The Justice Department yesterday urged the Civil Aeronautics Board to award a New York-London route to a U.S. airline that will promise to operate a low-fare service similar to the one planned by Britain's Laker Airways, Ltd.
Under the terms of the recently signed air services agreement between the United States and the United Kingdom, two airlines are to be designated by each country to serve the heavily traveled trans-Atlantic route.
While it has always been assumed that Pan America World Airways and Trans World Airlines, the two American carriers currently serving the route, would be designated by the U.S., John H. Shenefield, acting assistant Attorney General for antitrust, told the CAB yesterday that doesn't have to be the case.
The board has an "historic opportunity" to remake the existing international aviation picture, in which scheduled carriers stick to the International Air Transport Association cartel-set fares, he said, and to institutionalize low-fare, competition as a "permanent" force.
"We appear on behalf of trans-Atlantic passengers," Shenefield told the board.
The Justice Department proposal came during a full-day oral argument before the CAB to help it determine what airlines should be awarded routes both to London and other European cities and what new American cities should be opened as "gateways" for nonstop air service to Europe.
Under the new U.S.-U.K. agreement signed in the late July, the U.S. government must designate a carrier to operate between Dallas-Fort Worth and London, and a carrier to operate between Atlanta and London by Nov. 1.
President Carter, who makes the final determination, has asked the board to send its recommendations to him by early October. Also in contention are awards of new routes between U.S. and European cities decided in a proceeding by the CAB a year ago, but sent back by President Ford pending the outcome of the U.S.-U.K. negotiations.
In his presentation yesterday, Shenefield told the board it should allow Pan Am and TWA to apply for the low fare service to London from New York but said there "would be reason to favor a non-IATA carrier" for such service.
IATA members have been operating across the Atlantic for 30 years and didn't think of instituting low fares like Laker's until faced with the reality of that proposal, he said.He noted that several charter carriers, which have been providing the only truly low-fare service to Europe over the past few years, also have applied for low-fare scheduled service.
The Justice Department also has urged the board to investigate the IATA carrier fares, designed in part to meet Laker's competition, on grounds that they may be predatory and could force the charter carriers out of business.
Shenefield also told the board it should approve applications for low-fare service by any carriers to any European city to increase competition and low fares across the Atlantic. Such a move, he said, also would ameliorate the restrictive effects of the U.S.-U.K. agreement.
He said low fares to other European cities might deter the British from instituting capacity restrictions on U.S.-U.K. routes if low-fare alternatives exist to other European cities.
Shenefield also urged that carriers be granted the Dallas-Fort Worth and Atlanta routes on a one-year basis to allow the board to consider over a longer period of time what it wanted to do.
During yesterday's hearing, representatives of a dozen airlines each argued that their line was singularly qualified to institute certain new services, while officials from 18 cities and states argued that the routes should originate in their areas.