First. It is our impression that the bill seems to be a little vague as to the authority to be exercised by the Commission with respect to safety regulations. This function, at present, is administered by the Bureau of Aeronautics of the Department of Commerce by authority of the Air Commerce Act of 1926, as amended June 19, 1934. We believe that this important regulation should be turned over to the Interstate Commerce Commission, and, if such is the intention, it should be stated more clearly. For example, on page 6, line 7, insert after the comma the words "safe methods of operation.' Second. Section 416 authorizes the Commission to establish a Bureau of Air Transport and permits it to employ such experts, etc., as may be needed. We believe this section should go further and require that the inspectors, technicians, etc., at present in the service of the Department of Commerce, but who may be released because of this act, be transferred to the Interstate Commerce Commission. If this is not done much valuable experience will be lost. That is the extent of our statement. We would be glad to answer any questions, if you have any. Senator MCCARRAN. Mr. Hamilton, referring to your first proposed amendment, is it not now covered by S. 2496? Mr. HAMILTON. No; it is not. S. 2496 provides the machinery for settling disputes and what the other section, 13, in the present Air Mail Act provides is practically a prevailing and minimum scale of That is what it amounts to. pay. Senator MCCARRAN. Do you think that the amendment which you propose is essential by reason of other legislation existing? Mr. HAMILTON. We do. We think it fills a gap and completes the protection which we believe we should have and should like to have. Senator MCCARRAN. Will you leave a copy of that proposed amendment with the committee so they may have it? Mr. HAMILTON. It is in the statement. Senator MCCARRAN. Now, one other matter, dealing with the question of the removal of all control of air transportation from the Department of Commerce: It is not the intention of the author of this bill that there should be removed from the Department of Commerce the present facilities. This control has been operated, I think, successfully and very efficiently by the Department of Commerce. This bill would not affect the Department of Commerce in its present operation. We would merely recommend the placing over in the hands of the I. C. C. certain further powers, as for instance, of safety devices that the I. C. C. might see fit to recommend or install or cause to be installed. It is not the intention of the author of this bill, then, to transfer or to interfere with the present facilities and the present operation under the Department of Commerce. With that in mind, do you care to comment? Mr. HAMILTON. We still believe that regulations such as safety regulations should be removed from the Executive branch of the Government and placed under the Commission so that it can be treated and regulated in the same manner that the rates and so on are adjusted. I understand that safety is one of the functions of the Interstate Commerce Commission in connection with the railroads, and safety is of vital concern to the public and to the employees, especially those who are in the air, and to the company, and we believe that those important matters, which incidentally are covered in and recognized by the certificate authorizing an air line to operate, should be handled in a judicial or quasi-judicial manner. Senator MCCARRAN. Well, if under subdivisions 3 and 4, on page 6, your very idea is sought to be carried out, would that not meet the views that you have? Mr. HAMILTON. I see, where it says, "to approve or disapprove"? Well, now, in paragraph 4 it says, "to approve or disapprove, in whole or in part, any and all rules or regulations of any other department" it does not seem to me to be very clear as to how they are going to do that. Now, up here in paragraph 3 it says they are going to promote the development of safe and efficient air transportation by prescribing and revising, at least annually, the minimum standards respecting the types of equipment to be used, and the quality of service. But they do not prescribe the safe methods of operation, and it would seem to me that is where these regulations should be prescribed. Senator MCCARRAN. It is rather the idea of the author that this, in place of taking anything from the Department of Commerce, augments and adds to the safety of the industry by placing another agency, working coordinately with the Department of Commerce in some respects. Mr. HAMILTON. Yes. Senator MCCARRAN. As, for instance, the Department of Commerce, might issue a permit, an air-worthiness certificate, so-called. Mr. HAMILTON. Yes. Senator MCCARRAN. While this Commission, the Interstate Commerce Commission, might go further in its determination as to airworthiness. Senator TRUMAN. Senator, do you not think the responsibility ought to be in one place? Senator MCCARRAN. I beg your pardon? Senator TRUMAN. Do you not think the responsibility