Evening star., 1950-11-19

the rising total of airmail pay
ments-"to an estimated $125 mill
lion in 1950"-declared it increas-
ingly important that the subsidy
element be separately identified
He recommended immediate en-
actment of legislation to authorize
the separation of subsidy payments
from mail compensation to the
scheduled airlines.
Because neither the President
nor anybody knew even approxi-
mately how much of the $125 mil
lion went to the airlineS as pay
ment for flying the mail and what
amount was paid them to make up
for losses on Improbable routes
they are required by the Govern
ment to operate "in the public in
terest," this subsidy-separation
matter has developed into some
thing every taxpayer should know.
Some taxpayers already are very
earnestly on record as being tired
of all these subsidies" and are
heartily in favor of each form of
transportation paying it's own way.
The railroads, for example. do not
now receive any subsidy but pay
taxes that are applied, they say,
to subsidies for their competitors
In the air, on the public highways
and waterways.
Big Four in Favor
Paradoxically, some very self
sufficient airlines which receive no
direct Federal cash assistance in
their payments for flying the mail,
momentarily find themselves just
as indignant as the railroads when
they think of their taxes being ap-
piled as subsidies to airlines COM
peting on their pioneered routes,
by Government directive, without
offering any extraordinary public
service.
Presently there is no clearly de-
fined battle line nor is the type
of the belligerent on either side
readily recognizable. But this
much is known: Both sides in
clude Democrats and Republicans,
so it is not shaping up as strictly
party fight. And both sides num-
ber railroad and airline interests
who during some part of the trans
portation family row will be fight
ing shoulder to shoulder, but later
will be fighting face to face. Pres
sure, too, is being pumped up by
interested groups noted for pres
SURFING Congress, the most , eff
fective being the folks back home
IN 600-plus American communities
who will properly impress their
legislators in Washington to block
any move that could possibly re-
suit in their being rubbed off the
air transport map of the United
States.
The principle of clearly and &C
curately separating the compen-
satory rate from the subsidy, is
now indorsed by nearly every one,
both in and out of the airline in
dustry. In the early days of the
movement, though. there was OBJ
lection by the smaller operators
to both the principle and the re-
suits of mail-pay-subsidy separa-
tion. They feared that conclu-
sion-jumpers would seize upon the
subsidy" figure and make it a
target for immediate extinction
without bothering to go into the
justification for it under the law.
Other airlines, notably the big
four-American. Eastern, TWA
and United-are in favor of the
separation plan. They carry about
80 per cent of all airmail,
but airmail payments account for
only a very small percentage of
the total revenues of these opera
tors. AS an Illustration, in the
first nine months of this year,
American Airlines took in $85
million, of which nearly $73 mil
lion was -the-counter selling
of tickets to passengers, almost 81
million came from express and
freight. $4,191,918 was from the
Government for flying the mail
and about $15 million from mis-
cellaneous activities such as char
ter trips. After provision for
Federal income taxes amounting
to $6,140,000 Americans net profit
for the nine-month period was
$7.285 $40.
No Yardstick
American, as well as Eastern,
TWA and United, receives about
60 cents per ton mile as payment
for flying the mail, a figure which
is free from cash subsidy, so says
the Civil Aeronautics Board, but
which right now is under review
by that body in an effort to arrive
at a fair and reasonable airmail
rate pay, something yet to be
achieved for all the carriers.
The CAB has interpreted the
law as authorizing it to fix air.
mail pay at amounts sufficient
to meet the legitimate financial
needs of the certificated airlines
CAB takes the total recognized
expenses of each airline, plus q
"fair return" on investment (nov
around 7 per cent? and subtracts
revenues received from passenger
and other kinds of traffic. The
resulting deficit or need" is ther
fixed as the proper airmail pay.
ment. In the case of one small
experimental feeder airline now
no longer operating. this method
of figuring resulted in rate pay
ment of $91.94 per ton mile which
was all out of proportion to the
value of the service to the Post
Office Department and the public
But that little feeder line woulc
have gone out of business ever
quicker if it had been held to g
rate of 60 cents per ton mile, such
rs is paid the big four.