Key senators criticized the Civil Aeronautics Board yesterday for granting airlines unlimited authority to raise prices on short routes where there is generally more competition.
"I am skeptical about the economic justification for this uneven application of fare protection," Senate Commerce Committee Chairman Howard W. Cannon (D-Nev.) told CAB members at a hearing on its recent action. He said he was even more concerned about the "obvious appearance of discriminatory protection" that is already causing small communities to complain.
The CAB's decision granted airlines a three-tiered system of fare freedom. Effective immediately last week, the plan allowed airlines to raise fares without CAB approval by an unlimited amount for routes of 200 miles or less, by 50 percent above the base level for routes up to 400 miles and by 30 percent above the base for routes longer than 400 miles.
"That decision virtually removed all regulatory restraints from short-haul air transportation flights," Majority Leader Robert C. Byrd (D-W.Va.) complained. He was the leadoff witness at yestersay's hearing. "The obvious question is, "Why protect the long-haul routes and not the short-haul trips?" he asked.
Byrd said he was bewildered by the board's contention that competitive forces will keep fares in check so that a ceiling no longer is required. "It is on these short-haul trips that competition is lacking," he said."If I want to fly from Charleston, W.Va., to Cincinnati, Ohio, there is only one airline to which I can turn. The same can be said for most points with West Virginia . . ."
"Instead of alluding to nonexistent competition, the CAB should note that short-haul markets more realistically approach monopolistic situations," he said. "And we all know what occurs when a monopoly exists: Prices go up."
CAB Chairman Marvin S. Cohen said the board felt its fare level was much too low and that giving the airlines greatly increased freedom would require them to decide what fare level and structure would sell rather than take all increases allowed by the board.
"If we merely created a 10 or 15 percent zone, the industry would most likely continue to take this as an 'upwa rd price leader' and just go to that level in a lockstep movement," Cohen contended. He also contended that the plan gives the industry the scope to develop new pricing strategies.
Even before the recent CAB action, fares on routes operated by the socalled "local service" carriers could be 30 percent above the standard industry level, and often were. Cohen suggested that larger airlines also might have served those routes if their fares could have been 30 percent higher.
"You've done a good job of justifying added flexibility for carriers to increase fares but I'm not convinced you've justified the uneven protection . . ." Cannon said at the close of the hearing. He said he hopes the board will re-evaluate its action. "I'm still not convinced that what you've done is the right thing," Cannon said..
Most of the airlines have announced they will raise fares across the board between 4 percent and 6 percent, although Braniff International had announced it would take the maximum increases allowed by July 1.