Disapproval Of Fare Increase

Press, Volume CIII, Issue 30390, 14 March 1964, Page 13

Disapproval Of Fare Increase

(N.Z. Press Association—Copyright) WASHINGTON, March 12. The Civil Aeronautics Board today disapproved of an airline agreement which would have raised air fares to and from the South Pacific by 5 per cent. The board said that, instead of a rise, a reduction in fares “is both economically feasible and required in the public interest.”

It urged the airlines to reexamine fares. As no International Air Transport Association agreement is in effect in the Pacific, there was nothing to prevent individual airlines making “prompt” and appropriate reductions,” the board said.

The C.A.B. rejected an agreement which would have - reduced the 10 per cent discount on round trip flights on South Pacific routes to 5 per cent. The fare increase was first considered last December, when the C.A.B. deferred action on it pending submissions of economic justification by the airlines. The board said the data submitted since December by the only airline responding—Pan American Airways —was deficient and failed to

reflect actual operating results, either for that airline or the industry. The board added that If basic fares were reduced an appropriate amount, it would be inclined to approve the proposed 5 per cent round trip discount both as proposed on South Pacific routes, and on the central and northern Pacific routes as well. Two of the five board members dissented. Mr Chan Gurney and Mr Whitney Gilliland said the proposed reduction would not change fares enough to warrant disapproval of a compromise agreement reached unanimously by American and foreign airlines operating in the Pacific. They said that average loads on the South Pacific routes were too low, and the average rate of return on investment—6.2 per cent for Pan America and 7.8 per cent for North West Airlines—was substantially below the 10.25 per cent rate of return which the C.A.B. had found to be reasonable.