The top executive of the successful Northwest Airlines yesterday proposed some radical changes in airline regulation but at the same time opposed pending legislation.
Donald W. Nyrop, chairman of the board and chief executive officer of Northwest, told the Senate Aviation Subcommittee there "no major problems" with the statute under which the Civil Aeronautics Board regulates the industry, but that "some minor adjustments" may be required.
Among them, Nyrop suggested:
Revising the current subsidy program so that any airline becomes ineliible when its revenues reach a certain point: he suggested a $200 million limit for a three-year period which would be reduced by $20 million each year. "This will be an effective way for Congress to control and reduce its appropriations for airline subsidies," he said.
Limiting any pricing flexibility being contemplated so that carriers could raise fares only by 5 per cent and lower them by 10 per cent without AB interference.
Holding fare reductions to no more than 25 per cent of coach fare. "To have reductions to no more than 25 per cent of coach fare. "To have reductions greater than 25 per cent simply means that the business travelers and others who use the regular fares are being overcharged," he said. he also said it was "discriminatory" for one person to pay 30 or 45 per cent more for the same seat than a person who was able to purchase a ticket three weeks earlier.
Requiring the CAB to give more weight to the most efficient carriers - like Northwest - when awarding routes. The board's policy of awarding routes to weaker carriers in an effort to increase their revenue potential may have resulted in higher passenger fares than necessary, he said. Because the board's rate decisions are based on industry-wide average, continued expansion of the least efficient carriers "tends to create requirements" for increases.
Eliminating regulatory delays by mandating the CAB through legislation to stick to certain time limits for acting on carrier fare filings.
Nyrop said he favors "real deregulation" which the current bills do not accomplish.
In other testimony, Thomas A. Trantum, vice president of Wainwright Securities, Inc., said the industry and its consumers would be better off if federal regulation were reduced and the carriers were forced "to adjust to the demands of the market-place."
"The major questions are whether the public is willing to pay a higher price to support the system as we know it today, or whether potential productivity gains can be realized to offer the services at the same or lower prices," said Trantum, the only security analyst to publicly endorse a change in air regulation.
Rep. Millicent Fenwick (R-N.J.) told the hearing the carriers didn't want a change "because they don't know what will happen," a "syndrome" found in every industry that is regulated, she said.
Noting that the industry has operated under CAB control for 40 years, she said. "That's what they're accustomed to. It's like weaning a child. What child wants to be weaned?"