AVIATION: Competition Is Cheaper?

His arms bulging with brightly colored charts, his head bulging with airline facts & figures, a persuasive witness appeared last week before the Senate Commerce Committee’s subcommittee on aviation.

For the big game he was after, he had need of all this statistical ammunition. As a spokesman for 17 U.S. airlines, hawk-nosed Ralph Shepard Damon, vice president and general manager of American Airlines, hoped to kill off, once & for all, the monopolistic chosen instrument—or community company—which Pan American’s Juan Trippe advocates as the keystone of U.S. international air policy.

Ralph Damon’s basic proposition was that the U.S. can keep its present lead in aviation only by regulated competition, i.e., by allocating international routes to U.S. companies, the way the Civil Aeronautics Board now hands out domestic routes. He waved away the argument that low wages in other countries will permit foreign lines to put competing U.S. companies out of business. Said Airliner Damon: in the last full prewar year, the operating costs of U.S. airlines were far under those of any foreign line. The reason: greater efficiency of operation.

Then he did some sharpshooting at Pan Am’s own operations. Competition, said he, is better than monopoly because it is cheaper. Item: operating costs on Pan Am’s western division, which flies from Brownsville, Tex. to Mexico City, the Canal Zone and Trinidad, were $1.75 per revenue mile in 1940. Operating costs for American Airlines, on its routes from El Paso and Dallas to Mexico City, were 83.9¢ a revenue mile in 1943, when all airline costs were admittedly higher.

As to why it cost Pan Am so much more to fly its planes, Damon could not say. He guessed: “It is the difference in philosophy, of being fat and complacent as a monopoly versus being . . . lean and hungry as a competitor.”

Unwilling Competitor. American is not above being fat and complacent itself. As Maine’s Senator Brewster sharply reminded Damon: in CAB hearings 19 months ago, American Airlines had opposed any competition on its New York-to-Boston route. It argued then, as Trippe does now, that one line could do a better job than a number competing for a limited amount of traffic. In effect, American was willing to accept competition—if it had to.

But American and the other lines were not willing to get rid of competition through a community company. They were frank about their reasons: 1) wealthy Pan Am would control it, and 2) Juan Trippe would run it. (One airline spokes-man even went so far as to say that Trippe was the only possible candidate to run it.)

Furthermore, domestic lines have learned so much in flying around the globe for the Army’s Air Transport Command and Naval Air Transport Service that they are now confident that they can meet Pan Am at its own globe-girdling game. On the thousands of route miles which the U.S. has strung around the world, some eight domestic lines, Pan Am, Pan American-Grace and American Export Airlines have flown the astronomical distance of 2,581,903,999 passenger miles on overseas routes since Pearl Harbor.

Unwanted Policy. Now firmly planted in the field which Pan Am pioneered, they do not intend to get out. There seemed little chance that they would have to. Two months ago, the Senate subcommittee seemed on the verge of recommending to Congress that the U.S. adopt a chosen-instrument policy. But in the last few weeks, under heavy fire from the Army. Navy and CAB, the idea has steadily lost ground. American’s Damon may well have given monopoly its coup de gráce.

At week’s end, with no more than three committee members in favor of it, the community company seemed dead. More & more it looked as if the U.S. would fumble toward an international air policy by default; as long as Congress failed to act, the present domestic policy of controlled competition would simply be stretched to cover the globe.