WSP09126

• File Number: 8030
• Description: Section D General Correspondence-Other Organizations/Agencies
• State: CO
• Date: 5/2/1973
• Author: National Archives
• Title: US Water Resources Council-1972-1977-Federal Register-Volume 38 Number 84-Pages 10789-10908-Part 1
• Water Supply Pro - Doc Type: Publication

~

laUon wlll create a very real and Wljust
burden on military personnel; that
armed forces personnel do not l'ecelve
sufficient remuneration to permit them
to travel by air at full fares; that because
of the. time element air travel is often
the only mode of transportation suitable
for short furloughs; and that military
fares provide an excellent public rela-
tions and advertising conduit for the air-
lines and hence generate future full-fare
traffic. The complaint further alleges
that by allowing Frontier to cancel these
fares the Board will. in effect, be en-
couraging other carriers to make similar
proposals.
Upon consideration of the proposal,
the complaint and all other relevant
matters, the Board finds that the com-
plaint does not set forth sufticient facts
to warrant investigation, and the request
therefor, and accordingly the request for
suspension, will be denied and the com-
plaint dismissed.
Frontier's proposal is not unique to the
local service industry since several car-
riers do not presently offer military
standby fares. In view of Frontier's con-
tinuing subsJdized status and the fact
that special reservation fares for the
military will continue to be a\'ailable at
a significant discount in markets where
Frontier would cancel its miIUary stand-
by fares, we are unable to conclude that
its proposal is unreasonable,
Accordingly, pursuant to the Federal
Aviation Act 01 1958, and partiCUlarly
sections 204(a) , 403, 404, and 1002
thereof,
It is ordered, That:
1. The complaint of the Department
of Defense in docket 25402 is dismissed;
and
2. A copy of this order be served upon
Frontler Airlines, Inc., and the Depart-
ment of Defense.

This order shall be pUblished in the
FEDERAL REGISTER.

By the Civil Aeronautics Board.

[SEAL] EDWIN Z. HOLLAND,
Secretary,
(FR Doc."/3-8563 FUed. 5-1-73;8:45 am]

~,

.)

(Dockets Nos. 22364, 25474; Order 73-4-117)

U.S. MAINLAND-HAWAII FARES

Hawaii Fares Investigation; Order

Adopted by the Civil Aeronautics
Board at its omce in, Washington, D.C.,
on the 21th day of April 1973.
On March 30, 1973, Pan American
World Airwa.ys, Inc. (Pan American),
filed a petition request.ing that the Board
revoke order '12-5-100, which prescribes
regular fares in the U.S. mainland-Ha-
waii markets, so as to penn1t the filing
of tariffs increasing fares in the west
coast-Hawaii market.
Pan American asserts that it as well
as other carriers continue to suffer large
losses in Hawaiian service, and that an
increase in fares is essential. Pan Ameri-
can states that in 1972 it sustained an
operating loss .In its west coast-Hawa1.l
service of $5.6 million in spite of a 56.2-

"

NOTICES

percent passenger load factor, and al-
leges that at current fare levels it antic-
ipates an operating loss lor the year end-
ing JWle 30, 1974, of $10.4 m1l1ion.
Pan American also contends that the
Board's evaluation of the discount-fare
situation in order '12-11-31 does not ac-
curately reflect usage of the~e fares in
the west cotlSt-Hawaii markets.1 It fw--
ther alleges that the wide use of discount
fares from Interior markets is both ap-
propriate and reasonable due to the
longer hauls involved (and thus the need
for lower fares to encourage travel) and
the developmental stage of these mar-
kets. Pan American alleges that the car-
riers are faced with a problem of lim-
ited tramc growth and market develop-
ment, and that the continued availability
of discount fares is warranted and not
a reasonable basis for preclUding needed
regular fare increases.!
Pan. American challenges the Board's
premi.se in denying the carriers' request
for a regular fare increase last fall (or-
der 72-11-31). In that order, the Board
indicated its concern with the disconnt
fare/regular fare relationship in the Ha-
waiian market, both in terms of the dol-
lar level of discOlU1t fares and the pro-
portion of diScOWlt-fare traffic to total
traffic. It was the Board's belief at that
time that the carriers should take those
remedial actions within their powers be-
fore turning to the Board for basic fare
increases. Since issuance of order 72-11-
31, most carriers have attempted to
effectuate substantive discoWlt-fare re-
visions but competitive forces have ne-
cessitated withdrawal of those proposals.
While Pan American's experience with
discoWlt fares may differ somewhat from
the data upon which we relied in order
72-11-31, it does not alter our opinion
tha.t the growing use of discount :fares
in recent years has had a signiflcan tly de-
basing effect on fare yield and has con-
tributed to c.arrier losses, Nevertheless,
detailed information on traMc patterns
in the mainland-Hawaii market, upon
whjch to base a definitive Judgment are
not now avaliable. and we conclude that
an investigation of the level of discoWlt
fares and their relationship to normal
fares should now be W1dertaken.
Several factors lead us to the conclu~
slon that this investigation should also
encompass a reexamination of our de-
cision in docket 22364 with resp'ect to

