The spotlight in the debate over airline regulation shifted back to Capitol Hill yesterday as the Senate began 13 days of hearings on major legislation whose main features have the strong backing of the second administration in a row.
In opening the hearings, Sen. Howard Cannon (D-Nev.) promised that the Senate Aviation Subcommittee could have a bill ready for full Commerce Committee deliberations sometime in May.
"In my view, unless we revitalize the airline industry with a new regulatroy structure which encourages competition and discourages inefficiency and waste, the nation's privately owned airlines will go the way of the railroads," Cannon warned. "Huge government bailouts will be required along with quasi governmental owner ship."
Reducing federal regualation of the nation's airlines - allowing them greater freedom both to raise and lower their prices and to move into new routes - would benefit consumers and the airlines alike, lead-off witness Sen. Edward M. Kennedy (D-Mass.) told the Senate Aviation Subcommittee yesterday.
Kennedy rejected the arguments of many of the carriers that allowing airlines to lower their prices will not bring lower fares because airline costs are not going to go down. Pointing to carriers in California and Texas unregulated by the CAB whose fares are 20 to 60 per cent lower than CAB-regulated fares for comparable distances, Kennedy noted that they pay comparable wages, more for jet fuel, and the same for planes.
"They fly in rain as well as shine, get charged for landing at airports, the same FAA safety standards imposed on the CAB carriers . . . then why the lower rates?" Kennedy asked.
"The largest part of the difference is due to one simple fact: the intrastate carriers put more passengers on their planes," he said.
Pacific Southwest Airlines puts 158 seats in a Boeing 727-200 jet and fills 60 per cent of the sets on average, while American Airlines puts 121 seats on exactly the same type of aircraft and flies it 55 per cent full on the average, he noted.
"Thus, when flying PSA, 95 passengers share in the cost of the flight, while on the American plane, only 66 passengers must share the same cost," he said. As a result, PSA charges $32 to fly the 456 miles between San Diego and San Francisco, and American charges $51 to fly the 399 between Boston and Washington.
John E. Robson, chairman of the Civil Aeronautics Board, agreed with Kennedy that carriers and consumers would benefit with a system of air transportation that placed greater reliance on competitive market forces, but they disagree about how to get from here to there.
In contrast to the detailed step-by-step procedure for reducing regulation outlined in a bill co-sponsored by Kennedy and Cannon, Robson and his colleagues prefer a bill introduced by Sens. James B. Pearson (R-Kan.) and Howard H. Baker (R-Tenn.) which places greater discretion with the CAB for moving the industry toward greater competition.
The transition "must be gradual, carefully monitored, and should assign the regulatory agency the role of controlling the pace and design of the transition consistent with the new mandate of Congress," Robson said.
In its testimony, the board proposed a new program designed to assure, and even expand, air service to small communities under a more competitive environment. The board now pays local service carriers $70 million a year to serve small communities that might otherwise not have service. Under the board proposal, it would pay carriers to serve communities according to the actual cost of providing specified levels of service, predicated on costs representative of the smaller-plane commuter industry. All towns now getting certificated carrier service with 40 or fewer passengers a day would be eligible for the continuing subsidy.