I am attaching hereto tables which show that mail is constantly increasing
under the present system. October 1934 broke the existing records; December
broke that record; March again broke the record, when, for the first time in
history, the poundage dispatched over various routes was over a million pounds;
and successively since March, April, May, and June dispatches have been over
one million pounds. As mail has increased, express is also increasing. The
same is true of passenger travel. In March of this year the revenues were three
times the revenues of any previous March. Passenger miles in March, April,
May, and June have successively broken all previous records by a substantial
margin. Practically every major route in the country within the past year has
placed into service improved passenger equipment. Within the last year the
Burea of Air Commerce has cooperated with the Post Office Department in
every way by providing airways with the most modern facilities. With such a
state of improvement in mail, passengers, and express business and improvements
in airways, airports, airplanes, and safety instruments, it would appear that the
present plan of organization should be continued; that is, that the Post Office
Department will prescribe the routes and schedules; the Bureau of Air Commerce
supervise the airways, planes, and safety features; and the Interstate Commerce
Commission prescribe the rates.

(The tabulations referred to are as follows:)

Total passenger revenue, air-mail contractors, by months and fiscal years, as reported
by contractors to the Post Office Department

Total passenger-miles, by months and fiscal years, as reported by contractors to the Post Office Department

Revenue passenger-miles, by months and fiscal years, as reported by contractors to the Post Office Department

Mr. CROWLEY. I should like to add that there is no provision made definitely establishing a rule by which the Government shall pay for carrying the mail. If these lines are so strong that they must be controlled by the Interstate Commerce Commission in detail, as stated here in this bill, then we think that the proper rates for carrying the mail would be the same rates for which they carry express or passengers.

Senator DONAHEY. That will conclude our hearing today if that is all, Senator McCarran.

Senator MCCARRAN. Mr. Chairman, I should like for this statement of mail revenues and total revenues (and percentage relationships) received by air-mail contractors from dates upon which they began operations under present contracts to September 30, 1934, as shown by report of Interstate Commerce Commission in Air Mail Compensation, to be made a part of the record.

Senator DONAHEY. That will be done.

(The statement referred to follows:)

6310-35- -9

Statement of mail revenues and total revenues (and percentage relationships) received by air-mail contractors from dates upon which they began operations under present contracts to Sept. 30, 1934, as shown by report of Interstate Commerce Commission in Air Mail Compensation, 206 I. C. Č. 6751

1 Does not include revenues received by contractors from services off the mail routes. Those revenues, if included, would increase the portion of the revenues received from sources other than the transportation of mail.

Air miles operated and miles flown during June 1935

Senator DONAHEY. That concludes the hearing today, and the subcommittee will adjourn subject to the call of the chairman.

DEPARTMENT OF COMMERCE,

OFFICE OF THE SECRETARY,
Washington, August 6, 1935.

Hon. BURTON K. WHEELER,

Chairman Committee on Intersiate Commerce,

United States Senate, Washington, D. C.

MY DEAR SENATOR: The Department of Commerce, in response to request made upon it, is pleased to express its views on bill (S. 3027) bearing calendar date July 10, 1935, which was submitted by Senator Reynolds for Senator McCarran.

The declared purpose of S. 3027 is to amend the Interstate Commerce Act, as amended, by providing for the regulation of the transportation of passengers and property by aircraft in interstate and foreign commerce, and for other purposes. It is apparently intended to be made part 4 of the Interstate Commerce Act, and, as section 401 states, may be cited as the "Air Transport Act of 1935."

In commenting upon this proposed legislation, it is desired at the outset to affirm the zealous interest of this Department in the progress of interstate and foreign air commerce in the United States because the same has been our particular concern for nearly a decade, under the Air Commerce Act of 1926. Any rule or policy, falling within the administration's plan for coordination of the country's transportation facilities, that will be conducive to the development of air commerce and to its proper control will receive our earnest support.

However, it is our desire to point out certain aspects of the air transportation situation which we regard as highly pertinent. Aviation is a relatively new industry. It really still is in a state of infancy. It is carrying today less than 500,000 paid passengers domestically annually. Its express business is only about 2,000,000 pounds annually. Most lines are existing solely by reason of having Government subsidies. Without them, there would be no aviation industry worthy of the name.

Because of the newness of the industry, the rules of successful operation of it are not well defined. Experience is teaching us rapilly how to handle many situations, but most of them are too new to permit us to say definitely that this method of handling them is right, while the other is wrong, and vice versa. Distinctly, in most aviation matters we are in a stage of experimentation. This is true in building and in operation, and, we firmly believe, it is true in regulation and control.

Hence, based on these facts and our experience, we are inclined in all matters of air transport legislation to suggest the advisability of proceeding cautiously. Especially would we commend the most careful study of all legislation which might tend to retard development of the industry.