ought to be in one place? I have been told only God can secure cooperation between two departments. I think that is true. Senator MCCARRAN. I do not dispute that. Senator DONAHEY. There is a saving clause here that the President may authorize the establishment, modification, or annulment of such rule or regulation. Senator MCCARRAN. Now, to Senator Truman's suggestion, let me draw the Senator's attention to subdivision 4 on page 6, which prescribes that the Commission may— approve or disapprove, in whole or in part, any and all rules and regulations of any other department of the Government which affects the Commission's powers and duties under this part. Senator TRUMAN. Why not let the Commission make the rules, then? Senator MCCARRAN. That is the idea of section 3 just above. But the dealing with and using of those rules and regulations has been effectively and, I think efficiently carried out by the Commerce Department and they have a very comprehensive machinery. Senator TRUMAN. There is no doubt about that. Mr. HAMILTON. May I add another word. The way we see this set-up is this: The Department of Commerce, as you say, is doing a very good job in the regulation of air lines at the present time, but the fact remains it is an entirely different kind of a job than was done before the change of administration. Now, the same thing is going to happen again when the administration changes. They will have an entirely new group, new ideas, and there never will be stability so far as safety is concerned Senator MCCARRAN. Except as Mr. HAMILTON. Just one more thought; pardon me. Mr. HAMILTON. The Secretary of Commerce, under the Air Commerce Act, expressly has the supreme power to change the regulations by whim. He can overnight, if he sees fit, strike out a regulation, and that condition, it seems to me, opens itself, or leaves itself wide open to vicious lobbying. Senator DONAHEY. And confusion. Mr. HAMILTON. And confusion. Senator MCCARRAN. Those are all the comments you see fit to make? Mr. HAMILTON. I think that covers our views, Senator. Mr. HAMILTON. Thank you. (Thereupon, the witness left the committee table.) Senator MCCARRAN. I am going to call Capt. Edward Rickenbacker. STATEMENT OF EDWARD V. RICKENBACKER, GENERAL MANAGER, EASTERN AIR LINES, VICE PRESIDENT, NORTH AMERICAN AVIATION Senator MCCARRAN. Please state your name and what, if any, organization you represent. Captain RICKENBACKER. Edward V. Rickenbacker. Senator MCCARRAN. What is your business or profession? Captain RICKENBACKER. I am general manager of the Eastern Air Lines, vice president of North American Aviation, of which Eastern Air Lines is a division. Senator MCCARRAN. Captain Rickenbacker, you are familiar with the bill now before the committee. I might ask you to comment, if you will, and give the committee the benefit of your experience and observation with reference to this bill. Captain RICKENBACKER. Senator, I have not had the opportunity to study the bill in detail, to the extent that I would like to, but I cannot help but feel that in principle the bill is very sound. There has been a very definite effort made toward a constructive program which, as I understand it, has been the wish of the President in the statements he has made. There are a few objections that might be raised from what I have seen of it. And I think probably after they have been analyzed that the author would have no objection to amending it in accordance with the benefits to the majority. One particular item that I refer to is found on page 14, section 3, lines 13 to 22, where there is included a provision which should definitely be eliminated from the act. The fact that this section prevents any air carrier or airport operator from engaging in the "manufacture or sale of aircraft or engines or parts thereof, or other materials or accessories" would not only prevent a scheduled air transport operator from maintaining a valuable public service to all aviation by carrying a stock of parts and accessories, but would also eliminate 95 percent of the existing distributors and dealers of commercial aircraft manufacturing companies. Hundreds of small oper ators in every State in the Union either operate airports or offer charter service in connection with their aircraft sales agencies. In other words, I think that the same desired end could be accomplished without destroying the opportunity of these hundreds of small dealers and distributors to render this service. And I am sure that the author, after analyzing it thoroughly, would have no objection to amending the bill so as not to interfere with the activities of these organizations. As an illustration, under the act as now written, we as an air-line operator would not be permitted to set up or have, as we call it, a "used-car department" for the sale of obsolete equipment. We must have that because of the constant progress of the business. We must also be in a position to be able to buy parts to keep that equipment in shape or to prepare it for sale. I specifically think in terms of the United Aircraft