of sections 3, 13, and 15 of part I and therefore would not be upheld in connection with similar provisions in sections 404 (c), 508 (c) and 410 of S. 3027. Violations of order made under these sections would, however, be subject to a penalty of not more than $500 for the first offense and $2,000 for any subsequent offenses, under the provisions of section 415 (a). Such violations might also be restrained.

These penalties appear to be a sufficient deterrent and it is therefore suggested that the references to paragraphs (8), (9), and (10) be omitted.

Section 415 (b), page 42: There probably is no need for prohibiting "deferred rebates", line 4. So far as known, no practice of this kind has developed in air transportation.

Respectfully submitted.

JOSEPH B. EASTMAN, Federal Coordinator of Transportation.

STATEMENT OF LOUIS R. INWOOD, SECRETARY, INDEPENDENT AVIATION OPERATORS OF THE UNITED STATES

Senator MCCARRAN. State your name and with what concern you are connected and what training and experience you have had.

Mr. INWOOD. My name is Louis R. Inwood. I am secretary of the Independent Aviation Operators of the United States and was formerly executive officer of the National Code Authority for the Commercial Aviation Industry. I have been engaged continuously in aviation since 1928.

The people that I represent are not concerned with the schedules of air transport operations in any sense. The commercial aviation industry, as defined, is that section of the industry including the airport operator, the fixed base operator, the charter operator, school operator, repair station operator, and sales and accessory service operator.

In the main, before I discuss the bill, I want to say that I have read the bill very carefully and believe that it is in line with the expressed opinion of the Administration in regard to coordination of transportation. I think the bill in large measure seems to accomplish the purposes as set forth in that respect, and that it seems to be very excellent in its purpose. I am wondering, however, if the inclusion of the fixed-base operator or the commercial aviation industry would not work a double hardship.

I want to call to the committee's attention the fact that aviation, so far as national importance in Congress is concerned, has been considered chiefly as Army, Navy, and Air transport. The Interstate Commerce Commission could undoubtedly do a very fine job in regulating the air transport industry. It consists of some 26 companies, as stated by Mr. Behncke, of the pilot's organization, who said that he represented the labor situation in that industry. There are some 650 pilots and approximately 320 airplanes. That represents one problem in administration.

On the other hand, in the commercial aviation industry I have the figures of the Bureau of Air Commerce. There are 7,744 transport pilots and 1,006 commercial pilots, all of whom are in time to engage in interstate commerce and who have been engaged necessarily in scheduled air transport. Only 650 of that 8,700 engaged in scheduled air transport.

So that this phase of the industry has never received 1 cent of Government encouragement. As a matter of fact, it has received. Government competition in some respects. For instance, in the practice of the Army and Navy schools, in training their pilots, after

a very brief period, they release them in competition with the product of our commercial schools.

So I think we can come to you and ask for consideration, and for very large consideration, because we represent a great many people. Unfortunately there has never been any statistics gathered by the Government on this industry, and the first available statistics, I believe, as to the particular make-up of this class of industry were gathered by the code authority.

Our average number of employees per business unit is five throughout the entire industry. It is very widespread. There are some 2,500 operators. The Bureau of Research and Planning of the N. R. A. in conjunction with the Bureau of Air Commerce and ourselves made a survey, and as closely as we could approximate them there are about 2,500 commercial operators.

However, there are, in consideration of this bill, according to the last July report of the Bureau of Air Commerce, 2,343 airports in the United States. Of those, thre are 539 privately owned commercial airports; 717 municipal of that twelve hundred and some odd that we know definitely are commercial airports

Senator DONAHEY. Five hundred and thirty-nine commercial, you say?

Mr. INWOOD. That is, privately owned as against 717 municipal. The others are auxiliary field, emergency field, and other types of fields.

The bill definitely takes in air carriers and defines air carriers as anyone that engages in interstate commerce with an aircraft for hire. The very nature of the airplane is such that 99 percent of the commercial operators, other than the scheduled operators, engage in interstate commerce, because with the exception of possibly five States of the Union, a brief flight of 2 hours will certainly take you over the border of nearly any State; and these operators, while they do not make a constant practice of interstate commerce, at frequent times during the year must engage in interstate commerce. So that you are including, when you include these fixed-base operators, a type that perhaps would work a burden on the Interstate Commerce Commission as well as on the operators themselves, by this vast bulk.

