier holding a
certificate for _foreign air transportation shall be authorized to handle and
transport mail of countries other than the 1-; nited States.
(3) A certificate issued under this section to engage in supplemental
air transportation shall, with respect to charter service, designate the
terminal and intermediate points only insofar as the Board shall deem
practicable and may designate only the geographical area or areas within
or between which service may be rendered.
(4) No term, condition' or limitation of a certificate shall restrict the
right of an air carrier to add to or change schedules, equipment, accommo-
dations, and _facilities for performing the authorized transportation and
service as the development y the busyness and the demands of the public
shall require; except that the Board may impose such terms, conditions, or
limitations in a certificate for supplemental air transportation when
required by subsection (d)(3)(ii) of this section.
(5) No air carrier shall be deemed to have violated any term, condition,
or limitation of its certificate by landing 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 carrier, may perform
.charter service or any other special service, without regard to the points
named in its certificate, under regulations prescribed by the Board.
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o ray v ivi tk_a,a.a vr SUPPLEMENTAL AIR CARRIERS
Effective Date and Duration of Certificate
(f) Each certificate shall be effective from the date specified therein,
and shall continue in effect until suspended or revoked as hereinafter
provided, or until the Board shall certify that operation thereunder
has ceased, or, if issued for a limited period of time under subsection
(d)(2) of this section, shall continue in effect until the expiration
thereof, unless, prior to the date of expiration, such certificate shall
be suspended or revoked as provided herein, or the Board shall certify
that operations thereunder have ceased: Prorided, That if any service
authorized by a certificate is not inaugurated within such period,
not less than ninety days, after the date of the authorization as shall
be fixed by the Board, or if, for a period of ninety days or such other
period as may be designated by the Board any such service is not
operated, the Board may by order, entered after notice and hearing,
direct that such certificate shall thereupon cease to be effective to
the extent of such service.
Authority to Modify, Suspend, or Revoke
(g) The Board upon petition or complaint or upon its own initia-
tive, after notice and hearings, may alter, amend, modify, or suspend
any such certificate, in whole or in part, if the public convenience and
necessity so require, or may revoke any such certificate, in whole or in
part, for intentional failure to comply with any provision of this title
or any order, rule, or regulation issued .hereunder or any term, condi-
tion, or limitation of such certificate: Provided, That no such certifi-
cate shall be revoked unless the holder thereof fails to comply, within
a reasonable time to be fixed by the Board, wit It an order of the Board
commanding obedience to the provision, or to the order (other than an
order issued in accordance with this pro I. iso), rule, regulation, term,
condition, or limitation found by the Board to have been violated.
Any interested person may file with the Board a protest or memoran-
dum in support of or in opposition to the alteration, amendment,.
modification, suspension, or revocation of the certificate.
Transfer of Certificate
(h) No certificate may be transferred unless such transfer is ap?
proved by the Board as being consistent with the public interest.
CERTAIN RIGHTS Nor CONFERRED By CERTIFICATE
(i) No certificate shall confer any proprietary, property, or ex-
clusive right in the use of any airspace. Federal airway, landing area.
or air-navigation facility.
Application for Abandonment
(j) No air carrier shall abandon any route, or part thereof, for
which a certificate has been issued by the Board, unless, upon the
application of such air carrier, after notice and hearing, the Board
shall find such abandonment to be in the public interest. Any inter-
ested person May file with the Board a protest or memorandum of
opposition to or in support of any such abandonment. The Board
may, by regulations or otherwise, authorize such temporary- suspen-
simt of service as may be in the public interest.
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29
Compliance With Labor Legislation
(k)(1) Every air carrier shall maintain rates of compensation
maximum, hours, and other working conditions and relations of all of
its pilots and copilots who are engaged in interstate air transporta-
tion within the continental United States (not including Alaska) so
as to conform with decision numbered 83 made by the National Labor
Board on May 10, 1934, notwithstanding ay limitation therein as to
the period of its effectiveness.
(2) Every air carrier shall maintain rates of compensation for all
of its pilots and copilots who are engaged in overseas or foreign air
transportation or air transportation wholly within a Territory or
possession of the United States, the minimum of which shall be not
less, upon an annual basis, than the compensation required to be paid
under said decision 83 for comparable service to pilots and copilots
engaged in interstate air transportation within the continental United
States (not including Alaska).
(3) Nothing herein contained shall he construed as restricting the
right of any such pilots or copilots, or other employees, of any such
air carrier to obtain by collective bargaining higher rates of compen-
sation or more favorable working conditions or relations.
(4) It shall be a condition upon the holding of a certificate by any
air carrier that such carrier shall comply with title II of the Railway
Labor Act, as amended.
(5) The term "pilot" as used in this subsection shall mean an
employee who is responsible for the manipulation of or who manipu-
lates the flight controls of an aircraft while under way including take-
off and landing of such aircraft, and the term "copilot" as used in this
subsection shall mean an employee any part of whose duty is to assist
or relieve the pilot in such manipulation, and who is properly quali-
fied to serve as, and holds a currently effective airman certificate
authorizing him to serve as, such pilot or copilot.
Requirement as to Carriage of Mail
(1) Whenever so authorized by its certificate, any air carrier shall
provide necessary and adequate facilities and service for the trans-
portation of mail, and shall transport mail whenever required by the
Postmaster General. Such air carrier shall be entitled to receive rea-
sonable compensation therefor as hereinafter provided.
Application for New Mail Service
(m) Whenever, from time to time, the Postmaster General shall
find that the needs of the Postal Service require the transportation of
mail by aircraft between any points within the United States or
between the United States and foreign countries, in addition to the
transportation of mail authorized in certificates then currently effec-
tive, the Postmaster General shall certify such finding to the Board
and file therewith a statement showing such additional service and the
facilities necessary in connection therewith, and a copy of such certi-
fication and statement shall be posted for at least twenty days in the
office of the secretary of the Board. The Board shall, after notice and
hearing, and if found by it to be required by the public convenience
and necessity, make provision for such additional service, and the
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PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
facilities necessary in connection therewith, by issuing a new certifi-
cate or certificates or by amending an existing certificate or certifi-
cates in accordance with the provisions of this section.
SEC. 402. * * *
SEC. 403. * *
SEC. 404. * *
SEC. 405. * *
RATES FOR 'TRANSPORTATION OF MAIL
Authority to Fix Rates
SEC. 406. (a) The Board is empowered and directed, upon its own
initiative or upon petition of the Postmaster General or an air carrier,
(1) to fix and determine from time to time, after notice and hearing,
the fair and reasonable rates of compensation for the transportation
of mail by aircraft, the facilities used and useful therefor, and the
services connected therewith (including the transportation of mail by
an air carrier by other means than aircraft whenever such transporta-
tion is incidental to the transportation of mail by aircraft or is made
necessary by conditions of emergency arising from aircraft operation),
by each holder of a certificate authorizing time transportation of mail
by aircraft, and to make such rates effective from such date as it
shall determine to be proper; (2) to prescribe the method or methods,
by aircraft-mile, pound-mile, weight, space, or any combination
thereof, or otherwise, for ascertaining such rates of compensation for
each air carrier or class of air carriers; and (3) to publish the same.
Ratemaking Elements
(b) In fixing and determining fair and reasonable rates of com-
pensation under this section, the Board considering the conditions
peculiar to transportation by aircraft and to the particular air carrier
or class of air carriers, may fix different rates for different air car-
riers or classes of air carriers, and different classes of service. In
determining the rate in each case, the Board shall take into considera-
tion, among other factors, (1) the condition that such air carriers
may hold and operate under certificates authorizing the carriage of
mail only by providing necessary and adequate facilities and service
for the transportation of mail; (2) such standards respecting the
character and quality of service to be rendered by air carriers as may
be prescribed by or pursuant to law; and (3) the need of each such
air carrer other than a supplemental air carrier for compensation for
the transportation of mail sufficient to insure the performance of
such service, and, together with all other revenue of the air carrier,
to enable such air carrier under honest, economical, and efficient
management, to maintain and continue the development of air
transportation to the extent and of the character and quality required
for the commerce of the United States, the Postal Service, and the
national defense.
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PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS 31
SPECIAL OPERATING AUTHORIZATIONS
Authority of Board to issue
SEC. 417. (a) If the Board finds upon an investigation conducted on
its own initiative or upon request of an air carrier?
(1) that the capacity for air transportation being ofiered by the
holder of a certificate of public convenience and necessity between
particular points in the United States is, or will be, temporarily
insufficient to meet the requirements of the public or the postal service;
or
(2) that there is a temporary requirement for air transportation
between two points one or both of which is not regularly served by
any air carrier; and
(3) that any supplemental air carrier can provide the additional
service temporarily required in the public interest;
the Board may issue to such supplemental carrier a special operating'
authorization to engage in air transportation between such points.
Terms of Authorization
(b) A special operating authorization issued hereunder shall?
(1) contain such limitations or requirements as to frequency of
service, size or type of equipment, or otherwise, as will assure that
the service so authorized will alleviate the insufficiency which, would
otherwise exist, without significant diversion of traffic from the
holders of certificates for the route;
(2) be valid for not more than thirty (lays and extended not more
than twice; and
(3) not be deemed a F cense within the meaning of the Adminis?
tratire Procedure Act (5 U.S.C. 1001, et seq., as amended).
Procedure
(c) The Board shall by regulation establish, procedures for the ex-
peditious investigation and determination of requests for such special
operating authorizations. Such procedures shall include written notice
to air carriers certificated to provide service between the points involved,
and shall provide for such opportunity to protest the application in
writing, and at the Board's discretion to be heard orally in support of
such protest, as will not unduly delay issuance of such special operating
authorization, taking into account the degree of emergency. involved.
TITLE TX?PENALTIES
CIVIL PENALTIES
[Safety and Postai Offenses
[Six. 901. (a)(1) Any person who violates (A) any provision of
titles III, V, VI, VII, or XII of this Act, or any rule, regulation, or
order issued thereunder, or (B) any rule or regulation 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: Provided, That this,
subsection shall not apply to members of the Armed Forces of the
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32 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
rnited States, or those civilian employees of the Department of
Defense who are subject to 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 action with respect thereto and
tor making, to the Administrator or Board, as appropriate, a timely
report of any such a,tion taken.
[(2) Any such civil penalty may be compromised by the Admin-
istrator in the case of violations of titles III, V, VI, or XII, or any
rule, regulation, or order issued thereunder, and by the Board in the
case of violations of title VII, or any rule, regulation, or order issued
thereunder, or 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 person charged.]
Safety, Economic, and Postal Offenses
SEC. 901. (a)(1) Any person who violates (A) any provision 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 term, condition, or
limitation of any permit or certificate issued under title l V. or (B) any rule
or regulation 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,
regulation, or order issued thereunder, or under section 1002(i), or any
term, condition, or limitation of any permit or certificate 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 to the
provisions of the Uniform Code of Military Justice, while engaged in the
performance of their official duties; and the appropriate military author-
ities shall be responsible .for taking any necessary disciplinary action with
respect thereto and for making to the Administrator or Board, as appro-
priate, a timely report of any such action taken.
(2) Any such civil penalty may be compromised by the Administrator
in the case of violations of title III, TI, VI, or XII, or any rule, regulation,
or order issued thereunder, and by the Board in the case of violations of
titles IV and VII, or any rule, regulation, or order issued thereunder, or
under section 1002(i), or any term, condition, or limitation of any permit
or certificate issued under title IV, or 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 limited States to the person charged.
Liens
(b) In case an aircraft is involved in such violation and the viola-
tion is by the owner or person in command of the aircraft, such aircraft
shall be subject to lien for the penalty: Provided, That this subsection
shall not apply to a violation of a rule or regulation of the Postmaster
General.
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AGENCY COMMENTS
The following communications were received by Government agen-
cies and considered by the committee:
CIVIL AERONAUTICS BOARD,
Washington, D.C., June 5, 1961.
HOD. WARREN G. MAGNusoN,
Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: This is in reply to your letter of May 26,
1961, asking for a report on S. 1969, a bill to amend the Federal
Aviation Act of 1958, as amended, to provide for a class of supple-
mental air carriers, and for other purposes. S. 1969 was drafted by
the Board and introduced at its request as a part of the Board's
current legislative program.
The purpose and need for the legislation are set forth in the enclosed
statement which the Board prepared to accompany the draft legisla-
tion. The Board is prepared to appear and present testimony in
further justification for the enactment of the proposed legislation, and
urges that the bill be set down for hearing at an early date. The
Board wholeheartedly endorses S. 1969 and recommends its enact-
ment.
Sincerely yours,
ALAN S. BOYD, Chairman.
STATEMENT OF PURPOSE AND NEED FOR PROPOSED LEGISLATION
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
The Board, on January 28, 1959, in the Large Irregular Air Carrier
Investigation, docket 5132, issued temporary certificates of public
convenience and necessity for supplemental air service to a number of
air carriers found by the Board to be fit to receive them. Under these
certificates, supplemental air carriers were authorized to conduct
without reference to any specified 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, and to render unlimited
planeload charter services. This authorization was limited to inter-
state air transportation. It was the latest step in the development of
this industry which was originally known as large irregular air carriers.
A number of air carriers certificated to render route-type service
petitioned the U.S. Court of Appeals for the District of Columbia
Circuit for review of the Board's order and opinion of January 28,
1959. On April 7, 1960, the court rendered its decision in United Air
Lines et al. v. Civil Aeronautics Board (278 F. 2d 446), in which it
found that the Board's action in certificating supplemental air carrier
operations was legally deficient in three respects:
33
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134 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
1. The certificates issued by the Board do not specify the terminal
and intermediate points between which air transportation is authorized
but grant a blanket authorization to operate between any two points
in the United States.
2. The certificates issued by the Board contain a limitation of 10
flights per month in the same direction between the same two points.
In the opinion of the court, this limitation was in violation of section
401(e) of the act which provides: "No term, condition, or limitation
of a certificate shall restrict the right of an air carrier to add to or
.change schedules. * * *"
3. In referring to the determination of fitness required 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 certificates. The court
stated that in many instances the prior operations of the individual
applicants had been small or specialized and that their financial re-
sources were inadequate for the newly authorized operations. It
would thus appear that the court's standard of fitness that each
carrier must establish would be greater than that found by the Board
to be necessary for supplemental service.
As a stopgap measure to avoid immediate cessation of the supple-
mental air carrier industry, the Congress enacted Public Law 86-661,
approved July 14, 1960. Under tins legislation the Board is given
temporary authority to permit supplemental air carriers to conduct
operations for 20 months. However, legislation of a more permanent
nature is Deeded if there is to be any assurance that the supplemental
air carrier industry is to continue in existence.
The Board has found that the supplemental air carriers have per-
formed a useful public service and have a definite place and role in
meeting this Nation's air transportation needs. There can be no
doubt that the continued existence of the irregular air carrier fleet is
of real value in terms of national defense, and it is evident that the
future ability of the irregular air carriers to serve 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 in service for the military.
The Board recommends changes in the law as follows:
1. The law should be made clear that a carrier may request, and be
authorized to perform, limited services supplemental to those furnished
by the regular air carriers, and the Board should be expressly author-
ized to issue certificates of public convenience and necessity for supple-
mental service containing limitations on the type and extent of service
an thorized.
2. The Board should be authorized to grant a blanket authorization
without having to designate specific points.
3. The present stringent requirement of fitness should be reduced
so that only general findings of fitness need be made for supplemental
service.
4. Statutory operating rights should be granted to the existing
holders of supplemental air carrier certificates in the nature of a
"grandfather" provision, thus assuring the continuity of operations
presently being conducted by the supplemental air carriers.
The draft bill attached has been prepared to carry out these
recommendations.
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PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
35
THE SECRETARY OF COMMERCE,
Washington, D.C., June 29, 1961.
Hon. WARREN G. MAGNusoN,
Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.
DEAR Mn. CHAIRMAN: This is in response to your request of May
26, 1961, requesting the views of the Department on S. 1969, 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. S. 1969
would amend the Federal Aviation Act so as to provide: for certifi-
cation of a class of direct air carriers distinctive from the class of air
carriers historically certificated under sections 401(d) (1) and (2) of
the act, the new class to be known as "supplemental air carriers";
that such carriers may request, and be authorized to perform, limited
services supplemental to those furnished by the regular air carriers;
that the Civil Aeronautics Board be expressly authorized to issue
certificates of public convenience and necessity for supplemental serv-
ice containing limitations on the type and extent of service authorized;
that the Board be authorized to grant blanket authorizations without
having to designate specific points.
The act would also be amended to reduce the present standards of
fitness required for certification as au air carrier so that only general
findings of fitness need be made for supplemental service. S. 1969
would also provide for grant 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 Investiga-
tion, CAB docket 5132, the Board issued temporary certificates of
public convenience and necessity for supplemental air carrier opera-
tion in interstate air transportation. -Under these certificates,
supplemental air carriers were authorized to conduct without refer-
ence to any specified 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, and to render unlimited planeload
charter services.
The issuance of such certificates was challenged in the courts by
regularly authorized air carriers, i.e., air carriers certificated to render
route-type service. On April 7, 1960, the U.S. Court of Appeals for
the District of Columbia Circuit set aside the Board action of January
28, 1959, United Air Lines et al. v. Ciril Aeronautics Board (278 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 flights contrary to section 401(e) of the
act, and were not based on standards of fitness for applicants for
certificate required by section 401(d) of the act.
As a stopgap measure to avoid immediate cessation of 25 supple-
mental aircarrier authorizations, the Congress enacted Public Law
86-661, approved July 14, 1960. Such legislation was designed to
maintain the status quo of the supplemental air carriers for up to 20
months after enactment 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 carriers
involved.
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36 PROVIDE A CLASS OF SUPPLEMENTAL AIR CARRIERS
This Department is of the opinion that the continued existence of
the supplemental air carrier fleet is of real value in terms of national
defense. At the present time eight supplemental air carriers have
executed Civil Reserve Air Fleet (CRAF) standby contracts which
provide for the furnishing of air transportation on an international
scale to the Department of Defense in the event of war on national
emergency.
Of a total of 212 aircraft allocated by the Department's Defense Air
Transportation Administration to the basic CRAF program, 40 have
been allocated from supplemental air carrier inventories. In addition,
the aircraft remaining in such air carrier inventories after CRAF
requirements have been met (approximately 123 in number) are sub-
ject to DATA's allocation authority for purposes of DOD domestic
wartime requirements, such as the Navy's "quicktrans" and the Air
Force's "logair" operations, and for the needs of civil economy under
the War Air Service pattern program.
