Officials of two major airlines yesterday admitted to a host of injustices suffered under federal regulation but opposed pending legislation to free them from Civil Aeronautics Board control over their activities.
Both suggested that minor - rather than major - legislative surgery could correct what ills the industry has.
"I represent an airline that really hasn't done very well under the present system," Frank Borman, chairman, president and chief executive officer of Eastern Air Lines, conceded to the Senate Aviation Subcommittee.
In outlining what regulation has done for Eastern, Borman noted that the CAB took two and one-half years to approve EA's emergency application to acquire bankrupt Caribair's routes, is considering for the third time in eight years some of EA's route applications, took five years to decide on Puerto Rico fare revisions, and has yet to decide on a one-and-a-half-year-old Eastern proposal to carry charter groups on scheduled flights at almost half fare.
"Who in his right mind would want to hide behind regulations that have taken Eastern from being the most profitable carrier in the industry in 1955 to the brink of bankruptcy in 1975?" Borman asked.
Change is needed, he counseled, but not as much as the pending bills would require. "We have a good system that needs to be improved, not a bad system that needs to be abandoned." He suggested requiring the CAB to reduce regulatory lag by establishing procedural deadlines, priorities and criteria for hearing route applications, as well as permitting carriers to increase or decrease fares 10 per cent across the board.
Borman was highly critical of a report by the General Accounting Office released last month which concluded that regulated airlines could have operated at lower costs and offered consumers lower fares to the tune of $1.4 to $1.8 billion a year from 1969 through 1974 under less regulation.
"I have here a GAO airplane," Borman exclaimed, pulling the wraps off four rows of seats during yesterday's hearings. While committee chairman Howard W. Cannon (D-Nev.) and Barry Goldwater (R-Ariz.) tried unsuccessfully to squeeze themselves into the seats - their knees wouldn't fit in easily because the seats were so close together - Borman contended the airlines would have to use these seating configurations to meet GAO requirements.
[In fact, the rows of seats were placed three to four inches closer together in the EA mockup than the seating configurations used by GAO, which duplicated "actual" seating configurations in use today by Trans International Airline, the report suggests. The carrier uses the seating in its all-coach charters. "We used what airlines told us they are actually using," a GAO spokesman said yesterday. "They put people in those seats and make money."]
Richard S. Maurer, senior vice president of Delta Air Lines, agreed that there are some problems with the way the carriers have been regulated, but contended that charges of rigid price regulation and restrictive entry policies fall directly at the door of the CAB, not the basic statute which set it up. "Much of the impetus for the reform movement appears to come from dissatisfaction with recent CAB administration of the statute, rather than any inherent defects in the act itself." he said.
Noting that Delta is and has been successful and profitable, Maurer added "the fact that some entities in any industry do better or worse than others does not mean that the basic regulatory laws are wrong." Although Delta would do well under a more competitive system. Maurer worried that pending bills could "unbalance" the existing good law and weaken the "system."
If regulation were reduced, Delta probably would lower some short-haul fares, increase some long-haul fares, and keep most the same, Maurer said in response to a question.
In other testimony, officials of the Association of Local Transport Airlines supported legislative change to enhance competition and reduce the concentration of economic power they said the top five airlines now have.
Francisco Lorenzo, chairman of ALTA and president of Texas International Airlines, said he is worried that pending legislation would increase concentration by the five carriers - which take in 67 per cent of all domestic airline revenues. Lorenzo called for a gradual movement to a more competitive system which would protect the smaller carriers who ALTA's members who don't have the resources and aircraft to resist inroads by their larger brethren.
"The way to avoid oligopoly is to confine the more radical provisions of the Cannon-Kennedy bill to the most heavily traveled markets." Lorenzo said. "In the other markets, a certification preference for new entrants and small carriers should be created.
"That's the way to get competition into the airline system." he said, ALTA is comprised of 15 carriers, including Allegheny Airlines.