Pan Am clipper, January 1975

              January 1975
Congress Okays Airline Aid Bill
Pan Am, TWA Revise Route Swap Accord
Pan Am and Trans World Airlines revised their massive route swap proposal last month in an effort to clear the way for fast Civil Aeronautics Board approval.
The modified plan, filed with the Board on December 17, eliminated part of the “all or nothing” package that was so controversial the CAB said there was no chance for expedited action and that lengthy hearings would be required. That part was the proposed transfer of Pan Am’s ’Los Angeles - Hawaii turnaround authority to TWA.
Instead, the two airlines agreed that TWA would replace Pan Am as the sole U.S. carrier providing direct service between Austria and the U.S. which is served by New York-Vienna flights.
Otherwise, the proposal remains virtually unchanged. It is expected to produce an estimated earnings improvement of at least $25 million for both Pan Am and TWA.
The plan calls for TWA to suspend service to Germany and across the Pacific east of Saudi Arabia and west of Los Angeles. It would end TWA service at Honolulu, Guam, Taipei, Okinawa, Hong Kong,Bangkok and Bombay. And TWA would suspend its through-plane service authority between Washington and London.
Pan Am would suspend its service to France, Portugal, Spain and Morocca, as well as to Austria, except for its mid-Atlantic Miami-San
Juan-Lisbon-Madrid-Rome route. It would also suspend its authority for through-plane service to London from Chicago, Los Angeles and Philadelphia.
In effect, the service suspensions are designed to eliminate competition on the route involved between the two U.S. airlines.
Both airlines will maintain normal flight schedules pending CAB action on the proposal.
The original proposal, filed October 22, ran into strong opposition. It came from other U.S. airlines serving the mainland-Hawaii market. They objected to Pan Am switching its turnaround authority to TWA because they feared TWA’s extensive domestic route system would make it a much stronger competitor than Pan Am by funneling a lot of Hawaii traffic, currently going to other airlines, to TWA instead.
Pan Am lacks the backup of domestic routes and must carry traffic originating on the West Coast, or fed to the West Coast by another airline. The “turn-around” authority—the right to immediately pick up a fresh load of passengers and fly back to the mainland—will be retained by Pan Am.
Travel Agent Is Vital To Pan Am
In a letter to all employees on December 18, Chairman William T. Seawell re-emphasized the importance of the travel agent to Pan Am.
“In continuing efforts to find ways to improve Pan Am’s financial condition, our unique relationship with our travel agents continues to surface,” the letter said.
“The travel agent is vital to Pan Am in selling all of our services. In fact, almost 70% of our total sales were derived from this source in 1973 and 67% is estimated to be travel agent related in 1974.
“The majority of our travel agencies are not large businesses. The men and women who operate them must have faith in the product we provide if they are to select Pan Am over our competitors, and remain credible to their clients.
“The travel agent community, for the most part, understands and has been sympathetic to current problems. They have attempted to aid us not only with the ‘Fly US Campaign’ but with organized efforts of their own. In many areas, agents have formed their own groups to develop programs supporting U.S. flag carriers.
“I am sure all of you are aware of this unique relationship and operate effectively with the travel agents in your area. It is my wish that each of you who has reason to be in contact with travel agency personnel do all you possibly can to earn their support by providing the kind of service we are capable of giving and at the same time, letting them know we want and appreciate their business.”
PAN AM DROPS OUT OF
MUTUAL AID PACT
see page 6
UPU Mail Rate Dropped
After Senate Filibuster Threat
The U.S. Congress, in the final days of its 1974 session, overwhelmingly passed an airline aid bill designed to stop discrimination against U.S. international flag carriers. But it was only a partial victory.
After passing the House, the Senate knocked out a key provision of the International Air Transportation Fair Competitive Practices Act that would have meant millions of dollars more revenue for Pan Am and other U.S. overseas airlines.
It was the provision that U.S. carriers would be paid Universal Postal Union (UPU) rates for carrying international mail—the same higher rates paid to foreign carriers—rather than loWer rates set by the Civil Aeronautics Board.
Enough opposition to the amendment developed in the Senate that it threatened to kill the entire bill before Congress sine die adjournment.
Stuart G. Tipton, senior vice president federal affairs, termed the Senate action a “disappointment” to Pan Am management and employees.
“The tremendous support of many, many employees who came to Washington on their own time, to
help in whatever way they could, has shown government officials that this company is dedicated to survival,” he said.
“While the bill is not what we wanted, it does have features which will benefit the U.S. flag system. And we are much better off today with the bill than we were previously.
“We will renew our efforts in the next Congress to obtain whatever legislative relief is appropriate to ensure that the U.S. international system is provided an opportunity to compete equally with foreign carriers.
’’The UPU amendment had been introduced in the bill on the floor of the House by Congressman John Murphy (D-New York) on December 13.
“This amendment will rectify the discrimination against our air carriers which has pushed them, Pan American in particular, to the brink of financial disaster,” he said. His colleagues voted 154-13.1 for
the amendment, then passed the entire bill by a 221-54 margin.
It was the following Tuesday, with Congress heading for a December 20 end, that the Senate—with the amendment out—passed the bill by an overwhelming voice vote.
The bill still must be signed by President Ford before it becomes law. Ford, through the Department of Transportation, had earlier signaled his opposition, as well, to paying UPU rates to U.S. airlines.
How much additional revenue the UPU provision would have produced was a matter of dispute.
“The Postal Service claims that it would incur added costs of $96.5 million, whereas Pan American states that the cost would be $71.5
million,” Murphy told the House. He added that he personally figured that both estimates were too high and that the extra cost
Continued on Page 6
Project Turnaround
Draws Top Speakers
By MERLE RICHMAN
They came from half way around the world and from as close as Maryland. President Gerald Ford welcomed them to Washington, D.C., and U.S. Senator Barry M. Goldwater sent them on their way back home declaring that he did not believe that Pan Am would fail in its efforts to remain alive.
Capt. James Hotchkiss opens the seminar. On his left are Claude Brinegar, Secretary of Transportation; Capt. J.J. O’Donnell, ALPA President; and William Genovese, Vice President-Airline Division—International Brotherhood of Teamsters.
And, in between, some 150 airline employees attending Project Turnaround in Washington, D.C., in the first week of December, listened and discussed with a blue-ribbon panel of speakers, the problems facing Pan Am and the possible solutions.
“I welcome to our Nation’s Capital the men and women of Pan American World Airways who are here for meetings on Project Turnaround. The initiative and concern which you show is demonstrating your dedication to your company and to the future of our U.S. Flag system—the finest private international aviation system in the world,” President Ford said in a special message (see letter page 6) to all employees of Pan Am. President Ford’s message thus set the tone on December 2 for “Project Turnaround” sponsored by flight crew members of Pan Am.
Although the attendees mostly were from Pan Am, pilots, flight engineers and other employees of other U.S. international carriers sat in on the sessions.
In essence, the seminar, according to James Hotchkiss, Chairman, Pan Am Pilots Public Affairs Committee, was “an effort by the
pilots and flight engineers of Pan Am to give all of their fellow employees the basic facts they need in order to obtain public • awareness of, and support for, sensible long term solutions to the problems facing all U.S. international airlines.”
Discussion topics ranged from the public benefits of America’s international air service to the inequities long faced by U.S. Flag carriers in competing with foreign airlines.
Project Turnaround “may be just Continued on Page 6