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Aviation History
1964
1964 - 0712.PDF
fUGHT International, 19 March 1964 AIR COMMERCE . . . 411 Boyd on Air Cargo IT is always refreshing to hear Mr Alan Boyd, chairman of the US Civil Aeronautics Board, talking about his Board's role as a regu- latory authority. The following address, given before a recent air cargo seminar in New York, is of interest also as an insight into CAB policy on the development of air cargo. "•REGULATION as we view our function at the Civil Aero- • » nautics Board is essentially comprised of balancing acts. We attempt to balance the interests of passengers and carriers, shippers and carriers, carriers vis-d-vis carriers, US flag carriers and foreign flag carrier route requests, and the interests of one com- munity as related to other communities. "We administer an act composed of broad policies and loose standards. Provision in the law for great flexibility is necessary if regulation is to be able to grow and develop with industry. Other- wise the industry must ossify, while the regulatory agency petrifies. "The all-cargo carriers have so far contributed in two ways to our national stature. They have unquestionably provided assets to the defence ledger. They also have contributed to the rapid flow of commerce. Both these I hold to be worthy objectives which should be vigorously promoted. ... In the process, however, they have become increasingly reliant upon military business, the largest in the world. This is an unhappy situation. It is simply not good transport economics. The system, or one segment of the system, should not be forced to depend on the needs of one or only a few shippers. Today the ability of all-cargo carriers to survive rests primarily upon a policy decision of the Department of Defense. So we say 'Let's build a prosperous commercial business.' "Yet let's look at some of the facts bearing on this side of the picture. The domestic all-cargo carriers are in very poor financial straits today. They would be insolvent were it not for the dollar intake from military contract business. The combination carriers are faring no better in their commercial all-cargo operations, al- though this is somewhat clouded by a total profit and loss tally which is 95 per cent coloured by passenger services and belly freight revenues. The Big Four lost more than $20m in all-cargo opera- tions during the year ended September 30, 1963—a loss emanating from revenues of $41m in all-cargo operations. This is the con- clusion of the CAB staff, not allegations by those who don't love the combination carriers. It is impossible to pinpoint the exact figure—allocation of cost will vary according to who is doing it and what he wants to prove. "I am seriously concerned about a situation in which carriers with superior credit, gained largely from the relatively lucrative passenger business, use that credit access to purchase equipment for all-cargo use which can, if need be and at little expense, be turned into passenger service to offset losses incurred in cargo services. This is a vicious circle. It is not my idea of fair competition. It quite obviously makes it impossible for the all-cargo carriers to compete in these circumstances. "Indulging in a bit of Monday morning quarterbacking, I think the first error we have made is in assuming that freight is freight in contra-distinction to passenger service. The myriad rates now applying to as many commodities make it apparent that this is a gross over-simplification. We have long acknowledged the wisdom of price differentiation. We must become more accustomed to differentiation between categories of freight. "There is freight which by its nature and the demands of its con- sumer requires express service. It can be accommodated most expeditiously by the high frequency of passenger schedules. There is freight which moves now each day of the week, year in and year out, as an integral facet of our production economy. This is the heart of the market for all-cargo service. "The distribution process is a major element of our national pro- dution costs. All of us have a stake in its efficiency. It affects our standard of living—the prices which we, as consumers, must pay. Air service is a long way from making its full contribution to this process. "The Board proposes that combination carriers provide their all- cargo service primarily by purchasing blocked-space on those carriers specifically certificated to provide such service. We do not propose to take anything away from the combination carriers. They are free to continue operation of all-cargo aircraft if they elect to do so. Equally, however, we do not propose to ignore the losses incurred as a result—losses which are now being paid for by the passenger. There is no question that successful selling hinges on being able to accommodate all the needs of a shipper. We encourage active sales efforts in the cargo field by all carriers. However, selling Air cargo is now big enough business to justify the bigger freight carriers such as American investing more than £2m a time in specialist jet cargojiircraft \ikelthe BoeingJ07-320C
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