The Department also concludes that it would be unrealistic, as
well as inherently unsound, for the continued existence of the supple-
mental air carriers to be entirely dependent in peacetime upon military
business. Therefore, we agree that supplemental airlines should be
eligible to operate their planes in peacetime in commercial air services.
Accordingly, the Department supports the proposed legislation.
The Bureau of the Budget advises there is no objection to the sub-
mission of this report from the standpoint of the administration's
program.
Sincerely yours,
EDWARD GUDEMAN,
Under Secretary of Commerce..
DEPARTMENT OF THE AIR FORCE,
OFFICE OF TIIE SECRETARY,
Washington, July 29, 1961.
Hon. WARREN G. MAGNUSON,
Chairman, Committee on Commerce,
U.S. Senate.
DEAR MR. CHAIRMAN: Reference is made to your request to the
Secretary of Defense for the views of the Department of Defense with
respect to S. 1969, 87th Congress, 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. The Secretary of Defense has
delegated to the Department of the Air Force the responsibility for
expressing the views of the Department of Defense.
The purpose of the proposed legislation is to amend the Federal
Aviation Act of 1958 to provide for a class of supplemental air carriers,
and for other purposes.
This proposed legislation has been brought about by virtue of a
decision rendered by the U.S. Court of Appeals for the District of
Columbia Circuit in the ease of United Air tines, et al. v. Civil Aero-
nautics Board (278 F. 2d 446 (1960)). (See 364 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
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risu v Jur, A 1.,1111.0 0. yr u.1--x-LEMENTAL AIR CARRIERS 37
areas. The effect of the court's holding was that the Board did not
possess the legal power to grant certificates 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. As a stopgap
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 proposed 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 a useful public service
and that they have a definite place and role in meeting the Nation's air
transportation requirements. It, therefore, has proposed the subject
legislation designed to amend the Federal Aviation Act of 1958, in
various respects in order that it can legally award certificates for
supplemental air transportation to those carriers who would be eligible
for such authority under the proposed legislation.
The amendments proposed in S. 1969 to the Federal Aviation Act
of 1958 are all amendments of a technical nature designed to give the
Board appropriate legal authority to issue certificates to carriers for
supplemental air transportation. These proposed technical amend-
ments include a so-called grandfather provision which would authorize
the issuance of a certificate for supplemental air transportation to
those carriers who were previously authorized to engage in such
transportation. (See line 7 and following on p. 3 of S. 1969.)
The continued existence of the irregular air carrier fleet is of real
value in terms of national defense and it is evident that the future
ability of the irregular air carriers to service 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 in 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 program which POW includes 22 air carriers.
The Department of the Air Force, on behalf of the Department of
Defense, has no objection to the enactment of S. 1969, but defers to
the views of the Civil Aeronautics Board concerning the technical
details of the bill.
This report has been coordinated within the Department of Defense
in accordance with procedures prescribed by the Secretary of Defense.
The Bureau of the Budget advises that, from the standpoint of the
administration's program, there is no objection to the presentation of
this report for the consideration of the committee.
Sincerely,
JOSEPH S. IMIRIE,
4ssi4a7?t Secretary of the Air Force.
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e_) 1-1AV V 11/XJ L,L4t1.0,0 vr SUPPLEMENTAL AIR CARRIERS
COMPTROLLER GENERAL
OF THE UNITED STATES,
Washington, June 9, 1961.
Hon. WARREN G. 'MAGNUSON,
Chairman, Committee on Commerce,
U.S. Senate.
DEAR MR. CHAIRMAN: Further reference is made to your letter of
May 26, 1961, acknowledged on May 31, requesting the comments of
the General Accounting Office concerning S. 1969, 87th Congress, 1st
session, entitled "A bill to amend the Federal Aviation Act of 1958,
as amended, to provide for a class of supplemental air carriers, andifor
other purposes."
We have no special information or knowledge as to the need for or
desirability of the proposed legislation and, therefore, we make na
recommendation with respect to its enactment.
Sincerely yours,
JOSEPH CAMPBELL,
Comptroller General of the United States.
FEDERAL AVIATION AGENCY,
Washington, D.C., July 11, 1961.
Hon. WARREN G. MAGNusoN,
Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.
DEAR MR. CHAIRMAN: Tins is in reply to your request of May 26,
1961, for the views of this Agency with respect to S. 1969, 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.
This bill, introduced at the request of the Civil Aeronautics Board,
would provide permanent certification procedures for the supplemental
air carrier industry. Under existing law (Public Law 86-661) the
Civil Aeronautics Board has temporary authority, which will expire
ill March 1962, to permit supplemental air carriers to conduct opera-
tions. It is the view of the Civil Aeronautics Board that supple-
mental air carriers have performed a valuable service in meeting the
needs of the national defense and that their future ability to serve
the needs of the military depends upon their present and continued
ability to operate their aircraft ill commercial activities.
This measure is directed to operations within the particular province
of the Civil Aeronautics Board, and, accordingly, this Agency defers
to the views of the Civil Aeronautics Board on the subject proposal.
The Bureau of the Budget has advised that there is no objection
from the standpoint of the administration's program to the submission
of this report to your committee.
Sincerely,
N. E. HALABY, Administrator.
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87TH CONGRESS t HOUSE OF REPRESENTATIVES 5 REPORT
1st Session t No. 1177
SUPPLEMENTAL AIR CARRIERS
SEPTEMBER 13, 1961.?Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. HARRIS, from the Committee on Interstate and Foreign
Commerce, submitted the following
REPORT
[To accompany H.R. 7318]
The Committee on Interstate and Foreign Commerce, to whom was
referred the bill (H.R. 7318) 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 recommend that the bill as amended
do pass.
The amendment is as follows:
Strike out 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, and by
inserting immediately after paragraph (31) the following new paragraphs:
"(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 transporta-
tion, other than the transportation of mail by aircraft, rendered pursuant to a
certificate of public convenience and necessity issued pursuant to section 401(d) (3)
of this Act to suppleinent the scheduled service authorized by certificates of public
convenience and necessity issued pursuant to sections 401(d) (1) and (2) of this
Act."
SEC. 2. Subsection (d) of section 401 of the Federal Aviation Act of 1958 (49
U.S.C. 1371(d)) is amended by adding at the end thereof the following new
paragraph:
"(3) In the case of an application for a certificate to engage 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 convenI,nce
and necessity, if it finds that the applicant is fit, willing, and able properly to
perform the transportation covered by the application and to conform to the
provisions of this Act and the rules, regulations, and requirements of the Board
hereunder. Any certificate issued pursuant to this paragraph shall contain such
limitations as the Board shall find necessary to assure that the service rendered
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2 SUPPLEMENTAL AIR CARRIERS
pursuant thereto will be limited to supplemental air transportation as defined in
this Act."
SEC. 3. Subsection (e) of section 401 of the Federal Aviation Act of 1958 (49
F.S.C. 1371(c)) is amended to read as follows:
"TERMS AND CONDITIONS OF CERTIFICATE
"(e)(1) Each certificate issued tinder this section shall specify the terminal
points and intermediate points, if any, between which the air carrier is authorized
to engage in air transr ortation and the service to be rendered; and there shall
be attached to the exercise of the privileges granted by the certificate, or amend-
ment thereto, such reasonable terms, conditions, and limitations as the public
interest inay require.
"(2) A certificate issued under this section to engage in foreign air transporta-
tion shall, insofar as the operation is to take place without the -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 carrier holding a certificate for foreign air transportation
shall be authorized to handle and transport mail of countries other than the
-United States.
"(3) A certificate issued under this section to engage in supplemental air trans-
portation shall designate the terminal and intermediate points only insofar as
the Board shall deem practicable and otherwise shall designate only the geo-
graphical area or areas within or between which service may be rendered.
"(4) No term, condition, or limitation of a certificate shall restrict the right of
an air carrier to add to or change schedules, equipment, accommodations, and
facilities for performing the authorized transportation and service as the develop-
ment of the business and the demands of the public shall require; except that
the Board may impose such terms, conditions, or limitations in a certificate for
supplemental air transportation when required by subsection (d) (3) of this section.
"(5) No air carrier shall be deemed to have violated any term, condition, or
limitation of its certificate by landing or taking off during an emergency at a
point not named in its certificate or by operating in an emergency, under regu-
lations which may be prescribed by the Board, between terminal and intermediate
points ot her than those specified in its certificate.
"(a) Any air carrier, ot her than a suppleniental air carrier, may perform charter
trips or any other special service, without regard to the points named in its
certificitte, under regulat lofts prescribed by the Board."
Six. 4. 'Fit le IV of the Federal Aviai on Act of 1958 is amended by adding at
the end t hereof the following lieW section:
"SPECIAL OPERATING AUTHORIZATIONS
"AUTHORITY OF HOARD TO ISSUE
"Sac. 417. (a) If tie Board finds upon an investigation conducted on its own
initiative or upon request of an air carrier--
"(I) that the capacity for air transportation being offered by the holder
of a certificate of public convenience and necessity between particular points
in the United States is, or will be, temporarily insufficient to meet the require-
ments of the public or the postal service; or
"(2) that there is a temporary requirement for air transportation between
two points, one Or both of which is not regularly served by any air carrier;
and
"(3) that any supplemental air carrier can provide the additional service
temporarily required in the public interest;
the Board may issue to such supplemental air carrier a special operating author-
ization to engage in air transportation between such points.
"TERMS OF AUTHORIZATION
"(b) A special operating authorization issued under this section?
"(1) shall contain such limitations or requirements as to frequency of
service, size or type of equipment, or otherwise, as will assure that the strvice
so authorized will alleviate the insufficiency which otherwise would txist,
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 extended for
additional periods aggregating not more than sixty days; and
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SUPPLEMENTAL AIR CARRIERS 3
"(3) shall not be deemed a license within the meaning of section 9(b) of
the Administrative Procedure Act (5 U.S.C. 1008(b)).
"PROCED URE
"(c) The Board shall by regulation establish procedures for the expeditiouS
investigation and determination of requests for such special operating authoriza-
tions. Such procedures shall include written notice to air carriers certificated to
provide service between the points involved. and shall provide for such opportunity
to protest the application in writing, and at the Board's discretion to be heard
orally in support of such protest, as will not unduly delay issuance of such special
operating authorization, taking into account the degree of emergency involved."
SEC. 5. (a) If any applicant who makes application under section 401(d) (3) of
the Federal Aviation Act of 1958 for a certificate for supplemental air transpor-
tation within thirty days after the date of enactment of this Act shall show?
(1) that it, or its predecessor in interest, was an air carrier authorized to
furnish service between places within the United States under a certificate.
of public convenience and necessity issued by the Civil Aeronautics Board
pursuant to order E-13436, adopted January 28, 1959, or order E-14196,
adopted July 8, 1959, or that it was given interim authority to operate in
interstate air transportation as a supplemental air carrier under Board order
E-9744 of November 15, 1955, and has pending before the Board an appli-
cation for certification as a supplemental air carrier which was filed prior to
July 14, 1960;
(2) that, during the period beginning on the date such certificate was issued
or such interim operating authority was conferred by the Board and ending
en the date of enactment of this Act, such applicant or hi predecessor in
interest lawfully performed (A) a substantial portion of the transportation
authorized by such certificate or interim operating authority, (B) substantial
operations in overseas or foreign air transportation, as a supplemental or large
irregular air carrier, authorized by the Board, or (C) substantial operations
for the Military Establishment of the United States authorized by the Board;
(3) that such certificate or interim operating authority had not been re-
voked or otherwise terminated by the Board or had not otherwise expired
prior to Ow enactment of this Act: Provided, That for the purposes of this
section such certificate or operating authority shall be considered to low 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, notwithstanding a pending
judicial review of such order; and
(4) that such certificate or interim operating authority is held by the
ori.;,inal grantee or has been transferred 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 a person who on the
date of enactment of this Act had on file with the Board an application for
the approval of transfer to him of a certificate for supplemental air trans-
portation or interim operating authority, in which case the Board shall issue
to such person a new interim certificate or new interim operating authority
tinder this section if it approves the transfer pursuant to section 401(h) of
the Federal Aviation Act of 1958;
the Board, upon proof of such facts, shall issue a new interim 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 transporta-
tion covered by the application.
(b) If any applicant who makes application under section 401(d) (3) of the
Federal Aviation Act of 1958 for a certificate for supplemental air transportation
within thirty days after the date of enactment of this Act shall show that it or its
predecessor 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 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.
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4
SUPPLEMENTAL AIR CARRIERS
(c) A new interim certificate or new interim authority issued under this section
shall not be deemed a license within the meaning of section 9(b) of the Adminis-
trative Procedure Act (5 U.S.C. 1008(b)).
SEC. 6. (a) If any air carrier, or its predecessor in interest, was an air carrier
authorized to furnish service between places within the United States by a certifi-
cate of public convenience and necessity issued by the Civil Aeronautics Board
pursuant to order E-13436, adopted January 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
July 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 applica-
tion 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. 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 supple-
mental 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 transportation under its existing authority for thirty
days from the date of enactment of this Act, and it 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 certificate or new interim
authority under section 5 of this Act.
(b) The certificates of public convenience and necessity issued by the Board
pursuant to order E-13436 adopted January 28, 1959, and order E-14196, adopted
July 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 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 no application 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.
(c) Any air carrier 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 which otherwise would terminate such operating authority, is hereby
authorized to continue to operate, subject to the conditions and limitations con-
tained in order E-9744 or imposed by the court, until the court shall lift such stay
or until the final disposition of the judicial review proceeding of such Board
order, whichever shall first occur.
SEC. 7. The provisions of this Act shall in no way affect the authority of
the Board-
(1) to maintain any enforcement 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 enact-
ment of this Act; or
(2) to institute, on or after the date of enactment of this Act, any enforce-
ment or compliance proceeding or action against the holder of any certificate
or interim operating authority referred to in paragraphs (1) of this section
with respect to any violation of-
(A) the Federal Aviation Act of 1958,
(11) the provisions of such certificate,
(C) the terms of such operat ing authority, or
(D) the regulations of the Board,
without regard to when such violation occurred.
Any sanction which the Board 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 paragraph (2)
of this section, which violation occurred prior to the issuance to such holder of a
new interim certificate or new interim authority under section 5 of this Act or the
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5
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.
SEC. 8. Any application of an air carrier heretofore consolidated into the Board
proceeding known as the Large Irregular Air Carrier Investigation, Docket
Numbered 5132 and others, shall be deemed to have been finally disposed of upon
the date of enactment of this Act.
SEC. 9. Section 901(a) of the Federal Aviation Act of 1958 (49 U.S.C. 1471(a))
is amended to read as follows:
"SAFETY, ECONOMIC, AND POSTAL OFFENSES
"SEC. 901. (a) (1) Any person who violates (A) any provision 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 term, condition, or limitation of any permit or
certificate issued under title IV, or (B) any rule or regulation issued by the Post-
master 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, regulation, or order issued thereunder, or under section 1002(i)
or any term, condition, or limitation of any permit or certificate 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 to 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 nec-
essary disciplinary action with respect thereto and for making to the Adminis-
trator or Board, as appropriate, a timely report of any such action taken.
"(2) Any such civil penalty may be compromised by the Administrator in the
case of violations of titles III, V, VI, or XII, or any rule, regulation, or order
issued thereunder, 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, condition, or limitation 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
person charged."
SEC. 10. Section 902(a) of the Federal Aviation Act of 1958 (49 U.S.C. 1472(a))
is amended to read as follows:
"GENERAL
"SEc. 902. (a) Any person who knowingly and willfully violates any provision
of this Act (except titles III, V, VI, VII, and XII), or any order, rule, or regulation
issued under any such provision or any term, condition, or limitation of any certif-
icate 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 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 constitute a separate offense."
SEC. 11. (a) That portion of the table of contents contained in the first section
of the Federal Aviation Act of 1958 which appears under the heading "TITLE IV?
AIR CARRIER ECONOMIC REGULATION" is amended by adding at the end thereof
the following:
"Sec. 417. Special operating authorizations.
"(a) Authority of Board to issue.
"(b) Terms of authorization.
"(c) Procedure."
(b) That portion of such table of contents which appears under the heading
"Sec. 901. Civil penalties." is amended by striking out
"(a) Safety and postal offenses." and inserting in lieu thereof
"(a) Safety, economic, and postal offenses.".
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PURPOSE OF LEGISLATION
This legislation is needed to stabilize the supplemental air carrier
industry. The reported bill Would do this by giving the Civil Aero-
nautics Board authority to issue a new type of limited air carrier
charter certificate and to grant permits to carriers holding such certifi-
cates to conduct, 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 carriers can
make longer range plans and financial arrangements for future opera-
tions.
As a result of court decisions, the Civil Aeronautics Board now lacks
authority to license air carriers to conduct limited operations to
supplement the services provided by the scheduled rout e carriers.
The reported bill provides a means of accomplishing this without
undermining the financial stability of the scheduled route carriers, a
situation which could result in the curtailment of essential service or
calls for additional subsidy, or both.
SUMMARY OF REPORTED DILL
The reported bill would?
(1) Authorize the Board to issue certificates to supplemental
carriers to conduct charter operations;
(2) Provide a method whereby holders of supplemental certifi-
cates may furnish individually ticketed service on a temporary
basis under regulations of the Board;
(3) Permit the Board to expedite procedures in the issuance of
special operating permits authorizing such temporary service;
(4) Grant interim operating authority in the nature of grand-
father rights to permit operations until the Board can pass upon
applications for new certificates provided for by this legislation;
(5) Permit the Board to impose civil penalties for violations
of the economic provisions of existing law and regulations issued
thereunder, thus providing an effective method of deterring illegal
operations detrimental to the public interest, which have penalized
carriers operating in compliance with existing law. Penalties
would follow the pattern set in existing law to enforce safety
regulations.
COMMITTEE ACTION
The committee is reporting herewith 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 did not
possess and would have permitted the Board to authorize supplemental
operations to continue along the lines of present operations.
The committee substitute, drafted after careful consideration by the
full committee and the Subcommittee on Transportation and Aero-
nautics, would give the Board some, but not all, of the authority re-
quested by it. The committee substitute would establish guidelines
for the Board to follow in exercising its authority to certificate supple-
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mental carriers, especially, in the field of individually ticketed opera-
tions.
