The Civil Aeronautics Board granted temporary approval yesterday to a proposed restructuring of the International Air Transport Association while the board continues to decide whether IATA's rate-setting activities should continue to receive U.S. anti-trust immunity.
Board members also decided to conduct an unusual "legislative" hearing to take testimony themselves on the economic justifications and international ramifications of possible disapproval of IATA's 30-year-old role in setting international airline fares and cargo rates.
In board set up a schedule for taking written testimony, oral testimony for at least three days, and making a decision by Oct. 15.
In the meantime, IATA can proceed with its proposed reorganization under which its 103 member world airlines can choose to participate only in its trade association function such as baggage, ticketing and other facilitation activities, and not get involved in rate-setting. When Pan American Airways dropped out of IATA this year, it said, for instance, that it would rejoin and participate in the trade assocation activities if the reorganization were approved.
Under IATA's proposed changes, member airlines participating in the rate-setting conferences are also given some flexibility to meet low-fare offerings of non-IATA carriers. Under current rules, all member airlines were required to participate in both rate-setting and trade association activities.
The board also said yesterday it has decided that many of the specific IATA resolutions requiring CAB approval -such as resolutions settthe size and content of tickets, forms, and tags and setting procedures for confirming reservations and forwarding tickets-were not anticompetitive, and it withdrew previous tentative finding of disapproval.
A spokesman for IATA, whose directors-the presidents of 21 member airlines-were meeting in New York yesterday, said the group would have no comment on the board's decision until it studied the order other than to say it "welcomed" the action.
The board's proceeding into IATA's activities, begun last summer, has generated and enormous-and mostly negative-response from nations around the world and their airlines. During yesterday's board meeting. CAB Chairman Marvin S. Cohen cited the interest of large numbers of sovereign nations in the special kind of hearing the board decided to conduct rather than sending the issue to an administrative law judge for an adjudicative hearing.
"There are so many serious policy questions and philosophy questions involved here that . . . we ought to be doing this rather than filtering it through an administrative law judge," he said.
In its order, the board stressed that the IATA and others shouldn't misinterpret the significance of interim approval. Citing the "serious concern" that it continues to have about many aspects and activities of the IATA, the board warned that its final decision could be disapproval of the mechanism.
The board also held out the possibility that it could treat air transportation to or from the United States differently than air transportation that does not directly affect the U.S.
For instance, the board said it could approve the entire new structure of the IATA as it affects air transportation that doesn't involve the U.S. directly, approve the trade association functions as they affect the U.S. and disapprove rate conferences to the extent they affect rates to or from the U.S. That would be the same as totally approving IATA's new structure permanently, followed by the voluntary withdrawal of all airlines from rate conferences that involve the U.S.
If the board, in its final decision, removes IATA's antitrust immunity, effect from participating in the rate conferences because they would amount to illegal price fixing. In addition, any international airlines that fly to the U.S. would be subject to antitrust prosecution if they met to fix prices on routes to the U.S.