House and Senate conferees yesterday agreed on a compromise measure to phase out federal regulation of the nation's airline industry.
The compromise establishes a schedule for the gradual elimination of Civil Aeronautics Board jurisdiction over airlines' rates, routes and merges by 1985.
CAB authority over routes would be eliminated altogether at the end of 1981, leaving existing airlines totally free to start new routes without any application process. New airlines could be formed with a simple showing that they are "fit, willing and able" and would not be required to go through the extensive hearings that preceded new airline certifications - the few that were - in the past.
At the end of 1982, the CAB would be stripped of its authority over fares and mergers, leaving the airlines subject to the same federal antitrust statutes regarding pricing and mergers that apply to other nonregulated industries.
By Jan. 1, 1984, the CAB would be required to send Congress its recommendations on whether its life should be extended to handle international aviation matters, the small community air service programs or agreements among airlines. If Congress doesn't act within a year, those functions would be transferred to other federal departments and the CAB would be dissolved by Jan. 1, 1985.
The House and Senate are both expected to approve the conference report late next week before adjourning the House, which has to act first, has a holiday schedule that permits no votes to be taken until Thursday.
The Senate's inability so far to vote out a House-passed measure to help the airlines meet federal anti-noise regulations has been considered a potential stumbling block to final enactment. House conferees were frank about their intentions to "move both bills" together. But the noise bill is meeting more opposition in the Senate and supporters don't think the measure can get through at this late stage. Nevertheless, it is not believed the House supporters of the noise bill will keep the deregulation bill - with its wide support - from becoming law.
The measure, strongly backed by the Carter Administration, is designed to - and expected to - significantly increase competition among the airlines.
In fact, the measure would so clearly reduce regulation and so definitely assures a competitive environment for the airlines that conferees felt they could justify changing the name of the legislation to the Air Transpport Deregulation Act of 1978. The Senate had called its measure the air transportation regulatory reform act while the House had dubbed its the air service improvement act.
At the same time, the compromise measure would set up mechanisms designed to protect the airlines, their employees, and the public during the transition period from a highly regulated to a more competitive environment:
Employees might lose their jobs because of dislocations caused by the legislation would be eligible for payments of a percentage of their salaries for up to six years from the U.S. Treasury. The protection would not be available unless employment on an airline were reduced 7.5 percent. The Labor Secretary would have to draw up rules for the payments, fixing the salary percentages to be paid, within six months of enactment. Congress then would have one month to review the rules.
Cities now listed on airlines' certificates would be guaranteed "essential" air service for 10 years with the government picking up the tab for an airline's losses if it wanted to stop serving the city and no replacement airline can be found.
The compromise was hammered out in three meetings attended by House and Senate negotiators, led by Senate Commerce Committee Chairman Howard W. Cannon (D-Nev.), who engaged in some old-fashioned horse-trading yesterday to reach a final compromise. Cannon had not wanted to agree to a House provision abolishing the Mutual Aid Pact, a strike insurance agreement under which the members airlines agree to reimburse a struck airline for some of its normal operating costs. Cannon said it was not fair to limit the employers' strike payments and not the employees'.
In the end, Cannon got the conferees to agree to trade some provisions in the labor protection provision for a provision that would allow the CAB to approve a mutual aid pact under which 60 percent of an airline's expenses during the strike period would be paid for weeks if all members of the pact agree in advance to submit to binding arbitration.