The subcommittee conducted hearings on June 20, 21, and 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. Testimony
was received from the following witnesses: Alfred F. Blatz, president,
Blatz Airlines, Inc.; Hon. Alan S. Boyd, Chairman, Civil Aeronautics
Board; Clayton L. Burwell, president, Independent Airlines Associa-
tion; Ralph Cox, Jr., president, United States Overseas Airlines, Inc.;
Robert E. Fraley, on behalf of Quaker City Airways, _Inc., and
Paul Mantz Air Services, Inc.; Ross I. Newman, Associate General
Counsel for Rules and Legislation, Civil Aeronautics Board; George
S. Patterson, general manager, President Airlines, Inc.; Reed Pigman,
Independent Airlines Association J. W. Rosenthal, Routes and
Agreements Division, Bureau of Economic Regulation, Civil Aero-
nautics Board; Jesse Stallings, Independent Airlines Association; Cliff
Stratton, Jr., Air Transport Association of America; Stuart G. Tipton,
president, Air Transport Association of America; John H. Wanner,
general counsel, Civil Aeronautics Board; and DeWitt T. Yates,
general counsel, Independent Airlines Association.
BACKGROUND INFORMATION
Origin of supplemental air carriers
The supplementals, also known as "non-skeds," did not make an
appreciable impact on air commerce until after World War II, although
such carriers had been in existence several years.
The Civil Aeronautics Act of 1938 stabilized the then existing route
structure by giving "grandfather" rights to the 16 major, or trunk-
lines, in existence at that time. Shortly after passage of this act, the
Civil Aeronautics Board issued an order under section 416(b)l exempt-
ing the little nonscheduled 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 aircraft smaller
than those used in regular scheduled service.
But after the war three new factors entered the picture. The mili-
tary had a surplus of used aircraft for sale at cut rates. Thousands
of trained and experienced pilots were discharged from the services.
The established airlines were hard pressed to meet the boom in de-
mands for air transportation following the war.
SEC. 416. (a) * ? *
EXEM PTIONS
(b)(1) The Board, from time to time and to the extent necessary, may (except as provided in paragraph
32) of this subsection) exempt from the requirements of this title or any provision thereof, or any rule, regu-
lation, term, condition, or limitation prescribed thereunder, any air carrier or class of air carriers, if it finds
that the enforcement of tins title or such provision, or such rule, regulation, term, condition, or limitation
is or would be an undue 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 not in the
public interest.
(2) The Board shall not exempt any air carrier from any provision of subsection (k) of section 401 of this
title, except that (A) any air carrier not engaged in scheduled air transportation, and ( II), to the extent that
the operations of such air carrier are conducted during daylight hours, any air carrier engaged in scheduled
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 carrier, the enforcement of such paragraphs is or would be such an
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 from such paragraphs would not adversely affect the
public interest: Provided, That nothing in this subsection shall be 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 maximum flying hours for pilots or co-
pilots. (Identical with sec. 410(b) of the Federal Aviation Act of 1958.)
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8 SUPPLEMENTAL AIR CARRIERS
The result was a substantial increase in passenger-carrying opera-
tions by the nonscheduled operators. In a short time there were
almost 150 of these operators in the field.
In an effort to provide more effective regulation of this transporta-
tion, the Board, in 1947, revised its exemption regulations to require
these operators to obtain letters of registration. 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, regu-
larly or with a reasonable degree of regularity. These revised regu-
lations established criteria under which the carriers could operate as
many as 8 to 12 flights per month carrying individually ticketed pas-
sengers between the same 2 points, depending on the spacing of flights
and "breaks" in service.
Large irregular air carrier investigation
When it became apparent that the revised procedure was inadequate
to cope with the regulatory problems encountered the Board in Sep-
tember 1951 instituted the large irregular air carrier investigation
(docket 5132). In that investigation, where 66 nonskeds sought
operating rights, the Board sought to determine?
(1) The future role of the large irregular carriers and the extent
of operations which would be permitted;
(2) The selection of carriers to receive operating authority; and
(3) Whether the authority should be by certificate or by
exemption.
After extended hearings, the Board in 1954, with some 30 applicants
remaining to be heard, decided to expedite the proceedings by splitting
it into two parts?
(1) The public interest issues (the role to be assigned the
irregular carriers and the scope of operations to be authorized);
and
(2) Consideration of individual qualifications.
Exemption authority for sup plementals
On November 15, 1955, the Board, with three members for and two
against, issued a decision (order E-9744) on the public interest aspects
of the case, finding that the irregulars comprise a "separate class of
carriers" performing varied and flexible services. The Board found
that the operations of these carriers would not adversely affect the
certificated route carriers. The Board determined that unlimited
charter authority should be granted, together with authority to
perform individually ticketed or waybilled service not to exceed 10
flights per month in each direction between any 2 points. The 10-
flight limitation was arrived at by averaging the 8 to 12 flights per-
mitted under prior regulations.
This new authorization was granted to all members of the class on
an interim exemption basis, pending the Board's final decision on the
qualifications of individual carriers and the question of whether the
final authority should be by certificate or by exemption.
The Board's decision of November 15, 1955, was challenged by the
certificated industry, and on July 19, 1956, the Court of Appeals for
the District of Columbia Circuit held the order invalid because 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 writ of certiorari.
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9
On December 21, 1956, the court of appeals stayed the issuance of
its mandate until 60 days after the date of the final Board decision
in the Large Irregular Carrier case, docket 5132.
Certification of supplementals
On January 28, 1959, with two members, the Board issued its deci-
sion in docket 5132 granting temporary certificates of public conveni-
ence and necessity for supplemental air service to 23 carriers found
by the Board to be fit to provide the service authorized (order
E-13436). On July 8, 1959, the Board issued 2 additional certificates
(order E-14196) for a total of 25 such certificates. Under these
certificates, supplemental air carriers were authorized to provide
unlimited planeload charter service, and to conduct, without reference
to any specific terminal or intermediate points, not more than 10
flights carrying individually ticketed passengers or individually way-
billed property in the same direction between any single pair of points
in any calendar month in interstate air transportation.
Court decision on certification of supple mentals
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
(United Air Lines et al. v. Civil Aeronautics Board) that the Board's
action was legally deficient in three respects:
1. The certificates issued by the Board did not specify the terminal
and intermediate points between which air transportation was author-
ized but granted a blanket authorization to operate between any two
points in the United States.
2. The court held that the 10-flights-a-month limitation was in
violation of section 401(e) of the act which provides: "No term,
condition, or limitation of a certificate shall restrict the right of an
air carrier to add to or change schedules * * *"
3. In referring to the determination of fitness required 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 certificates. The court
stated that in many instances the prior operations of the individual
applicants had been small or specialized and that their financial
resources were inadequate for the newly authorized operations.
Concerning what should be done about the matter, the court said:
If the requirements of section 401(e) interpose an insuper-
able obstacle to the full development of supplemental air
service, which they may well do, the problem is for the
Congress. The Board should present it there.
History of congressional action
The Board then submitted to Congress proposed legislation to give
the Board the authority which the court held it did not have and tins
was introduced M the 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 adjourn-
ment, and the committee recommended the enactment of temporary
legislation maintaining the status quo to permit further consideration
during the 87th Congress (H. Rept. 1877, 86th Cong., 2d sess.).
H. Rept. 1177, 87-1-2
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10 SUPPLEMENTAL AIR CARRIERS
Subsequently Public. Law 86-661 was enacted to permit continua-
tion of supplemental air operations until March 14, 1962.
Early in the present session, the Board again submitted a draft bill
to authorize the issuance of limited certificates for supplemental oper-
ations. This proposed legislation was introduced as II. R. 7318 and
S. 1969.
Board Member Gurney did not join in the recommendation. His
views are explained in a letter included hereafter in this report.
ROLE OF SUPPLEMENTALS
Need for charter service
Witnesses who testified in the hearings were in agreement that the
basic role of the supplementals in the air transportation picture is to
provide charter service.
Even the witness for the Air Transport Association, speaking for
the scheduled airlines, while strongly opposing the granting of au-
thority to the Board to issue certificates permitting individually
ticketed, route-type service, supported legislation to clarify 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 constituted 4.3 percent of the total revenue
passenger miles generated by the air carrier industry, including the
certificated route air carriers. In 1959 the supplemental carriers
obtained only 2.7 percent of the total revenue passenger miles.
The domestic traffic of the supplemental carriers increased from
312 million passenger miles in fiscal 1959 to 346 million in 1960. This
traffic was 40 percent civilian and 60 percent military. The inter-
national traffic of the supplementals increased from 696 million
passenger miles in 1959 to 1.4 billion in 1960, 18 percent 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 $51 million in 1959 to $59 million in 1960. Contract
and charter services, both military and civilian, accounted for $40
million in 1959 and $48 million in 1960. Revenue from individually
ticketed services, both passenger and freight, was $11 million in 1960,
the same as in 1959.
Thus, it is clear that charters are the principal source of revenue
for the supplementals.
The basic concept written into the substitute bill reported herewith
is that the supplementals essentially are charter operators. The
committee recognizes that under special circumstances and in tem-
porary situations, individually ticketed supplemental service fills a
definite need in our transportation system. The committee recognizes
also that individually ticketed supplemental service must necessarily
be subject to close scrutiny by the Civil Aeronautics Board to make
certain that such service is restricted to supplemental needs and does
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SUPPLEMENTAL AIR CARRIERS 11
not provide unfair or discriminatory competition to scheduled carriers,
whose routes and operating conditions are necessarily to a large 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 charter be
written into the bill and this was given consideration by your com-
mittee. The bill passed by the Senate has such a definition.
Your committee, however, after considering the problem, came 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 contained in the reported bill. This is a very
difficult subject and any effort to freeze a definition of charter service
into law could well lead to complications.
Individually ticketed operations
H.R. 7318, as introduced, would have authorized the Board to issue
certificates without specifying the terminal and intermediate points,
and with such limitations as to frequency of service, size or type of
equipment, or otherwise, to assure that the service so authorized re-
mained supplemental to the service of the certificated route carriers.
How much, if any, individually ticketed service supplementals
should be authorized to perform is a very difficult and controversial
question.
Supplementals now operating under Board authority are permitted
to sell individually ticketed service, but in rendering such service are
limited to not more than 10 trips per month between any two points.
The legislation proposed by the Board would have permitted the
issuance of certificates authorizing individually ticketed service "for
such periods as may be required for the public convenience and
necessity."
One of the principal reasons which the court assigned 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 specify
the terminal points between which the carrier was authorized to en-
gage in air transportation as required by section 401(e) of the act.
The limitation on the number of trips, in lieu of specifying the ter-
minal points, was likewise held by the court to violate the provisions
of that subsection prohibiting the Board from placing a limitation in a
certificate restricting the right of an air carrier to add to or change
schedules.
In the hearings, both the Civil Aeronautics Board and the supple-
mental air carriers testified that such limited individually ticketed
operations to supplement service by the scheduled carriers filled a real
public need, were essential to the continued survival of the supple-
menials, and resulted in no demonstrable injury to the scheduled
carriers.
The scheduled carriers opposed any authority for supplementals
to conduct individually ticketed operations as a serious threat to the
health and prosperity of the scheduled industry, citing the poor earn-
ings of the scheduled carriers for the past 5 years. A witness for the
industry testified that in 1960 the 12 domestic trunklines had a net
profit of $1,188,000 on gross operating revenues of almost $2 billion.
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12 SUPPLEMENTAL AIR CARRIERS
Regulatory concepts of existing law
The so-called certificates issued by the Civil Aeronautics Board to
the 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
regulatory philosophy 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 artificial 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
assigning each carrier an allowed number of flights.
The committee has carefully considered the testimony and all
available evidence and failed to find any sound reason why these
fundamental principles of the act should be changed. From the
standpoint of good public service, and from the standpoint of oppor-
tunity for each carrier to compete and develop its business, any air
carrier certificated to operate individually ticketed service 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 competition, the Board should not be
free to avoid the consequences of competition by limiting the volume
of service to be provided by one, some, or all of the carriers in the
market. Moreover, the committee does not consider it either feasible
or desirable to authorize an air transport system in which the amount
of service is half regulated and half unregulated.
The committee recognizes, however, that there may be exceptional
circumstances in which, for a limited period of time, it may be desir-
able for a carrier not regularly certificated for a route to be authorized
to conduct ticketed operations over the route. Thus, during the
Christmas holidays and other periods of peak or unusual traffic de-
mand, where the capacity of the carrier or carriers serving the route
may be insufficient to meet the demand, it may be desirable and
economically sound for the Board to permit another carrier to provide
supplemental service for a temporary period. The special operating
authorization under the new section 417 is designed to meet this
situation. In the 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 chronic problem over
the particular route, and can be solved only by an additional carrier,
the solution 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 cont am n limitations as to the amount of service or the type of
equipment used to assure that it will meet the requirements for addi-
tional transportation without 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.
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SUPPLEMENTAL AIR CARRIERS
13
The Board is directed to establish a procedure for expeditiously
handling these situations. It is required to give written notice to the
air carriers certificated to provide service between the points involved
and to provide an opportunity for such carrier to protest the issuance
of such operating authorization in writing. Whether 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 in-
volved in meeting the shortage.
A conscientious effort to make maximum use of this section will
provide the Board with greater flexibility in meeting 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 service to supplement the existing air transportation system.
The committee 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 in the past led to a
multitude of enforcement problems and evasions, which the Board
has been unable to cope with under existing law.
Supplemental carriers on occasion have entered into illegal pooling
arrangements to provide what amounts to scheduled service contrary
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, although
palpably illegal, operations by sonic 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 legally has been substantial, to the
detriment not only of scheduled carriers but of those supplementals
operating legally.
In an effort to protect both the supplementals and the scheduled
industry by making such illegal operations unprofitable, the com-
mittee has accepted the recommendations of the Civil. Aeronautics
Board by extending the civil penalty provisions of the Federal Avia-
tion Act of 1958 to cover violations of the economic provisions of title
IV and of certificates issued thereunder. This has been accomplished
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 penalties in certain cases, to permit a civil penalty
of not to exceed $1,000 for each violation.
INTERIM OPERATING AUTHORITY
The interim operating authority in the nature of "grandfather"
provisions in sections 5 and 6 of the reported bill are designed to per-
mit the existing supplemental carriers to operate until such time as
the Board can pass upon 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 carriers involved.
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14 SUPPLEMENTAL AIR CARRIERS
Section 6 of the bill requires any carrier desiring to continue to
operate in the future as a supplemental air Carrier to file a new appli-
cation under section 401(d) (3) seeking such certificate within 30 daYs
from .the tune of enactment of the bill. If no application for a new
certificate is filed within that period, the carrier's present authority
will terminate,. whether derived from an exemption, a certificate, or
interim operating authority under Public Law 86-661. Any carrier
which files an application for a certificate 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 carrier will terminate, whether that authority
IS derived from a certificate, an exemption, or interim operating:
authority under Public Law 86-661.
If a carrier files a new application for a certificate as a supplemental
air carrier under section 401(d)(3) within 30 days after enactment of
this bill, the Board will next consider whether such carrier should be
issued new interim authority to engage in supplemental air transpor-
tation pending Board action on the certificate application. The com-
mittee is aware that the issuance of new interim authority identical
to that which the carriers now hold, rather than an extension of their
present certificate 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 specifiying what carriers are permitted to conduct what
operations pending action on their certificate applications.
The Board is directed to issue new interim authority to four cate-
gories of carriers. As of this time the first category 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
months, the bill requires the automatic issuance by the Board of new
interim operating authority without any further showing by the carrier.
The remaining three categories of carriers holding some form of
operating authority from the Board must satisfy certain specific
requirements before the Board is required to issue new iiiterim operat-
ing authority to them. These requirements have been included in
section 5 by the committee to insure that the effect of the grandfather
provisions is to avoid hardship by permitting legally operating carriers
to continue to operate, and not to revive dormant carriers which have
not operated. A carrier which is not 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.
A carrier in one of these three categories must be able to show that
between the dates of issuance of its operating authority and of the
enactment of tins bill, it performed a substantial portion of the service
authorized by its certificate or other operating authority or substantial
.operations in oversea or foreign air transportation authorized by the
Board or substantial operations for the Military Establishment as
authorized by the Board; that such certificate or operating authority
Las not been revoked or otherwise terminated by the Board; and that
the certificate or operating authority is held by the original grantee
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or has been transferred with the Board's approval. Special provision
is made for an application for transfer winch may be pending 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 5. The categories are mutually exclusive.
A carrier is in one category, and one only, or in none.
The following carriers were authorized to furnish service between
places within the United States by a certificate issued by the Board
pursuant to order E-13436, of January 28, 1959. Special circum-
stances 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 COMMENT
American Flyers Airline Corp.
Arctic-Pacific, inc Certificate expired May 30, 1961; no
application for renewal was filed.
Authority erminated by Poard
Order E-16734 of April 28, 1961.
Associated Air Transport, Inc.
Aviation Corp. of Seattle, d/b/a West-
air Transport
Blatz Airlines, Inc.
Capitol Airways, Inc.
Coastal Air Eines (formerly Coastal
Cargo Co., Inc.)
Conner Air Lines, Inc
General Airways, Inc
Imperial Airlines, Inc. (formerly Regina
Cargo Airlines, Inc.)
Johnson Flying Services, Inc.
Paul Mantz Air Services
Modern Air Transport, Inc.
Overseas National Airways
President Airlines, Inc. (formerly Cali-
fornia Eastern Aviation, Inc.)
Saturn Airways, Inc. (formerly All-
American Airways, Inc.)
Sourdough Air Transport
Southern Air Transport, Inc.
Standard Airways, Inc.
Stewart Air Service
Transocean Airlines
United States Overseas Airlines, Inc.
World Airways, Inc.
Application for transfer and renewal of
certificate pending.
No transport operations performed in
supplemental air service during test
period.
Certificate sold by trustee in bank-
ruptcy but no application for transfer
to the purchaser has been filed.
The following carriers were authorized to furnish service between
places within the United States by a certificate issued by the Board
pursuant to order E--14196, of July 8, 1959. The committee is aware
of no circumstance which would prevent their receiving interim
operating authority.
Trans International Airlines, Inc. (for-
merly Los Angeles Air Service, Inc.)
Quaker City Airways, Inc.
The following carriers were given interim authority to operate in
interstate air transportation as a supplemental air carrier under Board
Order E-9744, of November 15, 1955, and have pending before the
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16 SUPPLEMENTAL AIR CARRIERS
Board applications for a certificate as a supplemental air carrier which
were filed prior to July 14, 1960. Special circumstances relating to
such carriers are noted. In the absence of such notation, the com-
mittee is aware of no circumstance which would prevent their receiving
interim operating authority.
