Senate Aviation Subcommittee Chairman Howard W. Cannon (D-Nav.) yesterday took issue with airline industry predictions of doom if their federal protection is reduced, calling the claims "red her rings," "scare tactics," and "poppycock."
In tough questioning of C.E. Meyer Jr., president of Trans World Airlines, Cannon made it clear he wants evidence from carriers and any others who contend that pending legislation - which would move the highly regulated industry into a more competitive encironment - will necessarily hurt the airlines, their employees, or the communities and consumers they serve.
After listening to Meyer testify that reduced regulation could cause small communities to lose wir service, cause a reduction in airline safety standards, jeopardize countless jobs in the industry, threaten carriers with bankruptcy, and make it even harder that it currently is for airlines to get the capital they need to buy new aircraft, Cannon attacked them one-by-one.
Saying he personally believes the small community claim to be "a red herring" used for "scare" purposes, Cannon noted that Richard J. Ferris, president of United Airlines, which serves more small sports than any other large carrier, had just testified that small towns feed valueable traffic into their longer routes; that small commuter airlines already serve more small towns than the large airlines and are willing to serve more; and the there is wide concensus to including some sort of federal subsidy program to assure small town air service in any legislation.
"Given these facts, how are communities going to lose service in a more competitive environment?" Cannon asked. "What small communities would you abandon . . .?"
When Meyer began to respond that "it would very difficult" for him to say, Cannon interrupted him to note "as a matter of fact, you don't serve any small communities so you're extending your expertise . . ."
Raising the spectre of bankruptcy, Cannon said he believed it to be a "fallacy put out by airlines to alarm their employees." How could the legislation lead to bankrupty and put people out of jobs, he asked the TWA head. "The economics of this industry is so finely balanced, it would disrupt it," Meyer replied." . . . it could very easily cause bankruptcies."
Cannon said testimony during the hearings so far had suggested that more competition would stimulate travel and create new jobs. "Are you saying TWA can't make it in a competition market and would go bankrupt?" Cannon asked. "I'm suggesting that the possibility exists . . ." Meyer replied. "I'm not identifying who or under what circumstances it would occur." Cannon responded that the present system was no guarantee either.
Cannon then took on the safety issue. "You infer new carries will not operate safely; do you really believe that, or is it a scare tactic you're putting out here to cause alarm?" The senator, who is co-author of the Carter administration-endorsed legislative proposal with Sen. Edward M. Kennedy (D-Mass.), noted that under all pending bills, a new carrier would have to show - like now - that it was "fit, willing and able" to provide service, and would leave Federal Aviation Administration safety regulations unaltered.
After Meyer had already left the witness table and another witness had come to take his place, Cannon thought of something else. "One more thing," he called. Noting that Meyer suggested in his testimony that the meausre could mean the elimination of inter-airline baggage handling, reservations and ticketing systems, Cannon lectured him, "Nothing in here would eliminate agreements that benefit the public; to suggest it is absolutely absurd."
In other testimony, United President Ferris endorsed significant changes in the regulatory framework to move the industry to more competition gradually. "Existing regulation is sowing the seeds of destruction of a quality system," he said.
More competition would allow airlines to offer consumers some lower fares and different kinds of air service, and give them the opportunity to become more efficient and earn more profits, in turn making them more attractive for investors and lenders.
Without change, Ferris said the airlines could soon be in the same position as some railroads. "United Airlines does not want to be a ward of the state," he said. 'United Airlines does not want to become a nationalized carrier or operate under close government control of management decisions."
Ferris, whose carrier serves 113 cities, suggested that current regulation, not change, would lead to a loss of jobs. With a less regulated environment, existing carriers would become stronger and new carriers would enter the market; both could provide new jobs, he said. Although he said air fares will undoubtedly rise in the future, they "will rise less rapidly" with competition than underthe present system.