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Aviation History
1964
1964 - 2153.PDF
172 FLIGHT International, 30 July 1964 AIR COM MERCE . . . AMERICA AND EUROPE "My job is to talk, your job is to listen, and if you get through before I do, for God's sake let me know." On this note Mr Tom Taylor, TWA s vice-president in charge of Washington affairs, opened his recent talk on Air Union to the International Aviation Club in Washington. The talk was a good one, and judging by the guests present—who included the British civil air attache in Washington, Mr E. I. R. MacGregor, and also BOAC's man in Washington, Mr Ronald Geldard—the general standard of these addresses is high. It was the first such function we had attended, the closest equivalent in Britain, though it is not a luncheon club, being the excellent if underrated Air Forum. Mr Tom Taylor had, he said, read in a European newspaper recently words to the effect that when the Air Union carriers were "freed from the burdens of competition" they could improve services [laughter]. Americans, he said, had been brought up to the competitive philosophy and he foresaw a "conflict in economic ideologies." There was no sign that Uncle Sam was going to allow pooling, which in the American view was a conspiracy to restrain competition—"we'd all go to gaol." What might be expected to result from this basic ideological conflict? What would happen to fares and to all the arguments over frequencies and capacities ? Were disputes going to be magni- fied? "If the benefits rather than the evils of each system come to the fore," said Mr Taylor, "I don't think the public will come out too badly." In Europe, he said, the normal pattern was to pool and, so far, this had led to higher fares. Not that this was necessarily the result of pooling alone; it could be that Europe's lower market density meant higher fares anyway. But when the American carriers tried to serve European cities the European reaction was "There are too many flags around here, and what are you doing over here anyway ?" The answer was that Americans were trying to service their third and fourth freedom rights. Would the answer to this now be "This is traffic within our gates so get the hell out of here?" Air Union could perhaps best be described as the chosen airline instrument of the Common Market. It would be a monopolistic giant, "a platform differing completely from ours." But a monopoly situation could result in operating efficiency—"somebody who can ration his product can achieve higher load factors, so theoretically he is in a position to pass on to the public the benefits of the higher efficiency of his economic environment." This could mean lower fares and more flights. Perhaps this was what the newspaper he had read was talking about. If things worked out this way the users and the shippers would be better off. Americans were just as concerned about destructive competition as were their European friends though they believed that the benefits of properly regulated competition—the best product at the lowest price—were surer. Air Union would not, said Mr Taylor, be interested in excessive scheduling, so there would be no incentive for US carriers to out- schedule the others, something which went on in the USA and which "doesn't do anybody any good, least of all the user." On the other hand there was no reason to expect that the theoretical efficiency of Air Union would be passed on—though perhaps the stimulus of American competition would be there "to ensure that the consumer would be cut in on these benefits." Neither Air Union nor the American carriers could serve the public interest, which was the object of both, unless both were making money. "The user openly controls the situation," said Mr Taylor, "because if you are not going to serve the public some- body else is." If the pooled operators did pass on the benefits of their economies "we are going to find life hard maintaining their costs and prices." There were two ways, said Mr Taylor, in which Air Union could cause the situation to deteriorate. Excessive restrictionism would work against the interests of both sides. "We don't want pooling; to' gain the ascendancy, restricting progress.and the product, andj we don't want abuse of the fare structure." Concluded Mr Taylor: "td like to see that the public and not the operators are the primary beneficiaries." • • * While in Washington we were "received by Mr Alan Ferguson, the State Department official responsible for America's bilateral agreements. We asked him whether or not there seemed to be a trend in recent years in America away from liberalism and more toward predetermination. "We are more opposed than in the past to predetermination," replied Mr Ferguson, "though it is difficult to be more liberal." The Americans had, he said, been free in the past. The Italians and the French had rights to big US markets—Alitalia to New York and Chicago, Air France to New York, Chicago, Los Angeles, Houston and Washington. America could not be accused of illiberality, he said, but it was mandatory that the USA had to be compensated in the exchanging of routes in terms of what he called "equivalent overall value," and each exchange had to be treated as a particular bargaining case. But, he observed, there was the point that each side benefited from both the granting and the receiving of routes—"some exchanges increase the overall size of the pie." We asked whether relations with the British were running smoothly. "There have been misunderstandings," said Mr Fergu- son, "and plain honest-to-goodness irritations, but relations today are basically pretty good. Our differences are small overall." There For seven months after the Las Vegas "Son" printing works had been destroyed by fire, an emergency lair-lift by Steward-Davis jet-assisted Packets car- ried 16,0001b of newspapers seven nights a week from Los Angeles, where temporary production was arranged, to Las Vegas where the "Sun" was on sale 2\hr after leaving the press
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