CARRIERS COMMENT
Air Cargo Express, Inc.'
Airline Transport Carriers, Inc., d/b/a
California Hawaiian Airlines.
Argonaut Airways Corp
Meteor Air Transport, Inc
Miami Airline, Inc
S.S.W., Inc
World Wide Airlines, Inc
No transport operations performed in
supplemental air service during test
period.
Operating authority terminated by
Order E-15183 of May 4, 1960.
Operating authority terminated by
Order E-15252 of May 20, 1960.
1 The certificate applic ition of Air C Irg9 Evpress, Inc.. wts dmiel in Order E-43136, but the Board action
reversed and the annlic It i I ,nm ride I 'n, fmthnr ornneeting by the Cowl of Anpeals for the District of
Columbia in the case of Great Lakes Airlines et al. v. CAB., decided Feb. 24, 1961.
There remains one additional category of carriers for which the bill
makes special provision. Four carriers were given exemption author-
ity for supplemental air service by order E-9744, but have no appli-
cations for certificates pending before the Board because their oper-
ating authority under the exemption order was specifically terminated
by the Board in order K-13416. These carriers appealed the Board's
order denying a certificate and royoking their .exemption authority
to the courts and .are now operal nig under a judicial stay pending
review. Certiorari has been denied by the Supreme Court, but a
petition for reconsiderat ion of this action is pending. Carriers in this
category are Central Air Transport, inc., Curry Air Transport, Ltd.,
Great Lakes Airlines, Inc., and Trans-Alaskan Airlines. Section 6
provides that these carriers are authorized to continue to operate
subject to all conditions contained in order E-9744 or imposed by the
court until the court shall lift its stay or until final disposition of the
judicial proceeding.
NEED FOR LEGISLATION
The supplemental carriers constitute an important element in
national defense. During the Berlin airlift, with only 5 percent of
the Nation's civil air transport capacity, these carriers moved approxi-
mately 25 percent of the passengers and 57 percent of the cargo carried
by civilian aircraft. In 1950, the supplementals supported the Korean
airlift by supplying over half the commercial capability requested by
the military. The supplementals flew the first planes to Vienna in
1956 to provide airlift for Hungarian refugees. In the Lebanon crisis,
the supplementals offered the military 38 four-engine aircraft within
4 hours.
The Department of the Air Force, in a letter included hereafter in
this report, stated that continued existence of the supplementals is a
real value in terms of national defense.
The Civil Aeronautics Board in December 1955 characterized the
supplementals as: "A reserve air fleet, capable of being called into
action to meet emergency transportation needs with a minimum
amount of notice."
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17
The legislation reported herewith is needed to stabilize the supple-
mental industry, which has existed in an atmosphere of uncertainty
for many years.
Enactment of this legislation will give the supplemental industry a
more permanent role in air transportation. 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 economic
outlook for the industry which, a witness testified in the hearings, has
shown losses from 1957 to date, after making a profit in 5 of the 7
years between 1950 and 1957.
SECTION?BY?SECTION EXPLANATION OF THE COMMITTEE AMENDMENT
The following is a section-by-section explanation of the substitute
amendment reported by the committee. Unless otherwise indicated,
existing law referred to is the Federal Aviation Act of 1958.
Section 1
This section would amend section 101 of existing law by adding a
new paragraph (32) defining the term "supplemental air carrier" and
a new paragraph (33) defining the term "supplemental air trans-
portation".
"Supplemental air carrier" would be defined as an air carrier hold-
ing a certificate of public co-nveni..qice and necessity authorizing such
air carrier to engage in supplemental air transportation.
"Supplemental air transportation" would be defined as charter trips
in air transportation rendered pursuant to a certificate issued by the
Civil Aeronautics Board to supplement the scheduled service author-
ized to be performed by the certificated route air carriers, but would
not include the transportation of mail by aircraft.
Section 2
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
application. 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 determina-
tion that the applicant is fit, willing, and able to perform the trans-
portation authorized by the certificate and to conform to the provi-
sions of existing law and the regulations of the Board issued there-
under. Under the amendment to existing law made by section 3 of
the committee substitute, each supplemental certificate would desig-
nate the terminal and intermediate points between which the air
carrier concerned could operate, or, if the Board determines that such
designation is not practicable, the certificate would designate the
geographical area or areas within or between which such air carrier
could operate. The standard of fitness to be applied by the Board
to an applicant for a supplemental certificate could vary according
to the scope of the transportation authority granted by the certifi-
cate. It is obvious, for example, that the fitness requirements of the
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18 SUPPLEMENTAL AIR CARRIERS
Board with respect to the financial resources of an applicant could
vary considerably as between an applicant seeking unlimited authority
to engage in supplemental air transportation within a large geo-
graphical area and an applicant seeking limited authority to engage
in such transportation between two specific points. The Board also
would 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
to be performed by certificated route air carriers.
Section 3
This section would amend section 401(e) of existing law by dividing
it into six numbered paragraphs as follows:
1. Paragraphs (1) and (2) would repeat provisions presently con-
tained in section 401(e) of existing law (relating to terms of certificates
held by air carriers) without substantive change.
2. Paragraph (3) would be added to such section 401(e) of existing
law so as to require that each supplemental certificate issued by the
Civil Aeronautics Board designate the terminal and intermediate
points between which the air carrier is authorized to operate, unless
the Board determines that such designation of points is not practicable.
If the Board determines that such designation of points is not practi-
cable, it would be required to designate the geographical area or
areas within or between which the air carrier is authorized to operate.
3. Paragraph (4) would repeat the provision of such section 401(e) of
existing law which prohibits the imposition of limitations on a certifi-
cate of public convenience and necessity restricting the right of an
air carrier to change schedules, equipment, accommodations, and
facilities 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 supplemental certificate whenever the Board
deems it necessary in order to insure that the service rendered 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 carriers.
4. Paragraph (5) would repeat the provisions of section 401(e) of
existing law (relating to operations of air carriers during an emergency)
without substantive change.
5. Paragraph (6) repeats the provision of section 401(e) of existing
law authorizing any air carrier to perform charter trips or any other
special service, under Board regulation, without regard to points
specified in its certificate. This provision would be amended so as
to exclude from tins authorization any air carrier holding 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 Civil Aeronautics Board to issue to a supplemental air carrier a
special operating authorization under which such air carrier would
have limited authority to engage in air transportation, temporarily,
between specified points. It would be under this provision of the
Committee substitute that supplemental air carriers could bo author-
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19
ized to engage in individually ticketed and individually waybilled
operations.
Subsection (a) of the proposed new section 417 would grant the
Board authority to issue a special operating authorization to a sup-
plemental air carrier (but not to a certificated route air carrier) to
engage in air transportation temporarily between specified points.
Such authorization could be issued only if the Board finds, after an
investigation, that the capacity for air transportation between
particular points in the United States is, or will be, temporarily
insufficient to meet the requirements of the public or the postal
service, or, that there is a temporary requirement for air transporta-
tion 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
required in the public interest.
Subsection (b) of the proposed new section 417 would require, in
effect, that each special operating authorization contain such limita-
tions as the Board determines to be necessary to insure that the air
transportation authorized thereunder will alleviate the temporary
insufficiency in air transportation found to exist, without a significant
diversion of traffic from certificated route air carriers holding certifi-
cates authorizing them to engage in air transportation between the
points involved. No such special operating authorization could be
issued for more than 30 days. However, the Board could extend a
special operating authorization 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 operating author-
ization 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 application 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 prevent the holder of a special operating authorization
from applying for a renewal thereof, subject to the limitations con-
tained in the proposed new section 417, but it would prevent such
holder from continuing to operate after the expiration of such author-
ization unless the Board had affirmatively renewed it.
Subsection (c) of the proposed new section 417 would require the
Board to prescribe regulations establishing procedures for the expedi-
tious handling of requests for special operating authorizations. The
Board would be required to include in such procedures written notice
to certificated route air carriers authorized to engage in air trans-
portation between the points involved so as to give such air carriers
an opportunity to protest the issuance of a special operating authori-
zation affecting such points. Since the issuance of a special operating
authorization would depend upon the fact that air transportation
being offered between particular points had been found to be terni?-
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
in order to alleviate such temporary insufficiency of air transporta-
tion. Therefore, there is no specific requirement that the Board con-
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20 SUPPLEMENTAL AIR CARRIERS
duct a hearing 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 circumstances of the case would permit such pro-
cedures without causing undue delay in the issuance of the spcial
operating authorization involved. The discretion 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, taking into account the degree of emer-
gency 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 grandfather rights)to any applicant who,
within 30 days after the enactment of tins legislation, applies to the
Board for a certificate to engage in supplemental air transportation
and can show the Board
(1) that it holds authority previously granted by the Board
to engage in interstate air transportation as a supplemental air
carrier and has an application . pending before the Board for
certification as a supplemental air carrier which was filed before
July 14, 1960 (the date of enactment of Public Law 86-661,
enabling the Board to authorize supplemental air transportation
on a temporary basis);
(2) that it has conducted substantial operations under such
authority, or substantial operations (authorized by the Board)
in oversea or foreign air transportation as a supplemental or large
irregular air carrier, or substantial operations (authorized by the
Board) for the lilitary Establishment of the United States;
(3) that the operating authority held by the applicant 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 terminated if the Board had issued a final order
to that effect on or before the date of enactment of this legislation,
notwithstanding a pending judicial review of such Board order);
and
(4) that such operating authority is held by the original
grantee or has been transferred to the applicant with Board
approval. (Provision is also made for the extension of grand-
father rights under this section to a person who has an application
pending before tile Board for approval of a transfer to him of
operating authority referred to in this section, but the Board
could not extend grandfather rights to such person unless it
approves such transfer.)
The new interim certificate or new interim authority issued by the
Board under tins section would replace the certificate or interim
operating authority held by the applicant at, the time of the enactment
of tins legislation and would be valid until the Board grants or denies
the applicant's request for the supplemental certificate authorized to
be issued by the Board under the proposed new section 401 (d)(3).
Subsection (b) of this section would enable an air carrier which
holds interim operating authority to engage in supplemental air
transportation under Public Law 86-661 to qualify for new interim
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SUPPLEMENTAL AIR CARRIERS 21
authority (in the nature of temporary grandfather rights) by applying
for a supplemental 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 received interim operating
authority under such Public Law 86-661.
Subsection (c) of this section would provide that a new interim
certificate or new interim 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 t his provision is to
make it clear that any such certificate or authority would be valid
only until the Board grants or denies the applicant's request for a
.supplemental certificate under the new section 401(d) (3) proposed
by section 2 of the committee substitute. In other words, the cer-
tificate or authority issued under section 5 shall not be considered a
license to engage in any activity of a continuing nature so as to enable
the holder thereof to file an application for renewal and continue to
operate until the Board can dispose of I he renewal application.
Section 6
Subsections (a) and (b) of this section would enable any air carrier,
with certain exceptions noted in the explanation of subsection (c) of
this section, which is presently operating in air transportation as a
supplemental air carrier under au thorit:.- previously granted by the
Board to continue its operations, for a limited period of time, under the
terms of such authority. Ti such air carrier does not file an application
with the Board for a supplemental certificate under the proposed new
section 401(d)(3) within the 30-day period following the enactment
thereof, its authority to operate in air transportation as a supplemental
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 issuance to such air
.earrier of a-new interim certificate or new interim authority (temporary
grandfather rights) under section 5 of the committee substitute. As
noted previously in the explanation of such section 5, the new cer-
tificate or authority issued thereunder 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 proposed new section
401(d) (3).
Subsection (c) of this section would permit certain air carriers who
previously received authority from the Board to operate in air trans-
portation as supplemental air carriers, and who are presently con-
tinuing 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 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 opera-
tions until the courts have finally disposed of their case. The oper-
ating authority of this group was previously terminated 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 authorized to
be issued by the Board under the proposed new section 401(d)(3).
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22 SUPPLEMENTAL AIR CARRIERS
Section 7
This section would preserve to the Board authority to institute or
maintain enforcement proceedings against any air carrier which ob-
tains a new interim certificate or new interim authority under the
grandfather provisions of this legislation, or obtains a new supple-
mental certificate authorized to be issued by the Board under the
proposed new section 401(d) (3), for violations committed by such
air 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 oc-
curred. This provision also would permit the Board to impose sanc-
tions for such violations upon (1) the existing authority held by the
air carrier concerned, (2) the new interim certificate or new interim
authority issued under the grandfather provisions of this legislation,.
or (3) the supplemental certificate issued under the proposed new
section 401(d) (3).
Section 8
This section provides 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 supplemental air carriers in this.
Nation's system of air transportation. 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.
appropriate to provide for the termination of the Board's investigation
into this question upon the enactment of this legislation.
Section 9
This section would amend section 901(a) of existing law so as to
enable the Board to impose civil penalties for violations of the eco-
nomic 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
case of niinor violations or actions falling short of knowing and willful
misconduct., criminal prosecution may be too drastic or inappropriate.
The availability of the civil penalty would enable 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 re-
quired 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 violation 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 civil 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.
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limited in application to violations committed by supplemental air
carriers, but would include violations by certificated route air carriers
or any other person.
Since this section of the committee substitute 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
This section would amend section 902(a) of existing law so as to
preserve the criminal penalties contained in such section for knowing
and willful violations of the economic jprovisions of existing law.
Such section 902(a) contains an exception clause which excepts from
the provisions of such section violations "for which no penalty is
otherwise herein provided." Under the amendment made by section
9 of this legislation, economic violations would be subject to the civil
penalties provided for in section 901(a) of existing law. If the phrase
"for which no penalty is otherwise herein provided" contained in
section 902(a) of existing law is interpreted to refer to violations for
which no penalty is otherwise provided in the Federal Aviation Act
of 1958, rather than violations for which no penalty is otherwise
provided in such section 902(a), the application of civil penalties to
economic violations would place such violations within the exception
clause of such section 902(a). To prevent the possibility of such an
interpretation, the language of the exception clause would be changed
to read as follows: "for which no penalty is otherwise provided in this
section." Thus, it would be clear that the criminal penalties remain
applicable to economic violations.
Section 11
This section would make technical amendments to conform the
table of contents contained in the first section of existing law with
the changes made by the committee substitute.
CHANGES IN EXISTING LAW
In compliance with clause 3 of Rule XIII of the rules 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
is enclosed in black brackets, new matter is printed in italics, existing
law in which no change is proposed is shown in roman):
FEDERAL AVIATION ACT OF 1958
TITLE I?GENERAL PROVISIONS
DEFINITIONS
SEC. 101. As used in this Act, unless the context otherwise requires?
*
(82) "Supplemental air carrier" means an air carrier holding a
certificate of public convenience and necessity authorizing it to engage
in supplemental air transportation.
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(33) "Supplemental air transportation" means air transportation
rendered pursuant to a certificate of public convenience and necessity
which contains such limitations as to frequency of service, size or type
of equipment, or otherwise, as will assure that the service so authorized
rema,ins supplemental to the service authorized by certificates of public
convenience and necessity issued pursuant to sections 401 (d) (1) and (2)
of this Act.
[(32)] (34) "Ticket agent" means any person, not an air carrier or
a foreign air carrier and not a bona 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 solici-
tation, advertisement, or otherwise as one who sells, provides, fur-
nishes, 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.
TITLE TV-AIR CARRIER ECONOMIC REGULATION
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
CERTIFICATE REQUIRED
SEC. 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
.(h) 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.
NOTICE OF APPLICATION
(c) Upon the filing of any such application, the Board shall give
due notice thereof to the public by posting a notice of such applica-
tion in the office of the secretary of the Board and to such other
persons as the Board may by regulation determine. Any interested
person may file with the Board a protest or memorandum of opposi-
tion 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.
ISSUANCE 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 trans-
portation properly, and to conform to the provisions of this Act and
the rules, regulations, and requirements of the Board hereunder, and
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that such transportation is required by the public convenience and
necessity; otherwise such application shall be denied.
(2) In the case of an application for a certificate to engage in
temporary air transportation, the Board may issue a certificate au-
thorizing 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
transportation and to conform to the provisions of this Act and the
rules, regulations, and requirements of the Board hereunder.
(3)(i) In the case of an application for 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 con-
sideration to the conditions peculiar to supplemental 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 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.
(ii) If any applicant who makes application for a certificate for sup-
plemental air transportation within thirty days after the date of enactment
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 public convenience and necessity issued by
the Civil Aeronautics Board pursuant to order E-13436, adopted
January 28, 1959, or order E-14196, adopted July 8, 1959, or that
it or its predecessor has received interim operating authority from the
Board pursuant to section 1(2) of Public Law 86-661 of July 14,
1960, 74 Stat. 527;
(B) that between the effective date of the certificate or interim
operating authority and the date of enactment hereof, the applicant
or his predecessor in interest lawfully performed either (I) any portion
of the service authorized by the certificate or interim operating au-
thority, or (2) any operations for the Military Establishment of the
United States authorized by the Board; and
(C) that such certificate or interim operating authority had not
been revoked or otherwise terminated by the Board or had not other-
wise expired prior to the enactment of this paragraph, and is held by
the original grantee or has been transferred with Board approval pur-
suant to section 401(h): Provided, That application under this
paragraph may also be made by a person who on the date of enact-
ment hereof had on file an application to the Board for the approval
of transfer to him of a certificate for supplemental air transportation
or interim operating authority, in which case the Board shall issue
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a certificate hereunder if it approves the transfer pursuant to sec-
tion 401(h) of this Act;
the Board, upon proof of such facts only, shall issue a certificate author-
izing such applicant to engage in supplemental air transportation to the
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 pending at the time of enactment hereof.
TERMS AND CONDITIONS OF CERTIFICATE
(e) Each certificate issued under this section shall specify the ter-
minal points and intermediate points, if any, between winch 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 privi-
leges granted by the certificate, or amendment thereto, such reason-
able terms, conditions, and limitations as the public interest may
require. A certificate issued under this section to engage in foreign
air transportation shall, insofar as the operation is to take place with-
out the United States, designate the terminal and in 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. No term, condition, or limitation of a certificate shall
restrict the right of an air carrier to add to or change schedules, equip-
ment, accommodations, and facilities for performing; the authorized
transportation and service as the development of the business and the
demands of the public shall require. No air carrier shall be deemed
0 have violated any term, condition, or limitation of its certificate by
landing or taking off during an eniergeno 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. Any air carrier
I ay make charter trips or perform any other special service, without
regard to the points named in its certificate, muter regulations pre-
scribed by the Board. A certificate issued under this section to engage
in supplemental air transportation shall designate the terminal and inter-
mediate points only insofar as the Board shall deem practicable and may
designate only the geographical area 01 areas within which. service may be
rendered. Nothing in this subsection shall prevent the Board in specify-
ing the service to be rendered under a certificate .for supplemental air trans-
portation from placing such limitations on such certficate as it may .find
to be necessary to assure that the services are limited to supplemental air
transportation: Provided, That the Board may not impose such limita-
tions upon certificates issued pursuant to paragraphs (1) and (2) of
?subsection (d).