Air Transport at Cheyenne. They operate equipment that uses practically all Pratt-Whitney motive power. They have a distributing agency for that particular community. They can afford to render an exceptionally high standard of service, due to the fact that they have the inventory and must have it through natural necessity to take care of their own business and thereby render the aviation industry as a whole a service that the little 2 by 4 dealer would not be able to render, due to lack of demand, et cetera. Senator MCCARRAN. Captain Rickenbacker, I do not like to interrupt, but would your own organization or you, yourself, mind preparing an amendment to submit to the committee that they might consider it, carrying out the views you have? Captain RICKENBACKER. Yes, sir. Senator MCCARRAN. And in that respect I want to say, and I want to say this to the committee, that the author of this bill welcomes amendments that will carry out the spirit of the bill, looking to the progress of the science and the progress of the industry. We are not at all wedded to any language here. We are simply looking forward in the endeavor to promote the best interests of the industry. Senator DONAHEY. And which are not prejudicial to the public welfare. Senator MCCARRAN. That is it. Captain RICKENBACKER. I assumed that. And as you read that particular part of the act, you can readily see that it would be very helpful to a lot of small dealers and distributors. As an illustration, the average distributor and agent for commercial aircraft has to do so many things that involve the ownership or the leasing of an airport, he may be chartering planes, and he may be selling gasoline, he may be selling plane parts, and he has to do that in order to make both ends meet, because the market is not sufficient for him to have the earning power necessary by the simple selling of new aircraft alone to take care of his expenses. I am sure that no one would object to that. Senator DONAHEY. You will draw the amendments and present them to the committee as soon as possible? Captain RICKENBACKER. Sir? Senator DONAHEY. You will draw the amendments and present them to the committee as soon as possible? Captain RICKENBACKER. We will be very glad to do it. Senator MCCARRAN. We would be glad to have any other comments you have to make. Captain RICKENBACKER. There is one section that refers particularly to the issuing of the certificate of airworthiness, or public necessity, rather, convenience and necessity. I cannot help but feel, for the benefit of the majority, that it would add an additional burden to force these air lines to apply for this certificate of convenience and necessity. They must within 120 days file the application and go through the necessary effort and expense, when I believe it is the intent of the author that all air-mail operator or operators who today have an air-mail contract would automatically be qualified to receive a certificate of convenience and necessity. Senator DONAHEY. They are covered in under the "grandfather clause." Captain RICKENBACKER. Sir? Senator DONAHEY. They are covered in under the "grandfather clause." Captain RICKENBACKER. I believe that is the intent. Maybe I am wrong, but I think that anybody today who has an air-mail contract is in a position to render the service desired, and if he is not, why that is taken care of by both the Post Office Department and the Department of Commerce. Senator DONAHEY. That policy has been followed in other acts. Captain RICKENBACKER. That is the natural policy that governs. Senator DONAHEY. It governs in Federal departments. Captain RICKENBACKER. I think the expense would be reduced materially. There is another case that was brought up by one of the independent or new operators, as we call them, and his case is well taken, that as the language exists today it would be possible for one of the old operators to go back into a territory that he had lost to a new operator and qualify under the present phraseology as an able or sufficiently able operator to take care of that particular business. Senator MCCARRAN. However, that would be finally for the decision of the Commission, would it not, as to whether or not he could? Captain RICKENBACKER. Yes; but I think that could be simplified, because if you go back to 1934, some of these operators lost this territory and were qualified under the act to render the service. Now, there is a new operator in there. It would simplify the act considerably if that could be definitely stated, more positively stated, and it would eliminate a lot of worries of some of the smaller operators who might justly or unjustly have built up these fears of what might happen. Outside of those specific points, I haven't any other recommendations to make at this time. I believe that the industry would benefit materially from this legislation. Senator DONAHEY. Do you recognize the need of regulation at this time? Captain RICKENBACKER. Sir? Senator DONAHEY. Do you recognize the need of regulation at this time? Captain RICKENBACKER. Yes, sir. 6310-35--3 |