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Aviation History
1960
1960 - 0191.PDF
FLIGHT, 5 February 1960 Air France, would inevitably be regarded as an imperialist instru-ment by the new nationalists, who want commercial ties with France, but no political strings. This enlightened approach toproblems that resemble those you are facing is certainly worthy of your closest attention. Perhaps your advisers have already made brainpicking investi-gations into the experience of the Australians, the Canadians and the French. If so, it was right for them to have done so, becausethe conflicts you are now trying to resolve—in a vacuum of State monopoly—have their parallels elsewhere. Of Britain's experienceof mixed public and private enterprise in air transport it can fairly be said that we are a relatively backward nation. What of America's experience? Your Ministry, in the courseof many a wearisome contest, knows a good deal about the US Civil Aeronautics Board and its functions. It has been a patience-trying adversary on more than one occasion. It is a long-winded, quibbling and bureaucratic organization. But this should notcause your advisers to be prejudiced against some good points that we might usefully adapt to our own needs. Most important is the CAB's power over IATA. The CABcannot directly regulate international fares, as it does US domestic fares. But Section 412 of the US Civil Aeronautics Act empowersthe CAB to demand from US carriers who are members of IATA all documents concerning rate-fixing proposals for review inadvance of their discussion in IATA. The five-man Board, advised by its Bureau of Air Operations, then circulates the airlines withits opinions, which carry much weight in IATA. The US Govern- ment, through its appointed agent the CAB, is the only one inthe world which does not just rubber-stamp IATA fare decisions. It should not be forgotten that it was the CAB who brought aboutthe introduction of economy class fares in April 1958, by rejecting the airlines' arguments for a fare increase. Somewhere in BerkeleySquare House may be a copy of the CAB's Order number E-l 1215, which provides a perfect example of how an expert governmentagency with a mind of its own can serve the public interest and the long term interest of the airlines. (Usually members of IATAconsider only their own short-term interests.) Reforms in the Act Having learnt from the experience of others as much as we can(and we are surely not too proud or too complacent to do so) we must now consider what sort of executive air transport body willbest suit our needs. What shall be its constitution, its powers, its terms of reference? It is universally agreed that the time has come for reforms inthe Civil Aviation Act, particularly in that section which provides for the regulation of British air transport. The Air TransportAdvisory Council, conscientiously as its tiny secretariat and some of its members have interpreted their vague terms of reference,has been a pitifully inadequate instrument. No ATAC recom- mendation has ever been made on the basis of really thoroughindependent analysis of the issues involved. The arguments of one side are heard ("This proposed service will divert £6,253,121 ofour business"), and then the arguments of the other ("the new service will generate entirely new traffic"), and so on. Then, allarguments having been heard, behind doors which are barred to the public, the Council has to make a decision that might pro-foundly influence the course of the industry. Sometimes it turns to the Ministry for advice—notwithstandingthe fact that its statutory function is to give advice to the_ Ministry. The system is no longer worthy of the industry. To this day, tenmonths after the ATAC's secret hearings, Parliament and the pubhc have no idea what the Council's recommendations were onthe independents' VLF (very-low-fare) Colonial coach service proposals. It was VLF more than anything else that emphasizedthe weakness of the system, because (as Flight remarked before the hearings, in our issue of March 13, 1959) "the Council needsbacking up by a staff capable of analyzing these big issues scientifically." For the ATAC must now be substituted a new executiveauthority, an Air Transport Board. It must be so constituted that it can be entrusted completely with the expansion, promotion andeconomic licensing and regulation of British air transport. Just as the ARB is the nation's brains trust in matters of airworthinessand design, so should the Air Transport Board be the repository of national knowledge and expertise in the commercial andeconomic aspects of air transport. If constituted carefully it can be both master and servant ofBritain's air transport industry. As master it would discipline the very fast rates of growth and technical development which cancause such instability. History has shown that while; airline Hianagements may be the best advocates of their own interests,their requirements are not necessarily in the best long-term interests of the industry as a whole. Examples are the gradualencroachment of BEA into BOAC's long-haul business; the wasteful duplication of many of the two corporations' technicaland