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CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
For the information of the Members of the House of Representa-
tives, changes in existing law made by the bill, as reported, are shown
as follows (existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italics, existing law in which no
change is proposed is shown in roman):
FEDERAL AVIATION ACT OF 1958
AN ACT To continue the Civil Aeronautics Board as an agency of the United
States, to create a Federal Aviation Agency, to provide for the regulation and
promotion of civil aviation in such manner as to best foster its development and
safety, and to provide for the safe and efficient use of the airspace by both
civil and military aircraft, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That this Act, divided into
titles and sections according to the following table of contents, may
be cited as the "Federal Aviation Act of 1958":
TABLE OF CONTENTS
TIT LE IV-AIR CARRIER ECONOMIC REGULATION
Sec. 401. Certificate of public convenience and necessity.
(a) Certificate required.
(b) Application for certificate.
(c) Notice of application.
(d) Issuance of certificate.
( e) Terms and conditions of certificate.
(f) Effective date and duration of certificate.
(g) Authority to modify, suspend, or revoke.
(h) Transfer of certificate.
( i ) Certain rights not conferred by certificate.
( j ) Application for abandonment.
(k) Compliance with labor legislation.
(1) Requirement as to carriage of mail.
(m) Application for new mail service.
Sec. 402. Permits to foreign air carriers.
(a) Permit required.
(b) Issuance of permit.
(c) Application for permit.
(d) Notice of application.
(e) Terms and conditions of permit.
(f) Authority to modify, suspend, or revoke.
(g) Transfer of permit.
Sec. 403. Tariffs of air carriers.
(a) Filing of tariffs required.
(b) Observance of tariffs; rebating prohibited.
(c) Notice of tariff change.
(d) Filing of divisions of rates and charges required.
Sec. 404. Rates for carriage of persons and property.
(a) Carrier's duty to provide service, rates, and divisions.
(b) Discrimination.
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28 SUPPLEMENTAL AIR CARRIERS
Sec. 405. Transportation of mail.
(a) Postal rules and regulations.
(b) Mail schedules.
(c) Maximum mail load.
(d) Tender of mail.
(e) Foreign postal arrangement.
(f) Transportation of foreign mail.
(g) Evidence of performance of mail service.
(h) Emergency mail service.
(1) Experimental airmail service.
(j) Free travel for postal employees.
Sec. 406. Rates for transportation of mail.
(a) Authority to fix rates.
(b) Rate-making elements.
(c) Payment.
(d) Treatment of proceeds of disposition of certain property.
(e) Statement of Postmaster General and carrier.
(f) Weighing of mail.
(g) Availability of appropriations.
(h) Payments to foreign air carriers.
Sec. 407. Accounts, records, and reports.
(a) Filing of reports.
(b) Disclosure of stock ownership.
(e) Disclosure of stock ownership by officer or director.
(d) Form of accounts.
(e) Inspection of accounts and property.
Sec. 408. Consolidation, merger, and acquisition of control.
(a) Acts prohibited.
(b) Power of Board.
(c) Interests in ground facilities.
(d) Jurisdiction of accounts of noncarriers.
(e) Investigation of violations.
Sec. 409. Prohibited interests.
(a) Interlocking relationships.
(b) Profit from transfer of securities.
Sec. 410. Loans and financial aid.
Sec. 411. Methods of competition.
Sec. 412. Pooling and other agreements.
(a) Filing of agreements required.
(b) Approval by Board.
Sec. 413. Form of control.
Sec. 414. Legal restraints.
Sec. 415. Inquiry into air carrier management.
Sec. 416. Classification and exemption of carriers.
(a) Classification.
(b) Exemptions.
Sec. 417. Special operating authorizations.
(a) Authority of Board to issue.
(b) Terms of authorization.
(c) Procedure.
TITLE IX-PENALTIES
Sec. 901. Civil penalties.
(a) [Safety and postal offenses.] Safety, economic, and postal
offenses.
(b) Liens.
TITLE I?GENERAL PROVISIONS
DEFINITIONS
SEC. 101. As used in this Act, unless the context otherwise re-
quires?
(1) "Administrator" means the Administrator of the Federal Avia-
tion Agency.
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(2) "Aeronautics" means the science and art of flight.
(3) "Air carrier" means any citizen of the United States who
undertakes, whether directly or indirectly or by a lease or any other
arrangement, to engage in air transportation: Provided, That the
Board may by order relieve air carriers who are not directly engaged
in the operation of aircraft in air transportation from the provisions
of this Act to the extent and for such periods as may be in the public
interest.
(4) "Air commerce" means interstate, overseas, or foreign air com-
merce or the transportation of mail by aircraft or any operation or
navigation of aircraft within the limits of any Federal airway or any
operation or navigation or aircraft which directly affects, or which
may endanger safety in, interstate, overseas, or foreign air commerce.
(5) "Aircraft" means any contrivance now known or hereafter
invented, used, or designed for navigation of or flight in the air.
(6) "Aircraft engine" means an engine used, or intended to be used,
for propulsion of aircraft and includes all parts, appurtenances, and
accessories thereof other than propellers.
(7) "Airman" means any individual who engages, as the person in
command or as pilot, mechanic, or member of the crew, in the naviga-
tion of aircraft while under way; and (except to the extent the Admin-
istrator may otherwise provide with respect to individuals employed
outside the United States) any individual who is directly in charge
of the inspection, maintenance, overhauling, or repair of aircraft,
aircraft engines, propellers, or appliances; and any individual who
serves in the capacity of aircraft dispatcher or air-traffic control-tower
operator.
(8) "Air navigation facility" means any facility used in, available
for use in, or designed for use in, aid of air navigation, including
landing areas, lights, any apparatus or equipment for disseminating
weather information, for signaling, for radio-directional finding, or
for radio or other electrical communication, and any other structure
or mechanism having a similar purpose for guiding or controlling
flight in the air or the landing and take-off of aircraft.
(9) "Airport" means a landing area used regularly by aircraft for
receiving or discharging passengers or cargo.
(10) "Air transportation" means interstate, overseas, or foreign air
transportation or the transportation of mail by aircraft.
(11) "Appliances" means instruments, equipment, apparatus, parts,
appurtenances, or accessories, of whatever description, which are used,
or are capable of being or intended to be used, in the navigation, oper-
ation, or control of aircraft in flight (including parachutes and in-
cluding communication equipment and any other mechanism or
mechanisms installed in or attached to aircraft during flight), and
which are not a part or parts of aircraft, aircraft engines, or propellers.
(12) "Board" means the Civil Aeronautics Board.
(13) "Citizen of the United States" means (a) an individual who is
a citizen of the United States or of one of its possessions, or (b) a
partnership of which each member is such an individual, or (c) a cor-
poration or association created or organized under the laws of the
United States or of any State, Territory, or possession of the United
States, of which the president and two-thirds or more of the board of
directors and other managing officers thereof are such individuals and
in which at least 75 per centum of the voting interest is owned or con-
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trolled by persons who are citizens of the United States or of one of
its possessions.
(14) "Civil aircraft" means any aircraft other than a public air-
craft.
(15) "Civil aircraft of the United States" means any aircraft reg-
istered as provided in this Act.
(16) "Conditional sale" means (a) any contract for the sale of an
aircraft, aircraft engine, propeller, appliance, or spare part under
which possession is delivered to the buyer and the property is to vest in
the buyer at a subsequent time, upon the payment of part or all of
the price, or upon the performance of any other condition or the hap-
pening of any contingency; or (b) any contract for the bailment or
leasing of an aircraft, aircraft engine, propeller, appliance, or spare
part, by which the bailee or lessee contracts to pay as compensation
a sum substantially equivalent to the value thereof, and by which it is
agreed that the bailee or lessee is bound to become, or has the option
of becoming, the owner thereof upon full compliance with the terms of
the contract. The buyer, bailee, or lessee shall be deemed to be the
person by whom any such contract is made or given.
(17) "Conveyance" means a bill of sale, contract of conditional
sale, mortgage, assignment of mortgage, or other instrument affecting
title to, or interest in, property.
(18) "Federal airway" means a portion of the navigable airspace
of the United States designated by the Administrator as a Federal
airway.
(19) "Foreign air carrier" means any person, not a citizen of the
United States, who undertakes, whether directly or indirectly or by
lease or any other arrangement, to engage in foreign air transporta-
tion.
(20) "Interstate air commerce", "overseas air commerce", and "for-
eign air commerce", respectively, mean the carriage by aircraft of
persons or property for compensation or hire, or the carriage of mail
by aircraft, or the operation or navigation of aircraft in the conduct or
furtherance of a business or vocation, in commerce between, respec-
tively?
(a) a place in any State of the United States, or the District of
Columbia, and a place in any other State of the United States, or
the District of Columbia; or between places in the same State of
the United States through the airspace over any place outside
thereof; or between places in the same Territory or possession of
the United States, or the District of Columbia;
(b) a place in any State of the United States, or the District
of Columbia, and any place in a Territory or possession of the
United States; or between a place in a Territory or possession of
the United States, and a place in any other Territory or possession
of the United States; and
(c) a place in the United States and any place outside thereof;
whether such commerce moves wholly by aircraft or partly by air-
craft and partly by other forms of transportation.
(21) "Interstate air transportation", "overseas air transportation",
and "foreign air transportation", respectively, mean the carriage by
aircraft of persons or property as a common carrier for compensation
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SUPPLEMENTAL AIR CARRIERS 31
or hire or the carriage of mail by aircraft, in commerce between,
respectively?
(a) a place in any State of the United States, or the District of
Columbia, and a place in any other State of the United States, or
the District of Columbia; or between places in the same State of
the United States through the airspace over any place outside
thereof; or between places in the same Territory or possession of
the United States, or the District of Columbia;
(b) a place in any State of the United States, or the District of
Columbia, and any place in a Territory or possession of the United
States; or between a place in a Territory or possession of the
United States, and a place in any other Territory or possession of
the United States; and
(c) a place iii the United States and any place outside thereof;
whether such commerce moves wholly by aircraft or partly by air-
craft and partly by other forms of transportation.
(22) "Landing area" means any locality, either of land or water,
including airports and intermediate landing fields, which is used, or
intended to be used, for the landing and take-off of aircraft, whether
or not facilities are provided for the shelter, servicing, or repair of
aircraft, or for receiving or discharging passengers or cargo.
(23) "Mail" means United States mail and foreign-transit mail.
(24) "Navigable airspace" means airspace above the minimum
altitudes of flight prescribed by regulations issued under this Act, and
shall include airspace needed to insure safety in take-off and landing
of aircraft.
(25) "Navigation of aircraft" or "navigate aircraft" includes the
piloting of aircraft.
(26) "Operation of aircraft" or "operate aircraft" means the use of
aircraft, for the purpose of air navigation and includes the navigation
of aircraft. Any person who causes or authorizes the operation of
aircraft, whether with or without the right of legal control (in the
capacity of owner, lessee, or otherwise) of the aircraft, shall be deemed
to be engaged in the operation of aircraft within the meaning of
this Act.
(27) "Person" means any individual, firm, copartnership, corpora-
tion, company, association, joint-stock association, or body politic;
and includes any trustee, receiver, assignee, or other similar repre-
sentative thereof.
(28) "Propeller" includes all parts, appurtenances, and accessories
thereof.
(29) "Possessions of the United States" means (a) the Canal Zone,
but nothing herein shall impair or affect the jurisdiction which has
heretofore been, or may hereafter be, granted to the President in
respect of air navigation in the Canal Zone; and (b) all other posses-
sions of the United States. Where not otherwise distinctly expressed
or manifestly incompatible with the intent thereof, references in this
Act to possessions of the United States shall be treated as also referring
to the Commonwealth of Puerto Rico.
(30) "Public aircraft" means an aircraft used exclusively in the
service of any government or of any political subdivision thereof,
including the government of any State, Territory, or possession of the
United States, or the District of Columbia, but not including any
government-owned aircraft engaged in carrying persons or property
for commercial purposes.
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(31) "Spare parts" means parts, appurtenances, and accessories of
aircraft (other than aircraft engines and propellers), of aircraft engines
(other than propellers), of propellers and of appliances, maintained
for installation or use in an aircraft, aircraft engine, propeller, or
appliance, but which at the time are not installed therein or attached
thereto.
(32) "Supplemental air carrier" means an air carrier holding a certifi-
cate 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 pur-
suant to section 401(d)(3) of this Act to supplement the scheduled service
authorized by certificates of public convenience and necessity issued
pursuant to sections 401(d) (I) and (2) of this Act.
[(32)] (34) "Ticket agent" means any person, not an air carrier or
a foreign air carrier and not a bona 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 solici-
tation, advertisement, or otherwise as one who sells, provides, fur-
nishes, 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.
TITLE IV?AIR CARRIER ECONOMIC REGULATION
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
CERTIFICATE REQUIRED
SEC. 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
(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.
NOTICE OF APPLICATION
(c) Upon the filing of any such application, the Board shall give
due notice thereof to the public by posting a notice of such applica-
tion in the office of the secretary of the Board and to such other
persons as the Board may by regulation determine. Any interested
person may file with the Board a protest or memorandum of opposi-
tion 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.
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ISSUANCE OF CERTIFICATE
33
(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 trans-
portation properly, and to conform to the provisions of this Act and
the rules, regulations, and requirements of the Board hereunder, and
that such transportation is required by the public convenience and
necessity; otherwise such application shall be denied.
(2) In the case of an application for a certificate to engage in
temporary air transportation, the Board may issue a certificate au-
thorizing 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
transportation and to conform to the provisions of this Act and the
rules, regulations, and requirements of the Board hereunder.
(3) In the case of an application for a certificate to engage in supple-
mental 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 to perform the transporta-
tion covered by the application and to conform to the provisions of this
Act and the rules, regulations, and requirements of the Board hereunder.
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 transporta-
tion as defined in this Act.
TERMS AND CONDITIONS OF CERTIFICATE
(e) (1) Each certificate issued under this section shall specify the
terminal points and intermediate points, if any, between which the
air carrier is authorized to engage in air transportation and the 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.
(2) A certificate issued under this section to engage in foreign air
transportation shall, insofar as the operation is to take place without
the 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
carrier holding a certificate for foreign air transportation shall be
authorized to handle and transport mail of countries other than the
United States.
(3) 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 otherwise shall
designate only the geographical area or areas within or between which
service may be rendered.
(4) No term, condition, or limitation of a certificate shall restrict
the right of an air carrier to add to or change schedules, equipment,
accommodations, and facilities for performing the authorized trans-
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portation and service as the development of the business and the
demands of the public shall require; except that the Board may impose
such terms, conditions, or limitations in a certificate for supplemental air
transportation when required by subsection (d)(3) of this section.
(5) No air carrier shall be deemed to have violated any term con-
dition, or limitation of its certificate by landing or taking off during
an emergency at a point not named in its certificate or by operating
in an [emergency under] 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 may make] carrier, other than a supplemental
air carrier, may perform charter trips or [perform] any other special
service, without regard to the points named in its certificate, under
regulations prescribed by the Board.
EFFECTIVE DATE AND DURATION OF CERTIFICATE
(f) Each certificate shall be effective from the date specified there-
in, and shall continue in effect until suspended or revoked as herein-
after provided, or until the Board shall certify that operation there-
under has ceased, or, if issued for a limited period of time under
subsection (d)(2) of this section, shall continue in effect until the
expiration thereof, unless, prior to the date of expiration, such certifi-
cate shall be suspended or revoked as provided herein, or the Board
shall certify that operations thereunder have ceased: Provided, That
if any service authorized by a certificate is not inaugurated within
such period, not less than ninety days, after the date of the authoriza-
tion as shall be fixed by the Board, or if, for a period of ninety days
or such other period as may be designated by the Board any such
service is not operated, the Board may by order, entered after notice
and hearing, direct that such certificate shall thereupon cease to be
effective to the extent of such service.
AUTHORITY TO MODIFY, SUSPEND, OR REVOKE
(g) The Board upon petition or complaint or upon its own initia-
tive, after notice and hearings, may alter, amend, niodify, or suspend
any such certificate, in whole or in part, if the public convenience and
necessity so require, or may revoke any such certificate, in whole or in
part, for intentional failure to comply with any provision of this title
or any order, rule, or regulation issued hereunder or any term, condi-
tion, or limitation of such certificate: Provided, That no such certifi-
cate shall be revoked unless the holder thereof fails to comply, within
a reasonable time to be fixed by the Board, with an order of the Board
commanding obedience to the provision, or to the order (other than
an order issued in accordance with tins proviso), rule, regulation, term,
condition, or limitation found by the Board to have been violated.
Any interested person may file with the Board a protest or memoran-
dum in support of or in opposition to the alteration, amendment,
modification, suspension, or revocation of the certificate.
TRANSFER OF CERTIFICATE
(h) No certificate may be transferred unless such transfer is ap-
proved by the Board as being consistent with the public interest.
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CERTAIN RIGHTS NOT CONFERRED BY CERTIFICATE
35
(i) No certificate shall confer any proprietary, property, or exclusive
right in the use of any airspace, Federal airway, landing area, or air-
navigation facility.
APPLICATION FOR ABANDONMENT
0) No air carrier shall abandon any route, or part thereof, for
which a certificate has been issued by the Board, unless, upon the
application of such air carrier, after notice and hearing, the Board
shall find such abandonment to be in the public interest. Any inter-
ested person may file with the Board a protest or memorandum of
opposition to or in support of any such abandonment. The Board
may, by regulations or otherwise, authorize such temporary suspen-
sion of service as may be in the public interest.
COMPLIANCE WITH LABOR LEGISLATION
(k)(1) Every air carrier shall maintain rates of compensation,
maximum hours, and other working conditions and relations of all of
its pilots and copilots who are engaged in interstate air transporta-
tion within the continental United States (not including Alaska) so
as to conform with decision mmtbered 83 made by the National Labor
Board on May 10, 1934, notwithstanding any limitation therein as to
the period of its effectiveness.
