The Senate Aviation Subcommittee yesterday heard disparate testimony on proposed legislation which would reduce federal regulation of the airline industry:
Officials of two federally-regulated airlines insisted that more responsible - but not less - regulation by the Civil Aeronautics Board is all that is needed to make the airline industry healthy, not more competition.
The president of a small California airline contended his desire to be efficient, innovative and to grow is being frustrated by the CAB and that legislation reducing its control of the industry is his only hope of "survival."
Representatives of the airlines' traditional lenders - major banks and insurance companies - said that legislative changes would make future financing of new aircraft extremely difficult but admitted the carriers were in such bad shape - because of the past 20 years of regulation - they had pretty much already stopped lending them money.
Officials of the American Association of State Highway and transportation Officials testified that "something has to be done" to increase competition in the airline industry, and urged that any measure include recognition of the growing segment of small carriers as an integral part of the nation-wide network.
Arthur F.Kelly. chairman and chief executive officer of Western AirLines blames what troubles the industry has on "unnecessary burdens" imposed by "the failure of some of the recent membership of the CAB to act responsibly under the current statutes.
"We do not believe legislative changes are need," he said," . . . what is needed is close oversight of the regulatory agency to assure adherence to the law."
Asking "who has asked for this relief on our behalf," Kelly said it clearly wasn't the public because consumers don't think fares are too high. "We received not one complaint from the over 8 million passengers we carried in 1976 complaining of the fact that our fares are to high," he noted.
"The fact that you haven't received many complaints . . . doesn't necessarily prove that there aren't a lot of people complaining," chairman Howard W.Cannon (D-Nev.) noted, adding that people who feel they can't afford to fly at today's prices. When Kelly noted that his carrier had 124 discounts, Cannon replied: "That's another complaint we get - there are so many fares it requires a Philadelphia lawyer to understand them."
Harvey J. Wexler, senior vice president of Continental Air Lines, agreed with Kelly that a "return to enlightened regulation.
"The answer in our view does not lie in restructuring the industry or providing free entry to markets." he said.
Lee M. Hydeman, counsel for Continental, used a maenagerie of animal analogies to describe the airline industry. At one point, he noted the airlines had behaved "like a bunch of turtles" and withdrew into "the warmth of their shells" and stopped awarding new routes. But, he noted, the carriers are "perfect Pavlovian dogs" and if someone rings the bell and tells them which way to go, "they'll salivate immediately."
The carriers are like "a group of donkeys who have done a pretty good job of pulling their carts and getting to the marketplace," Hydeman said. "They will react to the stick or the carrot if properly applied by the regulators."
On the other hand, the carriers are "not race horses and we cannot treat them as such." or some will fall by the wayside in exhaustion. With too much freedom, "we are likely to find them wandering through the fields eating daisies," he suggested. "Some may get to the markets we want them to and some may not."
Alan F. Heath, president of Pacific American Airlines, which may currently engage only in "private" or "contract" carriage of persons or property - but may not advertise its services to the public - says his 30-year-old has "reached the point of throwing in the towel" because of "an unfair and restrictive" system it has been unable to penetrate.