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Aviation: Storm over the Atlantic

3 minute read

The biggest international ruckus of the jet age last week found the U.S. standing almost alone against nearly a score of foreign airlines. The dispute centered on fares on the heavily traveled North Atlantic run, where Pan American and TWA are engaged in hot competition with no fewer than 16 foreign airlines. The foreign airlines—most of them prestigiously losing money for the governments that run them—want to make changes that will, in effect, raise fares on the North Atlantic run 5%. The U.S. is holding out against the fare hike—and would, in fact, like to see fares cut. “The Americans are being bloody-minded,” snapped one foreign airline executive. But Civil Aeronautics Board Chairman Alan Boyd, aware that the majority of North Atlantic travelers are American, sees no reason why passengers should help reduce the deficits of inefficient airlines by what amounts to an involuntary subsidy.

Bitter Complaints. The trouble started six weeks ago when the CAB refused to okay a fare increase that had already been approved by the International Air Transport Association, the all-powerful airline trade group whose 90 member airlines set standard fares the world over. Since I.A.T.A. had approved the fare hike back in October and the CAB rejected it only two weeks before it was to go into effect, other members were understandably shocked and angered by the lateness of the CAB action. Foreign carriers complained bitterly that they had already printed new tickets, sent out new promotional brochures and based their financial projections on the new fares, but they agreed reluctantly to postpone imposing the new fares until this week.

Despite its tactless tardiness, the CAB had some good reasons for turning down the fare hike. Last year 2,300,000 passengers flew across the Atlantic—but, on the average, the big jets were only 45% full. Mostly mired in huge deficits, the European airlines see higher fares as the most expedient way out of their financial difficulties. Pan Am and TWA have been making good profits on the North Atlantic run, though steadily losing a bigger share of the market to foreign carriers. They argue that lower fares are needed to attract more passengers to Europe and help to fill up empty seats.

Uneasy Truce. As the uneasy truce ticked away, the CAB’s Boyd flew to London last week for a showdown. Timed to coincide with his arrival was the White House release of President Kennedy’s long-awaited new aviation policy. The policy was disappointingly vague and pedestrian in most respects, but it did make one point abundantly clear: the U.S. favors lower fares and is willing to fight I.A.T.A. to achieve them.

In the cavernous Shell-Mex House on London’s Strand, Boyd faced representatives of 15 foreign governments, including Germany, France and Italy. Only Canada was on the U.S. side. The others suggested that if the U.S. would go along with the fare rise, they would support a full review of all fares. Boyd was not budging. At week’s end, after three days of negotiations, Boyd’s opponents backed down temporarily, offered to extend the truce to May 15. But nothing was solved yet. A British official told a reporter: “We will tell TWA and Pan Am in mid-May that they must charge increased fares or they will not be allowed access to airports in this country.” Boyd planned to use the extra time to make the rounds of European capitals pleading the U.S. case for lower fares.

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