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THE PATH TO LEGISLATION OF THE AVIATION ACT OF 1975.

DRAFTING THE BILL


The first serious effort to translate the conclusions of the Kennedy Hearings into legislation was the proposed Aviation Act of 1975, submitted to the Congress by President Ford in October 1975. The Act began by proposing a new declaration of Policy, in place of the Section 102 of the Federal Aviation Act 1938:


Section 102:


In the exercise and performance of its powers and duties under this Act, the board shall consider the following, other things, as being in the public interest, and in accordance with the public convenience and necessity:


(a) the encouragement and development of an air transportation system which is responsive to the needs of the public and is adapted to the present and future needs of the foreign and domestic commerce of the United States, of the Postal service, and of the National Defense;

(b) the population of a variety of adequate, economic, efficient and low cost services by air carriers without unjust discriminations, undue preferences or advantages, or unfair or deceptive practices, and need to improve relations among and coordinates transportation by air careers;

(c) maximum Reliance on competitive market forces and on actual and potential competition to provide the needed air transportation system

(d) the encouragement of new air carriers

(e) the importance of the highest degree of safety in air commerce

The new Bill was in contrast and was designed to satisfy the needs of the public, not just of the airline industry itself.

The Ford Bill provided for continued regulation by the Civil Aviation Board through the grant or denial of certificates. But in the three areas of procedure, market entry and rates the act proposed substantial liberalization. In order to prevent recurrence of the route moratorium, the Act required the board to set up an application down for a hearing within sixty days and to act on it within ten months, if the Civil Aviation Board did not act; the application would be deemed granted.


To facilitate market entry the act proposed a complicated scheme.


1. If any city-pair had not enjoyed nonstop service, an application to provide such service had to be granted, without any need to prove "public convenience and necessity"

2. After the end of five year translation, any carrier holding a certificate would be entitled to provide nonstop service between any U.S. points name in its certificate.

3. All Carriers would be divided according to the number of available seat miles they had offered in a base year. If a carrier operated under this "discretionary authority" for twelve consecutive months, it could apply for permanent certification for the new service, which had to be granted unless the service was not in conformity with the act.

Criteria Rate Making was adapted from Section 1002(e) of the 1938/1958 Act, but the difference was comparable to those proposed in Section 102 of the Federal Aviation Act.


For determination of maximum rates for carriage of persons or property, the board had taken following points into consideration:-

1. The effect of such rates upon the movement of traffic

2. The need in the public interest of adequate and efficient transportation of persons and property by air carriers at the lowest cost consistent with the furnishing of such service

3. The quality and type of service required by the public in each market

4. The need for price competition to promote a healthy air transportation industry which provides maximum benefits to consumers

5. The need of each carrier for revenue sufficient to enable such air carrier, under honest, economical and efficient management, to provide adequate and efficient air carrier service

6. The desirability of a variety of price and service options such as peak and off peak pricing to improve economic efficiency


THE ACT IN COMMITTEE


The communities of the Congress that had legislative jurisdiction over air transport- i.e. the commerce note the judiciary, committee in the Senate and public works and transportation committee in the house- were in no hurry to consider the aviation act of 1975. The Senate committee held hearings on the administration bill in April and again in June 1976. The house committee did not hold hearings at all.


Secretary of transportation, who appeared as chief administration supporter of the legislation, the secretary of the treasury, William E. Simon, testified at the Senate hearing, throwing his support behind the bill as the leading edge of the program to reduce the government's involvement in the economy.


The carriers were prepared to experiment for a two year period with the "zone of reasonableness" in air fares, and they supported mandatory speed up of the board's procedures. But they were not prepared to accept eased conditions for route awards.

The Civil Aviation Board, was not prepared to support the administration bill, but instead offered its own program of "monitored regulatory reform", less rigid than the proposed aviation act of 1975.

The Civil Aviation Board proposed flexible expedited procedures; rather than mandatory removal of all short haul, long haul etc restrictions. The board also proposed ad hoc review of such restrictions; rather than complete rate decontrol download, the board proposed a Congressional directive to set maximum and minimum rates. The biggest this agreement between the board and the administration turn on the question of route grants and market entry. The board was prepared to free up entry, exit and pricing on air freight and on charter transportation, but not on trunk passenger routes. Chairman Robson called for a revised declaration of policy in section 102 of the act, looking; it seems, to greater stress on competition, the board was not prepared, however, to yield its basic power to grant certificates for service between particular City pairs.


With the Government Agencies divided, the airlines strongly opposed, and the Congress looking to an election year, the Senate committee was not anxious to report out a bill, and was not ready to support the administration's proposal which he had done so much to stimulate. In the end, no report was submitted. In the Washington parlance, the Aviation Act of 1975 died in committee.




Navin Kumar Jaggi

Sayesha Suri

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