(2) Every air carrier shall maintain rates of compensation for all
of its pilots and copilots who are engaged in overseas or foreign air
transportation or air transportation wholly within a Territory or
possession of the United States, the minimum of which shall be not
less, upon an annual basis, than the compensation required to be paid
under said decision 83 for comparable service to pilots and copilots
engaged in interstate air transportation within the continental United
States (not including Alaska).
(3) Nothing herein contained shall be construed as restricting the
right of any such pilots or copilots, or other employees, of any such
air carrier to obtain by collective bargaining higher rates of compen-
sation or more favorable working conditions or relations.
(4) It shall be a condition upon the holding of a certificate by any
air carrier that such carrier shall comply with title II of the Railway
Labor Act, as amended.
(5) The term "pilot" as used in this subsection shall mean an em-
ployee who is responsible for the manipulation of or who manipulates
the flight controls of an aircraft while under way including take-off
and landing of such aircraft, and the term "copilot" as used in this
subsection shall mean an employee any part of whose duty is to assist
or relieve the pilot in such manipulation, and who is properly qualified
to serve as, and holds a currently effective airman certificate authoriz-
ing him to serve as, such pilot or copilot.
REQUIREMENT AS TO CARRIAGE OF MAIL
(1) Whenever so authorized by its certificate, any air carrier shall
provide necessary and adequate facilities and service for the trans-
portation of mail, and shall transport mail whenever required by
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the Postmaster General. Such air carrier shall be entitled to receive
reasonable compensation therefor as hereinafter provided.
APPLICATION FOR NEW MAIL SERVICE
(m) Whenever, from time to time, the Postmaster General shall
find that the needs of the Postal Service require the transportation
of mail by aircraft between any points within the United States or
between the United States and foreign countries, in addition to the
transportation of mail authorized in certificates then currently effec-
tive, the Postmaster General shall certify such finding to the Board
and file therewith a statement showing such additional service and the
facilities necessary in connection therewith, and a copy of such certifi-
cation and statement shall be posted for at least twenty days in the
office of the secretary of the Board. The Board shall, after notice and
hearing, and if found by it to be required by the public convenience
and necessity, make provision for such additional service, and the
facilities necessary in connection therewith, by issuing a new certifi-
cate or certificates or by amending an existing certificate or certificates
in accordance with the provisions of this section.
PERMITS TO FOREIGN AIR CARRIERS
PERMIT REQUIRED
SEC. 402. (a) No foreign air carrier shall engage in foreign air
transportation unless there is in force a permit issued by the Board
authorizing such carrier so to engage.
ISSUANCE OF PERMIT
(b) The Board is empowered to issue such a permit if it finds that
such carrier is fit, willing, and able properly to perform such air trans-
portation and to conform to the provisions of this Act and the rules,
regulations, and requirements of the Board hereunder, and that such
transportation will be in the public interest.
APPLICATION FOR PERMIT
(c) Application for a permit shall be made in writing to the Board,
shall be so verified, shall be in such form and contain such information,
and shall be accompanied by such proof of service upon such inter-
ested persons, as the Board shall by regulation require.
NOTICE OF APPLICATION
(d) Upon the filing of an application for a permit the Board shall
give due notice thereof to the public by posting a notice of such appli-
cation in the office of the secretary of the Board and to such other
persons as the Board may by regulation (let ermine. Any interested
person may filed with the Board a protest or memorandum of opposi-
tion to or in support of the issuance of a permit. Such application
shall be set for public hearing and the Board shall dispose of such
application as speedily as possible.
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TERMS AND CONDITIONS OF PERMIT
37
(e) The Board may prescribe the duration of any permit and may
attach to such permit such reasonable terms, conditions, or limitations
as, in its judgment, the public interest may require.
AUTHORITY TO MODIFY, SUSPEND, OR REVOKE
(0 Any permit issued under the provisions of this section may,
after notice and hearing, be altered, modified, amended, suspended,
canceled, or revoked by the Board whenever it finds such action to be
in the public interest. Any interested person may file with, the Boiud
a protest or memorandum in support of or in opposition to the altera-
tion, modification, amendment, susponsion, cancellation, or revocation
of a permit.
TRANSFER OF PERMIT
(g) No permit may be transferred unless such transfer is approved
by the Board as being in the public interest.
TARIFFS OF AIR CARRIERS
FILING OF TARIFFS REQUIRED
SEC. 403. (a) Every air carrier and every foreign air carrier shall
file with the Board, and print, and keep open to public inspection,
tariffs showing all rates, fares, and charges for air transportation
between points served by it, and between points served by it and points
served by any other air carrier or foreign air carrier when through
service and through rates shall have been established, and showing to
the extent required by regulations of the Board, all classifications,
rules, regulations, practices, and services in connection with such air
transportation. Tariffs shall be filed, posted, and published in such
form andmanner, and ''shall contain such information, as the Board
shall by regulation prescribe; and the Board is empowered to reject
any tariff so filed winch is not consistent with this section and such
regulations. Any tariff so rejected shall be void. The rates, fares,
and charges shown in any tariff shall be stated in terms of lawful
money of the United States, but such tariffs may also state rates, fares,
and charges in terms of currencies other than lawful money of the
United States, and may, in the case of foreign air transportation,
contain such information as may be required under the. laws of .any
-country in or to which an air carrier or foreign air carrier is authorized
to operate.
OBSERVANCE OF TARIFFS; REBATING PROHIBITED
(b) No air carrier or foreign air carrier shall charge or demand or
,collect or receive a greater or less or different compensation for air
transportation, or for any service in connection therewith, than the
rates, fares, and charges specified in its currently effective tariffs; and
no air carrier or foreign air carrier shall, in any manner or by any
de v ice, directly or indirectly, or through any agent or broker, or other-
wise, refund or remit any portion of the rates, fares, or charges so
specified, or extend to any person any privileges or facilities, with
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38 SUPPLEMENTAL AIR CARRIERS
respect to matters required by the Board to be specified in such tariffs,
except those specified therein. Nothing in this Act shall prohibit
such air carriers or foreign air carriers, under such terms and conditions
as the Board may prescribe, from issuing or interchanging tickets or
passes for free or reduced-rate transportation to their directors, officers,
and employees (including retired directors, officers, and employees who.
are receiving retirement benefits from any air carrier or foreign air
carrier), the pafents and immediate families of such officers and em-
ployees, and the immediate families of such directors; widows,
widowers, and minor children of employees who have died as a direct
result of personal injury sustained while in the performance of duty
in the service of such an carrier or foreign air carrier; witnesses and
attorneys attending any legal investigation in which any such air
carrier is interested; persons injured in aircraft accidents and phy-
sicians and nurses attending such persons; immediate families, includ-
ing parents, of persons injured or killed in aircraft accidents where the
object is to transport such persons in connection with such accident;
and any person or property with the object of providing relief in cases
of general epidemic, pestilence, or other calamitous visitation; and, in
the case of overseas or foreign air transportation, to such other persons.
and under such other circumstances as the Board may by regulations
prescribe. Any air carrier or foreign air carrier, under such terms
and conditions as the Board may prescribe, may grant reduced-rate
transportation to ministers of religion on a space-available basis.
NOTICE OF TARIFF CHANGE
(c) No change shall be made in any rate, fare, or charge, or any
classification, rule, regulation, or practice affecting such rate, fare, or
charge, or the value of the service thereunder, specified in any effective.
tariff of any air carrier or foreign air carrier, except after thirty days'
notice of the Proposed change filed, posted, and published in accord-
ance with subsection (a) of this section. Such notice shall plainly
state the change proposed to be made and the time such change will
take effect. The Board may in the public interest, by regulation or
othetwise, allow such change upon notice less than that herein speci-
fied, or modify the requirements of this section with respect to filing
and posting of tariffs, either in particular instances or by general
order applicable to special or peculiar circumstances or conditions.
FILING OF DIVISIONS OF RATES AND CHARGES REQUIRED
(d) Every air carrier or foreign air carrier shall keep currently on
file with the Board, if the Board so requires, the established divisions
of all joint rates, fares, and charges for air transportation in which
such air carrier or foreign air carrier participates.
RATES FOR CARRIAGE OF PERSONS AND PROPERTY
CARRIER'S DUTY TO PROVIDE SERVICE, RATES, AND DIVISIONS
SEC. 404. (a) It shall be the duty of every air carrier to provide
and furnish interstate and overseas air transportation, as authorized
by its certificate, upon reasonable request therefor and to provide
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39
reasonable through service in such air transportation in connection
with other air carriers; to provide safe and adequate service, equip-
ment, and facilities in connection with such transportation; to estab-
lish, observe, and enforce just and reasonable individual and joint
rates, fares, and charges, and just and reasonable classifications, rules,
regulations, and practices relating to such air transportation; and, in
case of such joint rates, fares, and charges, to establish just, reason-
able, and equitable divisions thereof as between air carriers partici-
pating therein which shall not unduly prefer or prejudice any of such
participating air carriers.
DISCRIMINATION
(b) No air carrier or foreign air carrier shall make, give, or cause
any undue or unreasonable preference or advantage to any particular
person, port, locality, or description of traffic in air transportation
in any respect whatsoever or subject any particular person, port,
locality, or description of traffic in air transportation to any unjust
discrimination or any undue or unreasonable prejudice or disadvan-
tage in any respect whatsoever.
TRANSPORTATION OF MAIL
POSTAL RULES AND REGULATIONS
SEC. 405. (a) The Postmaster General is authorized to make such
rules and regulations, not inconsistent with the provisions of this
Act, or any order, rule, or regulation made by the Board thereunder,
as may be necessary for the safe and expeditious carriage of mail by
aircraft.
MAIL SCHEDULES
(b) Each air carrier shall, from time to time, file with the Board
and the Postmaster General a statement showing the points between
which such air carrier is authorized to engage in air transportation,
and all schedules, and all changes therein, of aircraft regularly oper-
ated by the carrier between such points, setting forth in respect of
each such schedule the points served thereby and the time of arrival
and departure at each such point. The Postmaster General may des-
ignate any such schedule for the transportation of mail between the
points between which the air carrier is authorized by its certificate
to transport mail, and may, by order, require the air carrier to estab-
lish additional schedules for the transportation of mail between such
points. No change shall be made in any schedules designated or
ordered to be established by the Postmaster General except upon ten
days' notice thereof filed as herein provided. The Postmaster General.
may by order disapprove any such change or alter, amend, or modify
any such schedule or change. No order of the Postmaster General
under this subsection shall become effective until ten days after its
issuance. Any person who would be aggrieved by ,any such order of
the Postmaster General undei? this subsection may, before the expira-
tion of such ten-day period, apply to the Board, under such regula-
tions as it may prescribe, for a review of such order. The Board may
review, and, if the public convenience and necessity so require, amend,
revise, suspend, or cancel such order; and, pending such review and
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40 SUPPLEMENTAL AIR CARRIERS
the determination thereof, may postpone the effective date of such
'order. 1 he Board shall give preference to proceedings under this
subsection over all proceedings pending before it. No air carrier
shall transport mail in accordance with any schedule other than a
'schedule designated or ordered to be established under this subsection
for the transportation of mail.
MAXIMUM MAIL LOAD
(c) The Board may fix the maximum mail load for ally schedule
'or for any aircraft or any type of aircraft; but, in the event that, mail
in excess of the maximum load is tendered by the Postmaster General
for transportation by any air carrier in accordance with any schedule
designated or ordered to be established by the Postmaster General
under subsection (b) of this section for the transportation of mail,
?such air carrier shall, to the extent such air carrier is reasonably able
as determined by the Board, furnish facilities sufficient to transport,
and shall transport, such mail as nearly in accordance with such sched-
ule as the Board shall determine to be possible.
TENDER OF MAIL
(d) From and after the issuance of any certificate authorizing the
transportation of mail by aircraft, the Postmaster General shall ten-
der mail to the holder thereof, to the extent required by the Postal
Service, for transportation between the points named in such certifi-
cate for the transportation of mail, and such mail shall be transported
by the air carrier holding such certificate in accordance with such
rules, regulations, and requirements as may be promulgated by the
Postmaster General under this section.
FOREIGN POSTAL ARRANGEMENT
(e) (1) Nothing in this Act shall be deemed to abrogate or affect
any arrangement made by the United States with the postal adminis-
tration of any foreign country with respect to transportation of mail
by aircraft, or to impair the authority of the Postmaster General to
.enter into any such arrangement with the postal administration of any
foreign country.
(2) The Postmaster General may, in any case where service may be
necessary by a person not a citizen of the United States who may
not be obligated to transport the mail for a foreign country, make
arrangements, without advertising, with such person for transport-
ing mail by aircraft to or within any foreign country.
TRANSPORTATION OF FOREIGN MAIL
(f) (1) Any air carrier holding a certificate to engage in foreign
air transportation and transporting mails of foreign countries shall
transport such mails subject to control and regulation by the United
States. The Postmaster General shall from time to time fix the
rates of compensation that shall be charged the respective foreign
countries for the transportation of their mails by such air carriers,
and such rates shall be put into effect by the Postmaster General
in accordance with the provisions of the postal convention regulating
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the postal relations between the United States and the respective.
foreign countries, or as provided hereinafter in this subsection. In
any case where the Postmaster General deems such action to be in
the public interest, he may approve rates provided in arrangements.
between any such air carrier and any foreign country covering the
transportation of mails of such country, under which mails of such
country have been carried on scheduled operations prior to January 1,,
1938, or in extensions or modifications of such arrangements, and
may permit any such air carrier to enter into arrangements with
any foreign country for the transportation of its mails at rates fixed
by the Postmaster General in advance of the making of any such
arrangement. The Postmaster General may authorize any such air
carrier, under such limitations as the Postmaster General may pre-
scribe, to change the rates to be charged any foreign country for ?
the transportation of its mails by such air carrier within that country
or between that country and another foreign country.
(2) In any case where such air carrier has an arrangement with
any foreign country for transporting its mails, made or approved in
accordance with the provisions of paragraph (1) of tins subsection,
it shall collect its compensation from the foreign country under its
arrangement, and in case of the absence of any arrangement between
the air carrier and the foreign country consistent with this subsec-
tion, the collections made from the foreign country by the United
States shall be for the account, of such air carrier: Provided, That.
no such air carrier shall be entitled to receive compensation both
from such foreign country and from the United States in respect of
the transportation of the same mail or the same mails of foreign
countries.
EVIDENCE OF PERFORMANCE OF MAIL SERVICE
(g) Air carriers transporting or handling United States mail shall.
submit, under signature of a duly authorized official, when and in such
form as may be required by the Postmaster General, evidence of the
performance of mail service; and air carriers transporting or handling -
mails of foreign countries shall submit, under signature of a duly
authorized official, when and in such form as may be required by the
Postmaster General, evidence of the amount of such mails transported
or handled, and the compensation payable and received therefor.
EMERGENCY MAIL SERVICE
(h) In the event of emergency caused by flood, fire, or other calami-
tous visitation, the Postmaster General is authorized to contract,
without advertising, for the transportation by aircraft of any or all
classes of mail to or from localities affected by such calamity, where
available facilities of persons authorized to transport mail to or from
such localities are inadequate to meet the requirements of the Postal
Service during such emergency. Such contracts may be only for such
periods as may be neCessitated, for the maintenance of mail service,
by the inadequacy of such other facilities. No operation pursuant to
any such contract, for such period, shall be air transportation within
the purview of this Act. Payment of compensation for service per-
formed under such contracts shall be made, at rates provided in such
contracts, from appropriations for the transportation of mail by the
means normally used for transporting the mail transported under -
such contracts.
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42 SUPPLEMENTAL AIR CARRIERS
EXPERIMENTAL AIRMAIL SERVICE
(i) Nothing contained in this Act shall be construed to repeal in
whole or in part the provisions of section 6 of the Act entitled "An
Act to provide for experimental airmail service, to further develop
safety, efficiency, economy, and for other purposes", approved April
15, 1938, as amended. The transportation of mail under contracts en-
tered into under such section shall not, except for sections 401(k) and
416(b), be deemed to be "air transportation" as used in this Act, and
the rates of compensation for such transportation of mail shall not be
fixed under this Act.
FREE TRAVEL FOR POSTAL EMPLOYEES
(j) Every air carrier carrying the mails shall carry on any plane
that it operates and without charge therefor, the persons in charge of
the mails when on duty, and such duly accredited agents and officers
of the Post Office Department, and post office inspectors, while travel-
ing on official business relating to the transportation of mail by air-
craft, as the Board may by regulation prescribe, upon the exhibition
of their credentials.
RATES FOR TRANSPORTATION OF MAIL
AUTHORITY TO FIX RATES
SEC. 406. (a) The Board is empowered and directed, upon its own
initiative or upon petition of the Postmaster General or an air carrier,
(1) to fix and determine from time to time, after notice and hearing,
the fair and reasonable rates of compensation for the transportation
of mail by aircraft, the facilities used and useful therefor, and the
services connected therewith (including the transportation of mail by
an air carrier by other means than aircraft whenever such transporta-
tion is incidental to the transportation of mail by aircraft or is made
necessary by conditions of emergency arising from aircraft opera-
tion), by each holder of a certificate authorizing the transportation of
mail by aircraft, and to make such rates effective from such date as
it shall determine to be proper; (2) to prescribe the method or meth-
ods, by aircraft-mile, pound-mile, weight, space, or any combination
thereof, or otherwise, for ascertaining such rates of compensation for
each air carrier or class of air carriers; and (3) to publish the same.
RATE-MAKING ELEMENTS
(b) In fixing and determining fair and reasonable rates of com-
pensation under this section, the Board, considering the conditions
peculiar to transportation by aircraft and to the particular air carrier
or class of air carriers, may fix different rates for different air car-
riers or classes of air carriers, and different classes of service. In
determining the rate in each case, the Board shall take into considera-
tion, among other factors, (1) the condition that such air carriers
may hold and operate under certificates authorizing the carriage of
mail only by providing necessary and adequate facilities and service
for the transportation of mail; (2) such standards respecting the
character and quality of service to be rendered by air carriers as may
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be prescribed by or pursuant to law; and (3) the need of each such
air carrier for compensation for the transportation of mail sufficient
to insure the performance of such service, and, together with all other
revenue of the air carrier, to enable such air carrier under honest,
economical, and efficient management, to maintain and continue the
development of air transportation to the extent and of the character
and quality required for the commerce of the United States, the
Postal Service, and the national defense.
