Word: cabs
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...CAB is a creature imprisoned by its own structure and procedures. It is unable to form clear policy. It is unable to make sound and comprehensive plans. It is unable to administer its affairs with vigor and dispatch." Such was the biting indictment of the Civil Aeronautics Board made by former CAB Member Louis Hector in his letter of resignation to President Eisenhower last fall. Last week this view was echoed-and then some-by the U.S. airline industry. The industry is beset by jet-age problems that cry for solution-and airmen feel that CAB is trying to solve...
...example, CAB finally approved a fare hike based on the airlines' return on investment-four years after it began its fare investigation. Its announcement was so ambiguous and confusing that not even airline lawyers could figure out what the board really meant. The hike seemed to amount to about 2%, but Braniff announced that it will ask for a 3% hike, Capital for a 4% hike, Eastern for 5% (with Capital and Eastern also asking an additional $1 a ticket...
...four-year delay points up one of the chief accusations against CAB: that it takes forever to decide even routine matters. Such indecision has hobbled the industry just when it needs fast action to deal with the new economic and regulatory problems of the jet age. During the first quarter of 1960, U.S. domestic trunk lines lost $24 million, v. a pretax profit of $16 million for 1959's first quarter. Bad weather and a spate of crashes account for some of the gap, but most of it is due to two major problems facing the airlines: fares...
...CAB had a hand in both problems. After World War II, many airlines exuberantly overexpanded. Instead of using its power to impose restraint, CAB approved patchwork and often uneconomic route structures. Result: subsidy payments to airlines jumped from $19.7 million in 1946 to $83.8 million in 1950, before dropping again. Though all trunk lines are now off subsidy, CAB expects to dole out $69.3 million in fiscal 1961 to small feeder airlines, which still do not have enough money to replace their obsolete equipment...
...adopting a policy of trying to strengthen middle-sized regional trunk lines, CAB awarded them long hauls already amply served by the major lines. Today seven markets are served by five or more airlines; in 1955 there were none. Sometimes, as in the case of Delta and Braniff airlines, the plan worked. Often everyone got hurt. Says American Airlines President C. R. Smith: "Competition is good. It becomes bad when it is wasteful and there is insufficient business to provide a profit even for the most efficient...