1 The carrier submits that. while the Boa.rd
relled on an analysis of tra.ffl.c during the
first (1 months of 1972 which showed that 51
percent of coach a.nd economy trafD.c traveled
on discount ta.res. Its own exper.ience durIng
this. pertod tndi~ted that dlscoun.t.:.!.e.re
travel accounted lor only 38 percent of th1B
tramc.
~ Continental AIr Lines, Inc., and Western
Air Ll.nes, Inc., have filed answers In support
or pa.n Americz.n's lletition. United Air L1nes,
Inc., has flIed an answer which, altbough sUp~
porting the ultlmate obJecti\"e of the petitton,
requests Its denIal BS unnecessa.ry to achieve
the normal tarl1r fI1l.ng environment. Hawal~
1a.n AttUnes, Inc., a.nd Aloba AirHnes, Inc.,
have flIed Joint comments with respect to
the common.tare requirement. and take no
position on the issue of tare Increases.

10833

normal fare levels. The fares which were
prescribed in order 72-5-100 were esti-
mated to produce an overall combined
rate of return for Braniff, Continental,
Pan . American, United. and Western, of
4.2 percent for the forecast year ended
June 30, 1911. This return has not been
achieved and, in fact, most carriers have
been sustaining significant operating
the record on which our decision was
losses in the intervening :rears. Further,
based reflected little in the way of actual
experience under the new market con-
ditions stemming from certification of
additional competitive service in 1969.
The pattern of competitive services has
now been relatively stable for a. period of
several years and we should be in a
better position to evaluate the revenue
need in this market.
Moreover, the cost data used to develop
the forecast in docket 22364 were based
on expenenced results for the year ended
June 30, 1970. There can be little doubt
that costs in this market have followed
the general rising trend being sustained
in overaH domestic operations. In addi-
t.ion, we perceive no reason at this time
why normal fare levels in the mainland-
Hawaii markets should not be reevalu-
ated in light of the ratemaklng principles
established in the various phases of the
domestic Passenger-Fare Investigation.
In summary, it is our view that the
outdated state of economic data upon
which the decision in docket 22364 was
based, the subsequent establishment of
various ratemaking prin.ciples in the Do-
mestic ~assenger-Fare Investigation and
the substantially changed market con-
di.tions which have evolved since the case
was tried, warrant revocat1on of the
normal fare levels prescribed in order
12-5-100, and institution of an investi-
gation of the level of regular fare and the
level and structure of discount fares in
the U.S. mainland-Hawaii market.
Aspects of the regular fare structure
were extensively litigated in the previous
U.S. mainland-Hawaii fares case and
there appears to be no need to litigate
them again. These issues are the rela~
tionship between second- and third-class
fares, charges for in-fiight amenities, and
consideration of regular fares for services
between interior U.S. points and Hawaii.
These issues will accordingly be excluded
from consideration in the investigation
ordered herein.'
Accordingly, upon consideration of the
foregoing. and all other relevant matters.
It is ordered, That:
1. That part of order '12-5-100 which
prescribes the level of first-, second-, and
third-class regular fares in the U.S.
mainland-Hawaii market is hereby re~
voked; .
2. Exceptions to the preceding order-
ing pa.ra.graph may be filed a.nd served
on or before the 15th day after date of
servJce of this order. Such exceptions

:l Of course, the scope of the proceeding Is
SUbject to modJflcatlon 1D the l1ght of any
petItIons tor reconsideratIon which may be
.filed.

FEDERAL REGISTER, YOL, 38, NO, 84-WEDNESDAY, MAY 2, 1973

I
0859