PAYMENT
(c) The Postmaster General shall make payments out of appropri-
ations for the transportation of mail by aircraft of so much of the
total compensation as is fixed and determined by the Board under
this section without regard to clause (3) of subsection (b) of this
section. The Board shall make payments of the remainder of the
total compensation payable under this section out of appropriations
made to the Board for that purpose.
TREATMENT OF PROCEEDS OF DISPOSITION OF CERTAIN PROPERTY
(d) In determining the need of an air carrier for compensation for
the transportation of mail, and such carrier's "other revenue" for the
purpose of this section, the Board shall not take into account?
(1) gains derived from the sale or other disposition of flight
equipment if (A) the carrier notifies the Board in writing that
it has invested or intends to reinvest the gains (less applicable
expenses and taxes) derived from such sale or other disposition
in flight equipment, and (B) submits evidence in the manner pre-
scribed by the Board that an amount equal to such gains (less
applicable expenses and taxes) has been expended for purchase
of flight equipment or has been deposited in a special reequip-
ment fund, or
(2) losses sustained from the sale or other disposition of flight
equipment.
Any amounts so deposited in a reequipment fund as above provided
shall be used solely for investment in flight equipment either through
payments on account of the purchase price or construction of flight
equipment or in retirement of debt contracted for the purchase or
construction of flight equipment, and unless so reinvested within such
reasonable time as the Board may prescribe, the carrier shall not have
the benefit of this paragraph. Amounts so deposited in the reequip-
ment fund shall not be included as part of the carrier's used and use-
ful investment for purposes of section 406 until expended as provided
above: Provided, That the flight equipment in which said gains may
be invested shall not include equipment delivered to the carrier prior
to April 6, 1956: Provided further, That the provisions of this sub-
section shall be effective as to all capital gains or losses realized on
and after April 6, 1956, with respect to the sale or other disposition
of flight equipment whether or not the Board shall have entered a
final order taking account thereof in determining all other revenue of
the air carrier.
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44 SUPPLEMENTAL AIR CARRIERS
STATEMENT OF POSTMASTER GENERAL AND CARRIER
(e) Any petition for the fixing of fair and reasonable rates of com-
pensation under this section shall include a statement of the rate the
petitioner believes to be fair and reasonable. The Postmaster Gen-
eral shall introduce as part of the record in all proceedings under this
section a comprehensive statement of all service to be required of the
air carrier and such other information in his possession as may be
deemed by the Board to be material to the inquiry.
WEIGHING OF MAIL
(f) The Postmaster General may weigh the mail transported by
aircraft and make such computations for statistical and administra-
tive purposes as may be required in the interest of the mail service.
The Postmaster General is authorized to employ such clerical and
other assistance as may be required in connection with proceedings
under this Act. If the Board shall determine that it is necessary or
advisable, in order to carry out the provisions of this Act, to have
additional and more frequent weighing of the mails, the Postmaster
General, upon request of the Board shall provide therefor in like
manner, but such weighing need not be for continuous periods of more
than thirty days.
AV. 1 LAPII.ITY OF All HOPRIATIONS
(g) Except as otherwise provided in section 405(11), the unexpended
balances of all appropriations for the transportation of niail by air-
craft pursuant to contracts entered into under the Air Mail Act of
1934, as amended, and the unexpended balances of all appropriations
available for the transportation of mail by aircraft in Alaska, shall
be available in addition to the purposes stated in such appropriations,
for the payment of compensation by the Postmaster General, as pro-
vided in this Act, for the transportation of mail by aircraft, the facil-
ities used and useful therefor, and the services connected therewith,
between points in the continental United States or between points in
Hawaii or in Alaska or between points in the continental United States
and points in Canada within one hundred and fifty miles of the inter-
national boundary line. Except as otherwise provided in section
405(h), the unexpended balances of all appropriations for the trans-
portation of mail by aircraft pursuant to contracts entered into under
the Act of March 8, 1928, as amended, shall be available, in addition
to the purposes stated in such appropriations, for payment to be made
by the Postmaster General, as provided by this Act, in respect of the
transportation of mail by aircraft, the facilities used and useful
therefor, and the services connected therewith, between points in the
United States and points outside thereof, or between points in the
continental United States and Territories or possessions of the United
States, or between Territories or possessions of the United States.
PAYMENTS TO FOREIGN AIR CARRIERS
(h) In any case where air transportation is performed between the
United States and any foreign country, both by aircraft owned or
operated by one or more air carriers holding a certificate under this
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title and by aircraft owned or operated by one or more foreign air
carriers, the Postmaster General shall not pay to or for the account
of any such foreign air carrier a rate of compensation for transporting
mail by aircraft between the United States and such foreign ?country,
which,
(nun 43,
which, in his opinion, will result (over such reasonable period as the
Postmaster General may determine, taking account of exchange fluc-
tuations and other factors) in such foreign air carrier receiving. a higher
rate of compensation for transporting such mail than such foreign
country pays to air carriers for transporting its mail by aircraft be-
tween such foreign country and the United States, or receiving a
higher rate of compensation for transporting such mail than a rate
determined by the Postmaster General to be comparable to the rate
such foreign country pays to air carriers for transporting its mail by
aircraft between such foreign country and intermediate country on
the route of such air carrier between such foreign country and. the
United States.
ACCOUNTS, RECORDS, AND REPORTS
FILING OF REPORTS
SEC. 407. (a) The Board is empowered to require annual, monthly,
periodical, and special reports from any air carrier; to prescribe the
manner and form in which such reports shall be made; and to require
from any air carrier specific answers to all questions upon which the
Board may deem information to be necessary. Such reports shall be
under oath whenever the Board so requires. The Board may also
require any air carrier to file with it a true copy of each or any con-
tract, agreement, understanding, or arrangement, between such air
carrier and any other carrier or person, m relation to any traffic
affected by the provisions of this Act.
DISCLOSURE OF STOCK OWNERSHIP
(b) Each air carrier shall submit annually, and at such other times
as the Board shall require, a list showing the names of each of its
stockholders or members holding more than 5 per centum of the entire
capital stock or capital, as the case may be, of such air carrier, together
with the name of any person for whose account, if other than the
holder, such stock is held; and a report setting forth a description of
the shares of stock, or other interest, held by such air carrier, or for
its account, in persons other than itself.
DISCLOSURE OF STOCK OWNERSHIP BY OFFICER OR DIRECTOR
(c) Each officer and director of an air carrier shall annually and at
such other times as the Board shall require transmit to the Board a
report describing the shares of stock or other interests held by him in
any air carrier, any person engaged in any phase of aeronautics, or any
common carrier, and in any person whose principal business, in pur-
pose or in fact, is the holding of stock in, or control of, air carriers,
other persons engaged in any phase of aeronautics, or common carriers.
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FORM OF ACCOUNTS
(d) The Board shall prescribe the forms of any and all accounts,
records, and memoranda to be kept by air carriers, including the ac-
counts, records, and memoranda of the movement of traffic, as well as
of the receipts and expenditures of money, and the length of time such
accounts, records, alai memoranda shall be preserved; and it, 5111111 be
unlawful for air carriers to keep any accounts, records, or memoranda
other than thwe prescribed or approved by the Board: Prorided, That
any air carrier may keep additional accounts, records, or ntentoranda
if they do not impair the integrity of the accounts, records, or memo-
randa prescribed_ or approved by the Board and do not constitute 1.11
undue financial burden On such air carrier.
INSP ECTIo N OF A CCOUNTs A ND PROPERTY
(e) The Board shall at 1111 times have access to all lands, buildings,
and equipment of any carrier and to all accounts, records, and mento-
ra di including all (10(1111 merits, papers, and correspondence, now or
he eafte? existing, aint kept or required to be kept, by air carriers; and
it may employ sn-cia atsents or auditors who shall have authority
under thn,. orders of the Board to nispecr ;Ind examine any and all such
lan s, buildings, equipment, a counts, record;, and memoranda. The
provisions of tins s.?ction snail appy, to thi ext-nt found by the Board
t ) be reaso'it)H,- ,ec-ssary for the administration of this Act, to per'-
s ns having contro' over any air carrier, or affiliated with any air car-
rier within the meaning of section 5(8) of the Interstate Commerce
Ac., as amen n d.
CONSOLIDATION, MERGER, AND ACQUISITION OF CONTROL
ACTS PROHIBITED
SEC. 408. (a) It shall be unlawful unless approved by order of the
Boa.d as provided in this section--
(1) For two or more air carriers, or for any air carrier and any
other common carrier or any person engaged in any other phase of
aeronautics, to consolidate or merge their properties, or any part
thereof, into one person for the ownership, management, or opera-
tion of the properties theretofore in separate ownerships;
(2) For any air carrier, any person controlling an air carrier,
any other common carrier, or allV person engaged in any other
phase of aeronautics, to purchase, lease, or contract to operate the
properi ies, or any substantial part thereof, of any air carrier;
(:i) For any air carrier or person controlling an air carrier to
purchase, lease, or contract to operate the properties, or anv sub-
stantial part thereof, of any person engaged in any phase of aero-
nautics otherwise than as an air carrier;
(4) For any foreign air carrier or person controlling it foreign
air carrier to acquire ,control, any manner whatsoever, of any
citizen of the United States engaged in any phase of aeronautics;
(5) For any air carrier or person controlling an air carrier, any
other common carrier, or any person engaged in any other phase of
aeronautics, to acquire control of any air carrier in any manner
II tS0 eVer;
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47
(6) For any air carrier or person controlling an air carrier to
acquire control, in any manner whatsoever, of any person engaged
in any phase of aeronautics otherwise than as an air carrier; or
(7) For any person to continue to maintain any relationship
established in violation of any of the foregoing subdivisions of
this subsection.
POWER OF BOARD
(b) Any person seeking approval of a consolidation, merger, pur-
chase, lease, operating contract, or acquisition of control, specified in
subsection (a) of this section, shall present an application to the
Board, and thereupon the Board shall notify the persons involved in
the consolidation, merger, purchase, lease, operating contract, or ac-
quisition of control, and other persons known to have a substantial
interest in the proceeding, of the time and place of a public hearing.
Unless, after such hearing, the Board finds that the consolidation,
merger, purchase, lease, operating contract, or acquisition of control
will not be consistent with the public interest or that the conditions
of this section will not be fulfilled, it shall by order approve such con-
solidation, merger, purchase, lease, operating contract, or acquisition
of control, upon such terms and conditions as it shall find to be just
and reasonable and with such modifications as it may prescribe: Pro-
vided, That the Board shall not approve any consolidation, merger,
purchase, lease, operating contract, or .acquisition of control which
would result in creating a monopoly or monopolies and thereby re-
strain .competition or jeopardize another air carrier not a party to the
consolidation, merger, purchase, lease, operating contract, or acquisi-
tion of control: Provided further, That if the applicant is a carrier
other than an air carrier, or a person controlled by a carrier other
than an air carrier or affiliated therewith within the meaning of section
5(8) of the Interstate Commerce Act, as amended, such applicant
shall for the purposes of this section be considered an air carrier and
the Board shall not enter such an order of approval unless it finds
that the transaction proposed will promote the public interest by
enabling such carrier other than an air carrier to use aircraft to public
advantage in its operation and will not restrain competition: Provided
further, That, in any case in which the Board determines that the trans-
action which is the subject of the application does not affect the con-
trol of an air carrier directly engaged in the operation of aircraft in
air transportation, does not result in creating a monopoly, and does
not tend to restrain competition, and determines that no person dis-
closing a substantial interest then currently is requesting a hearing,
the Board, after publication in the Federal Register of notice of the
Board's intention to dispose of such application without a hearing (a
copy of which notice shall be furnished by the Board to the Attorney
General not later than the day following the date of such publication),
may determine that the public interest does not require a hearing and
by order approve or disapprove such transaction.
INTERESTS IN GROUND FACILITIES
(c) The provisions of this section and section 409 shall not apply
with respect to the acquisition or holding by any air carrier, or any
officer or director thereDf, of (1) any intet.%,st in any ticket office, land-
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ing area, hangar, or other ground facility reasonably incidental to the'
performance by such air carrier of any of its services, or (2) any
stock or other interest or any office or directorship in any person
whose principal business is the maintenance, or operation of any such
ticket office, landing area, hangar, or other ground facility.
JURISDICTION OF ACCOUNTS OF NONCARRIERS
(d) Whenever, after the effective date of this section, a person, not
an air carrier, is authorized, pursuant to this section, to acquire con-
trol of an air carrier, such person thereafter shall, to the extent found
by the Board to be reasonably necessary for the administration of this
Act, be subject, in the same manner as if such person were an air car-
rier, to the provisions of this Act relating to accounts, records, and
reports, and the inspection of facilities and records, including the
penalties applicable in the case of violations thereof.
INVESTIGATION OF VIOLATIONS
(e) The Board is empowered, upon complaint or upon its own initi-
ative, to investigate and, after notice and hearing, to determine
whether any person is violating any provision of subsection (a) of
this section. If the Board finds after such hearing that such person
is violating any provision of such subsection, it shall by order require
such person to take such action, consistent with the provisions of this
Act, as may be necessary, in the opinion of the Board, to prevent
further violation of such provision.
PROHIBITED INTERESTS
INTERLOCKING RELATIONSHIPS
SEC. 409. (a) It shall be unlawful, unless such relationship shall
have been approved by order of the Board upon due showing, in the
form and manner prescribed by the Board, that the public interest
will not be adversely affected thereby--
(1) For any air carrier to have. and retain an officer or director
who is an officer, director, or member, or who as a stockholder
holds a controlling interest, in any other person who is a common
carrier or is engaged in any phase of aeronautics.
(2) For any air carrier, knowingly and willfully, to have and
retain an officer or director who has a representative or nominee
who represents such officer or director as an officer, director, or
member, or as a stockholder holding a controlling interest, in
any other person who is a common carrier or is engaged in any
phase of aeronautics.
(3) For any person who is an officer or director of an air
carrier to hold the position of officer, director, or member, or to
be a stockholder holding a controlling interest, or to have a repre-
sentative or nominee who represents such person as an officer,
director, or member, or as a stockholder holding a controlling
interest, in any other person who is a Common carrier or is en-
gaged in any phase of aeronautics.
(4) For any air carrier to have and retain an officer or director
who is an officer, director, or member, or who as a stockholder
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holds a controlling interest, in any person whose principal busi-
ness, in purpose or in fact, is the holding of stock in, or control
any other person engaged in any phase of aeronautics.
(5) For any air carrier, knowingly and willfully, to have and
retain an officer or director who has a representative or nominee
who represents such officer or director as an officer, director, or
member, or as a stockholder holding a controlling interest, in any
person whose principal business, in purpose or in fact, is the
holding of stock in, or control of, any other person engaged in
any phase of aeronautics.
(6) For any person who is an officer or director of an air carrier
to hold the position of officer, director, or member, or to be a stock-
holder holding a controlling interest, or to have a representative
.or nominee who represents such person as an officer, director, or
member, or as a stockholder holding a controlling interest, in any
person whose principal business, in purpose or in fact, is the hold-
ing of stock in, or control of, any other person engaged in any
phase of aeronautics.
PROFIT FROM TRANSFER OF SECURITIES
(b) It shall be unlawful for any officer or director of any air carrier
to receive for his own benefit, directly or indirectly, any money or
thing of value in respect of negotiation, hypothecation, or sale of any
securities issued or to be issued by such carrier, or to share in any of
the proceeds thereof.
LOANS AND FINANCIAL AID
SEC. 410. The Board is empowered to approve or disapprove, in
whole or in part, any and all applications made after the effective date
of this section for or in connection with any loan or other financial
aid from the United States or any agency thereof to, or for the benefit
of, any air carrier. No such loan or financial aid shall be made or
given without such approval, and the terms and conditions upon which
such loan or financial aid is provided shall be prescribed by the Board.
METHODS OF COMPETITION
SEC. 411. The Board may, upon its own initiative or upon com-
plaint by any air carrier, foreign air carrier, or ticket agent, if it con-
siders that such action by it would be in the interest of the public,
investigate mid determine whether any air carrier, foreign air carrier,
or ticket agent has been or is engaged in unfair or deceptive practices
or unfair methods of competition in air transportation or the sale
thereof. If the Board shall find, after notice and hearing, that such
air carrier, foreign air carrier, or ticket agent is engaged in such unfair
or deceptive practices or unfair methods of competition, it shall order
such air carrier, foreign air carrier, or ticket agent to cease and desist
from such practices or methods of competition.
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SUPPLEMENTAL AIR CARRIERS
POOLING AND OTHER AGREEMENTS
FILING OF AGREEMENTS REQUIRED
SEC. 412. (a) Every air carrier shall file with the Board a true copy,
or, if oral, a true and complete memorandum, of every contract or
agreement (whether enforceable by provisions for liquidated damages,
penalties, bonds, or otherwise) affecting; air transportation and in
force on the effective date of this section or hereafter entered into,
or any modification or cancellation thereof, between such air carrier
and any other air carrier, foreign air carrier, or other carrier for pool-
ing or apportioning earnings, losses, traffic, service, or equipment, or
relating to the establishment of transportation rates, fares, charges,
or classifications, or for preserving and improving safety, economy,
and efficiency of operation, or for controlling, regulating, preventing,
or otherwise eliminating destructive, oppressive, or wasteful competi-
tion, or for regulating stops, schedules, and character of service, or
for other cooperative working arrangements.
APPROVAL BY BOARD
(b) The Board shall by order disapprove any such contract or agree-
ment, whether or not previously approved by it, that it finds to be
adverse to the public interest, or in violation of this Act, and shall by
order approve any such contract or agreement, or any modification or
cancellation thereof, that it does not find to be adverse to the public
interest, or in violation of this Act ; except that the Board may not
approve any co?lfract or agreement, between an air carrier not directly
engaged in the operation of aircraft in air transportation and a com-
mon carrier subject to the Interstate Commerce Act, as amended,
governing the compensation to be received by such common carrier
for transportation services performed by it.
FORM OF CONTROL
SEC. 413. For the purposes of this title, whenever reference is made
to control, it is immaterial whether such control is direct or indirect.
LEGAL RESTRAINTS
SEC. 414. Any person affected by any order made under sections
408, 409, or 412 of this Act shall be, and is hereby, relieved from the
operations of the "antitrust laws", as designated in section 1 of the
Act entitled "An Act to supplement existing laws against unlawful
restraints and monopolies, and for other purposes", approved October
15, 1914, and of all oh her restraints or prohibitions made by, or im-
posed under, authority of law, insofar as may be necessary to enable
such person to do anything authorized, approved, or required by such
order.
