Evening star., 1938-01-13
A|RMA|L LINES
FEARING FAILURE
Appropriations Boost Of at
Least $19,500, 900 Urged
on House Group.

unless congress increases a1rmAu
appropriations to q total Of at least
$l9.500,000 there is danger that q
number OF the domestic airmail lines
will fail during the coming fiscal year
and that the whole industry will be
seriously crippled, Col. Edgar s. Cor
rell, president of the Air Transport
Association Of America, testified before
the Post Once Subcommittee of the
House Appropriations Committee, it
was revealed today.
THE great majority Of the air.
lines are today facing a gravely serious
business situation, one so serious that
there is doubt whether some of them
can long continue to exist" Col Cor
rell told the subcommittee. Large
and small alike, the majority Of the
airlines which carry the domestic air.
mail, though doing more business, are
losing more money and losing it more
rapidly than at any other time in
their existence"
Wages Up 20 Per Cent.
Col. Gorrell said that during the
past year wages paid by the airlines
have increased 20 per cent; the cost
Of fuel and oil has gone up 80 per
cent; airport rentals have increased
20 per cent; unemployment, old-age
benefit and other social security taxes,
State and Federal, have increased 253
per cent; other taxes have increased
10 per cent and necessary capital
expenditures have increased So per
cent.
THE results" he said, "have been
an aggregate increase, in just these
half dozen items OF operating cost
and current expenditure, Of "a per
cent, or at the rate Of approximately
$5,300,000 year"
The airmail industry has been Iv-
ing OF the capital invested in the
boom era following the Lindbergh
flight, Col. Gorreu said. Its resources
now are at rock bottom.
THE industry has had, at one time
or another, about $l20, 0,oo0,00 OF
capital, and has lost about half of
that amount" he said. year after
year there have been losses in the
industry. Cash balances have been
depleted. The industry today has
little over $1,000, 900 of cash and about
50, ,400, 900 of receivables. Its payables
are about $4,400,0OO, and other COM
mitments facing 1t in the next few
months are approximately $6, 800, 900;
or total Of payables facing it in
the next few months Of $40, zoo, ,000."
Accidents Affect Revenue.
Airline accidents have had q tre-
mendous effect on passenger traffic,
Col. Gorrell said, explaining that the
passenger traffic of one Of the lines
which recently lost plane has fallen
on almost unbelievably."
During the last year. Col. Gorrell
pointed out, the Federal Government
spent $12, 100000 for contract airmaiI
service and took in $l2,50o,000 in the
sale OF airmail postage. leaving q
deficit Of only 100000. In return, he
said, it received between 2l,000, 900
and 22,000.00O airplane miles Of free
airmail transportation in mail credit
trips" Actually paying for approxi-
mately 10000 plane miles Of airmail
transportation, he said, the Govern
ment received about 81 SOC, 900 miles of
transportation.
THE superlative system Of airmail
transportation Of which the Post
Ofice Department had full benefit last
year at . net cost Of 100000 to
the Government, was thus available
only because Of and at the expense
Of an operating deficit Of some 81, ,000.-
600 suffered by airline stockholders"
the witness said.