The same way with regard to the airports. The act states very precisely that nothing herein contained shall force an airport to come under its jurisdiction, but in another section it states very definitely that it shall be unlawful for a licensed air carrier to land at or take off from an airport other than one registered; which means that every airport in the United States, which is normally under the jurisdiction of the State rather than of the Federal Government, would immediately, in order to stay in business, be compelled to register and place itself under the jurisdiction of the Interstate Commerce Commission.

Senator MCCARRAN. Do you distinguish between a certificate of convenience and necessity and a license, when you are discussing that subject?

Mr. INWOOD. Well, as I possibly have misinterpreted the act, I would be very glad to be clarified on that point, if I have. I took it to mean that these airports would all have to have a certificate in order to allow any licensed air carrier or one with a certificate to land or take off. Is that correct?

Senator MCCARRAN. That is correct.

Mr. INWOOD. There might be considerable question as to the administration, particularly of the smaller airports which would be forced to come in under this provision. Otherwise the charter operator, the one-man institution which is so prevalent throughout our entire industry, who has a sales agency and uses his demonstrator for the transportation of what charter business he can procure from one state to another.

That one-man institution, oftentimes holding not only a transport license but a mechanic's license and doing his own repair work during depression times, has suffered very greatly, being a new industry; and these boys have hung on under more trying circumstances, perhaps, than even some of the airlines, which have had a tough enough time.

Also under this same act it would disorganize it somewhat if paragraph 3 on page 14 were allowed to remain in the act. That paragraph states that the air carrier or airport operator shall not engage in the manufacture or sale of aircraft or engines or parts thereof. That will practically disrupt the entire commercial aviation industry of the United States, because 95 percent of all the commercial aircraft, sales agencies and by that I mean an agent for Boeing, for instance, or for Stinson or for Fairchild, and so forth-practically every one of those individuals uses his demonstrator for charter operations; in other words, uses it as an air carrier under the definition of this act.

Also, many of those same people, as we found in our registration, engage in many different classifications of this art, and any restriction as to the number of classifications would work a very severe hardship. For instance, in communities throughout the country where some of these 539 privately owned airports exist, these operators not only own or lease the airport, but they also have school privileges, charter privileges, and maintain sales agencies. And in our meeting last week, Tuesday, at which this bill was discussed, in Detroit, at the National Air Show, one operator in Ohio stated that in order to make ends meet he also had a Ford agency.

I call this particularly to the committee's attention because of the fact that Mr. Putnam, in suggesting the modification of this section, suggested that we merely eliminate "or sale", and that would work an undue hardship on these smaller ones, due to the fact that the better class repair stations-though even those are small, practically none of them running to over 15 employees, and the average being about 8these approved repair stations-that is, approved under the Bureau of Air Commerce-in order to maintain satisfactory service to meet peak demands of repair and overhaul, have to find other employment for their mechanics part of the time; for instance, wintertime in this section of jthe country, and rainy seasons in others, and so forth. In order to do that most of them engage in some light manufacturing. For example, specifically in the case of the Pontiac Aircraft Repair Co., which is a small institution in Pontiac, Mich., which has through ingenuity perfected a new type of airplane wheel that is licensed and approved by the Bureau of Air Commerce and is assembled and manufactured in their plant, and which they sell to some of the smaller airplane companies. Of course the total production last year was only somewhere around 700 planes. That concern did not make a whole lot of sales, probably, but it was very vital to them to be enabled to remain in business by that light manufacturing.

There is a case of another one in Michigan who manufactures exhaust collector rings, being another small company which retails its plane around $2,000. On the west coast I could cite two or three similar instances.

So that these smaller companies-disregarding the Douglasses and the Boeings, and so forth-the two or three place or single place airplanes that young Americans are anxious to fly and, we hope, will soon fly in greater numbers, are dependent upon the right of these individuals to do this light manufacturing. They do it at relatively small cost, and that helps to bring down the cost of the small plane and makes it available to greater numbers of individuals.

So that we really feel that any prohibition directed against the smaller man would be an injustice. We recognize, of course, the aim behind this provision, and we recognize the justice of the prohibition as affects the large corporations and prevents some of those larger corporations from owning the entire aircraft-manufacturing industry, and also owning the scheduled air transport service.

