WAR FRONT: Sedta Cuts the Rates

As most U. S. citizens know, German designs on the New World have their primary focus in South America. There a network of Nazi airlines twists and twines, like the tentacles of a determined octopus over 23,000 miles of strategic routes (South American mileage of Pan Am & affiliates: 26,000 miles). Owned or controlled by huge Deutsche Lufthansa, they operate at a considerable financial loss. But their pilots fly for the Fatherland, not for pfennigs. Lufthansa and her keen-eyed brood are 1) the arteries of German propaganda taken from Wilhelmstrasse to Rio by the Italian airline Lati, 2) the training schools where Nazi pilots learn South American topography, gain practice in long-distance flying, 3) the outposts from which hemisphere defenses come in for Nazi scrutiny.

Two years ago the State Department became alarmed by Nazi shenanigans in Colombia. Controlled and operated by avowed anti-U. S. Germans, powerful, 20-year-old Scadta airline had mapped and charted the Panama Canal, had placed an airfield but 150 miles away, could well use its heavy Junkers as troop transports, bombers. Last year Colombia responded gracefully (if belatedly) to U. S. pressure by nationalizing Scadta (now Avianca) and giving 64% control to Pan American.* But the Nazi shadow still fell on the canal.

The Sociedad Ecuatoriana de Transportes Aéreos (Sedta) flies 900 route miles in Colombia’s next-door neighbor, Ecuador. Heavily subsidized by the local Government and Germany, Sedta is controlled by Deutsche Lufthansa through equipment credits, other loans. It is no moneymaker. But it makes up in good will what it lacks in revenue. Nearly 50% of its passengers (many of whom are Government officials) reportedly travel free, barely 10% pay the full fare.

To a jittery U. S., Sedta is as sinister as her late sister Scadta. Recently she has sought (unsuccessfully) to extend service to 1) Colombia, 2) the Galápagos Islands,† which, though sparsely inhabited and commercially impotent, are located strategically near the Panama Canal, 3) the jungles of eastern Ecuador, from which she could easily connect with Lufthansa-owned Condor’s penetration line in western Brazil. Her Junkers JU52s (used as troop transports in Belgium, The Netherlands) could fly from Ecuador to the Canal Zone in four hours or less.

Last fall the State Department, finding Ecuador unwilling to follow Colombian example, replied to Sedta in kind. Dangling a reported $180,000-a-year post-office subsidy, it hooked reluctant Pan American-Grace Airways into setting up a rival service.

Result: an old-fashioned rate war. Last month Sedta established domestic airmail service, charged 80 centavos (about 25¢) per five grams. A few days later, Panagra cut the price to 45 centavos. Last week came Sedta’s rebuttal, devastating and unanswerable: they would carry mail free within Ecuador’s borders.

By this week it was clear which way the wind sock was pointing. If Panagra is to keep her foothold in Ecuador, earn the right to buy out Sedta’s operating permit, she (and Washington) must throw as much money into Ecuador’s winds as Adolf Hitler.

* Since 1931, Pan Am had owned a majority of Scadta’s stock. Reportedly, most of their shares were held in escrow (with voting powers) under the name of Scadta President Peter Paul von Bauer.

† This week Washington and Ecuador were negotiating over naval bases on the Galápagos.