Might we suggest, therefore, that your committee consider very carefully all of the elements involved in effecting an immediate transfer of aviation control to the Interstate Commerce Commission, or any other body without extensive aviation background, which is not completely set up at this time to administer the affairs of the air transportation industry. While we see no objection to transferring to the Interstate Commerce Commission matters of a judicial or a quasi-judicial nature, pertaining to air transport, we believe that a further study by your committee will reveal certain aspects of administrative problems not now evident and will serve to more clearly define those administrative features which have already presented themselves. We therefore suggest a most careful and thorough study of these factors before proceeding with such comprehensive legislation as is proposed in S. 3027. In other words, greater latitude, with fewer restrictions is preferable at this time.

Specifically, we are mindful of the President's aviation message, delivered to the Congress on January 31 of this year. In the closing paragraph of that message, the President propounded a doctrine with which we are in complete accord. He said:

"In the granting of powers and duties by the Congress, orderly government calls for the administration of executive functions by those administrative departments or agencies which have functioned satisfactorily in the past, and, on the other hand, calls for the vesting of judicial functions in agencies already accustomed to such powers. It is this principle that shoud be followed in all of the various aspects of transportation legislation.'

That passage, we believe, should be taken as a starting point for the setting up of a system that will best promote the objective sought, the present and future well-being of American air commerce.

After a careful study of S. 3027, the Department is of the opinion that it is, in large measure, a commendable piece of draftsmanship. In designing a measure of this nature, in which it is sought to lay the groundwork for future regulation of a medium of transportation, that, as a common carrier, has had such brief career, is admittedly difficult.

That certain phases of American aviation have reached a state of development requiring effective regulation in respect to their entrance into the transportation industry cannot be disputed. In that connection, it might be remarked that our extensive experience in aeronautics has impressed us with the idea that the whole field can be generally divided into two major classifications; on the one hand the scheduled air-transport carriers, virtually all of whom hold air-mail contracts, and on the other, what we call miscellaneous flying, which embraces the remaining categories. That the scheduled air carriers could and should be regulated, not only for their own but for the general good, is agreed. Whether at this time the Government should go further in regulation of miscellaneous flying is a broad question. That part of our aeronautics is still in the guild stage, where the units have been found to be made up of from four to five men participating in a variety of activities, such as flying training, charter flights, minor construction, emergency repair, and aerial photography.

In these reflections upon extension of present authority, we wish also to call your attention to the existing law and our attitude in the matter of airports and airport operators. A preponderance of the airports made use of by interstate air carriers are owned, operated, and maintained by municipalities. The reason for this is found in the law, more precisely in section 5 of the Air Commerce Act of 1926. A review of the legislative history of that act will indicate that at the time of its passage it was agreed that for the Government to own, operate, or maintain airports would be unwise. It was contended that the airports, like the docking spaces for vessels, should be left to private ownership. As you know, docks and wharves are not required to possess certificates of convenience and necessity issued by the Federal Government. It is understood that this bill does not specifically require a certificate of convenience and necessity from an airport operator, but indirectly it accomplishes that purpose when it provides (sec. 405 (j), (2), p. 14): "It shall be unlawful except in an emergency, for any air carrier operating under a certificate issued under this part to land or take off at any airport which does not have a certificate."

In thus suggesting to withdraw all but the scheduled carriers from the scope of the bill, we are motivated largely by considerations of economy. We know the financial condition of the airport and fixed base operators. Their condition is woefully poor. To require them to submit to the legal, accounting, and auditing expenses that this bill imposes would work an extreme hardship on them at the present time. The problem of airport control involves questions of power and rights between municipal and State governments and the political subdivisions thereof, and the Federal Government, that might better be reserved for a later date when the issues will be more clearly drawn.

Careful consideration should be given to the requirement for certificates of convenience and necessity for operators. Doubtless where routes have been established and where operators are rendering effective service, protection should be given in a manner provided for by a certificate of convenience and necessity, but consideration also should be given to large areas remaining in the country which have not yet been tapped by air transportation. In any contemplated regulation the utmost care should be taken to see that restrictions against new lines should not be made so severe as to discourage proper development.

Under existing laws we cooperate in several ways with the Postmaster General, especially in those matters having to do with the technical operation of air mail contractors. This bill, with the exception of two small provisions, sets aside the Air Mail Act of 1934. The contract basis previously existing for the carriage of mail would, consequently, seem to be eradicated and in its place there is substituted a method for air mail payment which we are somewhat fearful may cause more trouble in the future than what we have experienced in the past. The method, as we understand it, is lodged with the Interstate Commerce Commission which is given far reaching power to fix rates for mail service. It is inferred that the Commission could, under the powers granted by the bill, fix rates high enough to continue the present or past subsidy. This proposed solution of the problem already has been passed upon by the Seventy-third Congress, which