INQUIRY INTO AIR CARRIER MANAGEMENT
SEC. 41.5. For the purpose of exercising arid performing its powers
and duties under this Act, the Board is empowered to inquire into the
management of the business of any air carrier and, to the extent rea-
sonably necessary for any such inquiry, to obtain from such carrier,
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and from any person controlling or controlled by, or under common
control with, such air carrier, full and complete reports and other
information.
CLASSIFICATION AND EXEMPTION OF CARRIERS
CLASSIFICATION
SEC. 416. (a) The Board may from time to time establish such just
and reasonable classifications or groups of air carriers for the purpose s
of this title as the nature of the services performed by such air carriers
shall require; and such just and reasonable rules and regulations,
pursuant to and consistent with the provisions of this title, to 1)e
observed by each such class or group, as the Board finds necessary in
the public interest.
EXEMPTIONS
(b) (1) The Board, from time to time and to the extent, necessary,
may (except as provided in paragraph (2) of this subsection) exempt
from the requirements of this title or any provision thereof, or any
rule, regulation, term, condition, or limitation prescribed thereunder,
any air carrier or class of air carriers, if it finds that the enforce'rent
of this title or such provision, or such rule, regulation, term, condi ion,
or limitation is or would be an undue burden on such air carrier or.
class of air carriers by reason of the limited extent of, or unusual cir-
cumstances affecting, the operations of such air carrier or class of air
carriers and is not in the public interest.
(2) The Board shall not exempt any air carrier from any provision
of subsection (k) of section 401 of this title, except that (A) any air
carrier not engaged in scheduled air transportation, and (B), to the
extent that the operations of such air carrier are conducted during
daylight hours, any air carrier engaged in scheduled air transporta-
tion, 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 carrier, the enforcement of such para-
graphs is or would be such an 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 from such para-
graphs would not adversely affect the public interest: Provided, That
nothing in this subsection shall be 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 maxinnun flying hours for
pilots or copilots.
SPECIAL OPERATING AUTHORIZATIONS
AUTHORITY OF BOARD TO ISSUE
SEC. 4.17. (a) If the Board finds upon an investigation conducted on
its own Initiative or upon request of an air carrier?
(1) that the capacity for air transportation being offered by the
holder y a certificate of public convenience and necessity between
particular points in the United States is, or will be, temporarily'
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52 SUPPLEMENTAL AIR CARRIERS
insufficient to meet the requirements of the public or the postal
service; or
(2) that there is a temporary requirement for air transportation
between two points, one or both of which is not regularly served by
any air carrier; and
(3) that any supplemental air carrier can provide the additional
wince temporarily required in the public interest;
the Board may issue to such supplemental air carrier a special operating
authorization to engage in air transportation between such points.
TERMS OF AUTHORIZATION
(b) A special operating authorization issued under this section?
(1) shall contain such limitations or requirements as to frequency
of service, size or type of equipment, or otherwise, as will assure that
the service so authorized will alleviate the insufficiency which other-
wise 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 ex-
tended for additional periods aggregating not more than sixty days;
and
(3) shall not be deemed a license within the meaning of section
9(b) of the Administrative Procedure Act (5 U.S.C. 1008(b)).
PROCEDURE
(c) The Board shall by regulation establish procedures for the expe-
ditious investigation and determination of requests for such special
operating authorizations. Such procedures shall include written notice
to air carriers certificated to provide service between the points involved,
and shall provide for such opportunity to protest the application in
writing, and at the Board's discretion to be heard orally in support of
such protest, as will not unduly delay issuance of such special operating
authorization, taking into account the degree of emergency involved.
TITLE IX?PENALTIES
CIVIL PENALTIES
[SAFETY AND POSTAL OFFENSES]
SAFETY, ECONOMIC, AND POSTAL OFFENSES
SEc. 901. (a)(1) Any person who violates (A) any provision of
[titles] title III, IV, V, VI, VII, or XlI of this Act, or any rule,
regulation, or order issued thereunder, or under suction, 1002(i), or
any term, condition, or limitation of any permit or certificate issued under
title IV, or (B) any rule or regulation issued by the Postmaster General
under this Act, shall he subject to a civil penalty of not to exceed
$1,000 for each such [violation] violation. In the case of a violation
of a provision of title /17 or VII or any ruli , regulation, or order issued
thereunder, or under section 1002(i), or any term, condition, or limitation
of any permit or certificate issued under title IV, f such violation is a
continuing one, each day of such violation shall constitute a separate
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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 to 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 action with respect
thereto and for making to the Administrator or Board, as appropriate,
a timely report of any such action taken.
(2) Any such civil penalty may be compromised by the Admin-
istrator in the case of violations of titles III, V, VI, or XII, or any rule,
regulation, or order issued thereunder, [and] or by the Board in the
case of violations of [title VII] titles IV or VII, or any rule, regula-
tion, or order issued thereunder, or under section 1002(i), or any term,
condition, or limitation 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 person charged.
CRIMINAL PENALTIES
GENERAL
SEC. 902. (a) Any person who knowingly and willfully violates any
[provisions] provision of this Act (except titles III, V, VI, 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 [herein]
provided in this section, shall be deemed guilty of a misdemeanor and
upon 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 constitute a separate offense.
AGENCY REPORTS
The committee considered the following letters:
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington, D.C., June 16, 1961.
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, House Office Building, Washington, D.C.
MY DEAR MR. CHAIRMAN: This is in reply to your requests 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
for a class of supplemental air carriers, and for other purposes.
The Department of Commerce and the Civil Aeronautics 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 gen-
erally in the statements of those agencies and recommends enactment
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of legislation to authorize the Civil Aeronautics Board to issue limited
certificates of public convenience and necessity for air services supple-
mental to those provided by the regular common carriers. Since
H.R. 7318 was drafted by the Board to give it the authority it believes
necessary for this purpose, we recommend it be enacted rather than
H.R. 7512.
Sincerely yours,
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: 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 Aviation Act of 1958, as
amended, to provide for a class of supplemental 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 certificated under sections 401(d) (1)
and (2) of the act, the new class to be known as supplemental air
carriers; that such carriers may request, and be authorized to per-
form, limited services supplemental to those furnished by the regular
air carriers; that the Civil Aeronautics Board be expressly authorized
to issue certificates of public convenience and necessity for supple-
mental service containing limitations on the type and extent of service
authorized; that the Board be authorized to grant blanket authoriza-
tion without having to designate specific points.
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 ex-
isting holders of supplemental 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 certificated 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 con-
venience and necessity which limits the holder to performance of un-
limited planeload charter operations, limited individually ticketed
passenger or individually waybilled cargo operations, 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 designate specific points.
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. 7512
would also provide for grant of statutory operating rights to the
PHILLIP S. HUGHES,
Assistant Director for Legislative Reference.
THE SECRETARY OF COMMERCE,
Washington, D.C., June 19, 1961.
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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 temporary certificates of public
convenience and necessity for supplemental air carrier operation in
interstate air transportation. Under these certificates, supplemental
air carriers were authorized to conduct without reference to any
specified 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, and to render unlimited planeload charter services.
The issuance of such certificates was challenged in the courts by
regularly authorized air carriers, i.e., air carriers certificated to render
route-type service. On April 7, 1960, the U.S. Court of Appeals for
the District of Columbia Circuit set aside the Board action of January
28, 1959, United Air Lines et al. v. Civil Aeronautics Board (278 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 flights contrary to section 401(e) of the
act, and were not based on standards of fitness for applicants for
certificate required by section 401(d) of the act.
As a stopgap measure to avoid immediate cessation of 25 supple-
mental air carrier authorizations, the Congress enacted Public Law
86-661, approved July 14, 1960. Such legislation was designed to
maintain the status quo of the supplemental air carriers for up to 20
months after enactment 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 carriers involved.
This Department is of the opinion that the continued existence of the
supplemental air carrier fleet is of real value in terms of national
defense. At the present time eight supplemental air carriers have
executed civil reserve air fleet (CRAF) standby contracts which
provide for the furnishing of air transportation on an international
scale to the Department of Defense in the event of war or national
emergency.
Of a total of 212 aircraft allocated by the Department's Defense
Air Transportation Administration to the basic CRAF program, 40
have been allocated from supplemental air carrier inventories. In
addition, the aircraft remaining in such air carrier inventories after
CRAF requirements have been met (approximately 123 in number)
are subject to DATA's allocation authority for purposes of DOD
domestic wartime requirements, such as the Navy's quicktrans and
the Air Force's logair operations, and for the needs of the civil econ-
omy under the war air service pattern program.
The Department also concludes that it would be unrealistic, as well
as inherently unsound, for the continued existence of the supplemental
air carriers to be entirely dependent in peacetime upon military busi-
ness. Therefore, we agree that supplemental airlines should be
eligible to operate their planes in peacetime in commercial air services.
The Department supports the purpose of these two similar bills
but considers the provisions of H.R. 7318 as being more likely to
achieve their desired aims. We recommend against the provision in
H.R. 7512 that would give the supplemental carriers the right of first
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refusal in the operation of all charter trips in interstate, overseas, and
foreign air transportation. It is our view that such a provision would
give the supplemental carriers an unwarranted competitive advantage
over the regularly authorized air carriers and that it could cause
undue burden on those persons desiring charter flights by limiting at
the outset their choice of carrier.
Furthermore, the provisions in H.R. 7512 limiting the frequency of.
individually ticketed or individually waybilled cargo operations to
192 flights per year appears to be arbitrary. We are of the opinion
that H.R. 7318 gives authority to the Board to furnish the necessary
protection without setting a limitation that may be harmful to the
supplemental carriers, the regularly certificated carriers and the
traveling public.
The Bureau of the Budget advises that there is no objection to the
submission of this report from the standpoint of the administration's
program.
Sincerely yours,
Hon. JOHN BELL WILLIAMS,
Chairman, Subcommittee on Transportation and Aeronautics,
Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.
DEAR CONGRESSMAN WILLIAMS: While I agree with my. colleagues_
on the Civil Aeronautics Board that legislation by the Congress is
required to authorize the Board to issue certificates of public con-
venience and necessity for supplemental air transportation, I differ
as to the type of certificates which the Board should be empowered to
issue. I would urge the Congress to enact legislation authorizing the
Board to issue supplemental certificates limited to the operation of
charter services only without regard to the other limitations in the act.
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.
As you and the members of your committee know, 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. CAB., 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 the ex-
piration of Public Law 86-661 enacted by the Congress 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 in interstate air transportation limited to 10 round trip flights
per month between any 2 points carrying individual ticketed passen-
gers or cargo, but unlimited as to charter flights. Further proceedings
were ordered with respect to eight additional carriers. The 10-trip
authority, for example, permits a carrier to operate 10 round trips
EDWARD GuDEMAN,
Under Secretary of Commerce.
CIVIL AERONAUTICS BOARD,
Washington, D.C., June 20, 1961.
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57
monthly between New York and Los Angeles in addition to 10 round
trips per month between any other 2 points in the United States.
The authority to operate between any two cities M the United States
simultaneously is limited only by the availability of equipment by
each carrier. With this authority, the supplemental carriers could
concentrate their operations in the heavy traffic markets on which
the trunkline carriers depend for their financial success. Additional
competition in route-type operations by a substantial number of
supplemental carriers is certainly not required or necessary. The
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 currently provide air service to 576 cities and
towns in the continental United States. Thus the trade and vacation
routes are more than adequately served by these route-type carriers
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 have through the
years concentrated on developing the charter market rather than
holding out to the individual ticketholder. For example, the Board's
records show that for the year ending June 30, 1960, the supplemental
carriers received operating revenues of $50,417,000 for their civilian
and military charter sales while grossing transport revenues of
$13,580,000 in operations other than charters. (These statistics do
not include revenues of two carriers which are involved in enforcement
proceedings for violations of their authority as large irregular carriers.)
Of all the carriers operating supplemental services, 76 percent of the
total noncharter revenues were received by only three carriers. Of
these carriers, one is now bankrupt and another is operating only
pending appeal of the Board decision denying it continuing authority.
The third carrier although receiving 40 percent of its income from
individual ticket operations, showed a net loss on all operations of
$577,000 in 1960, and $1,350,000 in 1959.
A vast majority of the supplemental carriers, therefore, are not
engaging in individual ticketing or waybill operations. In fact, 14 of
these carriers engaged in no individual ticket or waybill operations
during the 12 months preceding June 30, 1960. It is my conclusion,
therefore, that since only a limited few carriers have used the indi-
vidual ticket and waybill authority from 1955 to the present, little
need exists for this type of service. If, at any time, an emergency
should develop requiring the services of the supplemental carriers for
purposes other than charters, the Board can invoke its authority
under section 416(b) of the act to authorize such operations.
The Board has encouraged the supplemental carriers to develop the
charter market by permitting these carriers to operate a charter
exchange whereby a charter group is assured of the availability of an
aircraft to suit its needs by negotiating with one central source which
in turn has available the entire supplemental air carrier fleet. The
Board disapproved a similar arrangement organized by the trunkline
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58 SUPPLEMENTAL AIR CARRIERS
carriers to protect the supplemental carriers from unwarranted com-
petition in developing the charter market. It is my firm belief that
the future of the supplemental air carrier industry lies in the further
development of t he charter market?and not in attempting to engage
in 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 competing with
approximately 67 foreign air carriers. As a result of this competition,
the market for the U.S.-flag carriers has decreased 'substantially each
year for several years. In 1950 our flag carriers carried 74.7 percent
of the market, but in 1960 carried only 54.7 percent of the total pas-
senger traffic. Although the traffic in numbers of passengers has
increased considerably during this period, unlimited competition by
the supplemental carriers could very well cause the frequency and
quality of our flag services to deteriorate. This in turn would seriously
affect their financial condition.
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 carriers 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 inter-
national field may well pose a further threat to the financial condition
of the existing carriers on these routes.
The large irregular carriers, predecessors to the supplemental air
carriers, have had authority to operate cargo flights internationally, I
but few have sought to use this authority over the years. t is ap-
parent, therefore, that little need exists for oversea or foreign supple-
mental air transportation of any kind and it is urged that such
authority be deleted from the proposal.
Failure to include oversea and foreign supplemental air transporta-
tion in the proposed amendment does not mean that the supplemental
carriers will be excluded from participation in either civilian or mili-
tary international movements?as again the Board has ample author-
ity under section 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 Ain FORCE,
Washington. July 29, 1961.
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives.
DEAR Mn. CHAIRMAN: Reference is made to your request to the
Secretary of Defense for the views of the Depart mel it of Defense with
respect to B.R. 7512, 87th Congress, a bill to amend the Federal Avia-
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Lion Act of 1958, as amended, to provide for a class of supplemental
air carriers, and for other purposes. The Secretary of Defense has
delegated to the Department of the Air Force the responsibility for
expressing the views of the Department of Defense.
The purpose of the proposed legislation is to amend the Federal
Aviation Act of 1958 to provide for a class of supplemental air carriers,
and for other purposes. This proposed legislation is similar to H.R.
7318, 87th Congress, on which a separate report has been written.
This proposed legislation has been brought about. by virtue of a de-
cision rendered by the -U.S. Court of Appeals for the District of Co-
lumbia Circuit in the case of United Air Lines, et al. v. Civil Aeronau-
tics Board (278 F. 2d 446 (1960)). (See 364 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 supplemental
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 certificates of public convenience and neces-
sity to authorize supplemental air transportation. Thus, those car-
riers who held certificates to engage in supplemental air transporta-
tion did not then have legal operating authority. As a stopgap meas-
ure 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 proposed 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 a useful public
service and that they have a definite place and role in meeting the
Nation's air transportation requirements. 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 \vho would be
eligible for such authority under the proposed legislation.
The amendments proposed in H.R. 7512 to the Federal Aviation
Act of 1958 are all amendments of a technical nature designed to
give. the Board appropriate legal authority to issue certificates to
carriers for supplemental air transportation. These proposed tech-
nical amendments include a so-called "grandfather" provision which
would authorize the issuance of a certificate for supplemental air
transportation to those carriers who were previously authorized to
engage in such transportation (see line 5 and following on p. 3 of
H.R. 7512).
The continued existence of the irregular air carrier fleet is of real
value in terms of national defense and it is evident that the future
ability of the irregular air carriers to service 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 en-
gaged in service for the military. In this regard, the current (April
1, 1961) allocation of aircraft to the civil reserve air fleet (CRAY)
program shows that there are 8 supplemental air carriers participating
in this program which now includes 22 air carriers.
The Department of the Air Force, on behalf of the Department of
Defense, has no objection to the enactment of H.R. 7512, but defers
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60 SUPPLEMENTAL AIR CARRIERS
to the views of the Civil Aeronautics Board concerning the technical
details of the bill.
This report has been coordinated within the Department of Defense
in accordance with procedures prescribed by the Secretary of Defense.
The Bureau of the Budget advises that, from the standpoint of the
administration's program, there is no objection to the presentation
of this report for the consideration of the committee.
Sincerely,
JOSEPH S. IMIRIE,
Assistant Secretary of the Air Force.
OFFICE OF THE POSTMASTER GENERAL,
Washington, D.C., June 20, 1961.
Hon. OREN HARRIS,
Chairman, Committee on Interstate and Foreign Commerce,
House of Representatives, Washington, D.C.
DEAR MR. CHAIRMAN: We reply to your request for reports on
H.R. 7318 and H.R. 7512 proposing to authorize the Civil Aeronautics
Board to issue certificates of public convenience and necessity to
"supplemental air carriers."
Each of these bills would amend the Federal Aviation Act by au-
thorizing the Civil Aeronautics Board to issue certificates of public
convenience and necessity to "supplemental air carriers." The bills
differ, however, in the specific type of service which could be authorized
by the Board in the certificates granted to "supplemental air
carriers." H.R. 7512 does not include authorization for the trans-
portation of mail. H.R. 7318, on the other hand, would permit the
Civil Aeronautics Board to grant "supplemental air carriers" authority
to transport mad.
To date the supplemental air carrier operations authorized by the
Civil Aeronautics Board have not included any grant of authority to
transport mail. Nor has the Department ever supported any such
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 trans-
portation 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 been advised by the Bureau of the Budget that from the
standpoint of the administration's program there is no objection to
the presentation of the report to the committee.
Sincerely yours,
J. EDWARD DAY, Postmaster General.
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