The Civil Aeronautics Board acted yesterday to end for now its controversial investigation into the fare-setting activities of airline members of the International Air Transport Association.
The investigation had elicited such a storm of protests from governments around the world that the State and Transportation departments had urged the CABto back away from its original proposal, which would have withdrawn U.S. antitrust immunity enjoyed by IATA members since 1946 for their fare-setting.
Instructing its staff to prepare an order that would bring the proceeding to a close, the board said it had come to believe that abrupt removal of antitrust immunity for all IATA fare-setting could backfire, leading to reactions around the world which might hinder its efforts to stimuate a more competitive international aviation enviroment.
Yesterday's decision will permit foreign and U.S. airlines to continue to meet under IATA's aegis and jointly agree on fares they all will charge subject to the approval of the governments involved on each route.
But the board said it would prohibit U.S. airlines from participating in the IATA conferences that set passenger fares and cargo rates for routes across the North Atlantic between the United States and Europe.
Because IATA members have failed to reach agreement on North Atlantic fares over the last few years and all U.S. airlines but National have dropped out of IATA's rate conferences, the board's prohibition doesn't effectively alter the status quo.
But questions were raised yesterday on Capitol Hill about whether it was fair to grant foreign airlines the right to set prices on U.S. routes and deny it to U.S. carriers.
the CAB said that because the system appears to be functioning well without U.S. carrier involvement in collective rate-making, it could not find, that it was in the public interest to shield U.S. airlines from the normal reach of the antitrust laws.
Because foreign governments are so addamantly against the U.S. application of U.S. antitrust laws to their own airlines, the board said it decided to use caution in withdrawing immunity from them, especially because it was probable that, U.S. policies of encouraging competition in the North Atlantic market could be achieved without it.
The reaction of foreign governments to the whole proceeding obviously influenced the board's decision.
After reviewing the record in the past year and a half -- including five days of hearings last month -- the board said it continues to doubt that airlines need the power to set fares jointly in order to have a smoothly functioning and efficient international aviation system.
But is said it recognized that other govermnents -- including some which share U.S. avaition goals to various degrees -- do believe it is necessary. Some asserted that a lack of face coordination could imperil fledgling airlines in developing counties the board noted.