That, I believe, is the condition that brought about this paragraph, but I have tried seriously to consider some method by which the bill might be amended to take care of these operators so that they might be regulated, but I do not believe that the same set of regulations could possibly apply to the scheduled air transport industry and at the same time be modified in such a way as to apply to this so totally different problem of the small operator throughout the United States. The Bureau of Air Commerce has done a splendid job in assisting the industry by their regulations, by their safety requirements, and I really feel that it is so closely tied to private lines that the nonscheduled operations and the facilities offered private flyers, and so forth, might well be eliminated from a serious Government transportation picture; and I therefore recommend to the committee that the act be amended in such fashion, which would be very simple, as to cover the scheduled air carrier.

The charter operator does not interfere with interstate commerce. The bulk of his operations, say, 75 percent, is probably intrastate. But the remaining 25 percent forces him to come under the provisions of the rate-making provisions. As it is stated in another paragraph, he is restricted to a certain defined territory. I have in mind an operator who is possibly pretty hungry-which represents the majority of our operators-and this operator is possibly restricted, due to his ignorance and to his inability to employ counsel, to four States. He may not have railroad fare to come to Washington, D. C., to apply properly to the Interstate Commerce Commission.. may have a charter trip offered him by some citizen of the community with whom he is well acquainted, to go to a State outside of that restricted territory. He cannot stop to get a further license: from the Interstate Commerce Commission. He probably would. not know how to go about it.

He

So that I really feel that the logical solution in this bill would be to take the scheduled air transport people and put them under the Interstate Commerce Commission and take out all nonscheduled. operations. Also airports. I say airports, although I will admit. that there are approximately 168 airports out of 2,300 which cater largely to scheduled air transport. But there, again, some of those airports, with the exception of about possibly 10 major air terminals,,

are engaged like this same man who said that he had a Ford agency. So that I doubt the advisability of including even airports under the Interstate Commerce Commission until such time as the industry is better organized and has more stability. I think the entire view as expressed in this bill is excellent as a long range view. It is very wisely considered. But the time is not ripe as yet. It would disorganize and disrupt an industry which is struggling very hard to get on its feet at the present time.

If there are any questions, I would be very happy to answer them. Senator MCCARRAN. I have no questions. Thank you very much. (The witness withdrew from the committee table.)

Senator MCCARRAN. Is there anyone here representing the PanAmerican Co.?

Mr. McEvoy. I am from the Pan-American. I am William J. McEvoy, representing the Pan-American Airways, Washington, D. C. I am not authorized to speak for them on this bill. I do not think my office knew about this hearing. I know I did not know about it until yesterday, and I want to tell them about it this afternoon. Senator DONAHEY. You may file a statement with the clerk in connection with the bill.

Mr. McEvoy. Thank you.

STATEMENT OF EUGENE L. VIDAL, DIRECTOR OF AIR COMMERCE, BUREAU OF AIR COMMERCE, WASHINGTON, D. C.

Senator MCCARRAN. Will you give the committee the benefit of your views and observations, based on your experience, with reference to this bill?

Mr. VIDAL. Mr. Chairman, we commented in writing on the original bill, and it was not until, I think, Friday that we received in the Bureau of Air Commerce this amended bill which changed the original considerably. We have not had sufficient time to study it, and would like to submit in writing a memorandum just as quickly as we can, because there are a few paragraphs that we wanted to study more thoroughly.

I would like to say at this time that the Department of Commerce and the Bureau of Air Commerce are only concerned about the general advancement of aviation, particularly a greater and more efficient air transport system, and we are less concerned about how it is done or through what agency it might be handled.

Because of our interest in aviation we think that the vesting of certain control and responsibilities in the Interstate Commerce Commission, in order that air transportation can be coordinated with the other forms of transportation, is a step in the right direction, but we think, in reading it over, that there are several paragraphs that might restrict or retard the growth of aviation, and it is with reference to those few paragraphs that we would like to submit written comments. Senator DONAHEY. Naturally, you are interested in the public welfare?

Mr. VIDAL. Yes, sir.

Senator DONAHEY. We would be very glad to have them.

Senator MCCARRAN. I wonder if you would accommodate the committee and the author of the bill by giving us your comments as soon as possible.