operational services; BOAC's recent policy of wanting to subsidize its proposed economy class services by the retention of tourist services, and—in some areas—the higher pricing of theseservices; BEA's complete elimination of competition by a 100 per cent pooling policy; the withholding by independents (BIATA andnon-BIATA) of financial and traffic statistics without which a true picture of the industry is lacking; BEA's apparent loss ofenthusiasm for the Vanguard, and the way in which both cor- porations have shrugged off the opportunity to create a demandfor the cheapest as well as the fastest vehicles; and so forth. The cry "We don't want a lot of civil servants telling us how torun our business" is very often justified. An airline's commercial judgement must be allowed full play. But there are matters whichdo require publicly calling to account; and the Air Transport Board (which we hope will be staffed by people as expertand dedicated as those in the ARB) would not be just "a bunch of civil servants." No one has ever said this of the ARB'speople. " Bunch of Tame Economists " There is of course the chance that the Air Transport Board willcome to be classed as "an interfering bunch of tame economists and lawyers." Bui this is up to the Board. And much dependsupon the wisdom with which it is constituted. It is most important that the Board's terms of reference are such that all thoseindefinably precious "vague" qualities of British administration are preserved. We do not want a hidebound, legalistic andbureaucratic authority like the American CAB, which takes 20,000 pages of evidence (or was it 200,000?) on the airlines' casefor a fare increase and then spends more than a year (so far) to decide its verdict, by which time many of the leading personalitiesinvolved have departed elsewhere. Nor, indeed, do we want to get embroiled in long-drawn-out hearings like those which tookplace before the Canadian Air Transport Board when the "CPAL versus TCA" domestic competition case was being considered.There is a great deal to be said for the goodwill and informality of the ATAC's methods, whereby the fewest possible people thrashout their problems under the shrewd no-humbug chairmanship of a man like Lord Terrington. These are characteristically Britishmethods of settling issues : they have failed in the ATAC because (1) the Council has had no adequate secretariat to analyseindependently the problems involved; (2) it has had no executive powers; and (3) it has conducted its business behind closed doors.There has been no public accountability—a matter to which we shall return in a moment. The Air Transport Board will, we have no doubt, be respon-sible for licensing airlines to operate scheduled air services. It is most important that a clear distinction be drawn between anoperating licence and a route licence. In all the recent talk about the need for a "new licensingauthority" this distinction has never been drawn. It is quite clear in our minds: every operator should, on safety grounds, berequired to possess an operating licence (let's call it, as the Canadians do, an operating certificate). This would be issued—likepersonnel and aircraft licences—by your Ministry, just as pilots and engineers and aircraft have to be properly licensed by theGovernment before they can operate, airlines that wish to operate air services (though not necessarily ad hoc charters) should hence-forth be similarly licensed. Will this require a huge staff of enforce- ment officers? Probably not, because every operator would know(like every pilot) that negligence could mean the loss of his licence and hence his livelihood. Deterrent Already Exists In effect, of course, such a deterrent is in force today in anon-statutory (though nonetheless effective) sort of way, as two independents in 1958 discovered to their cost. An operatingcertificate would make de jure your de facto powers of making life impossible for "sharp operators": it is no more significantthan that. But it need not be administered by the Air Transport Board.It is the route licence (which of course would be granted only to holders of an operating certificate) that should be at the dis-position of the Air Transport Board. Such a licence would be granted on economic and public interest grounds after properhearings and independent analysis of the issues involved. When we talk of the Air Transport Board as a licensing authority, wemean route licensing. The issue of route licences will be the primary end-product of the Air Transport Board, which willbestow upon the most suitable applicant a licence to operate scheduled services after full public hearings and its own assess-ment of the implications. There will be no precipitate handing-over of routes toindependents, none of whom has the savoir faire to do the job BOAC and BEA are doing. But the corporations' monopoly ofalmost every British domestic and international air route will no longer be inviolate: independent pressures to break this monopolywill no longer be frustratingly stranged at birth, and their proposals and arguments for a share in route A or route B will have the
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