Statement by the President Upon Signing Bill Authorizing Permanent Certification of Certain Air Carriers.

I HAVE APPROVED H. R. 4520 authorizing permanent certification of certain air carriers operating between the United States and Alaska. It is with some reluctance that I have done so, first, because I do not believe it is sound practice to bypass by legislation the regular procedures for certification that Congress has established in the Civil Aeronautics Act, and second, because of the heavy subsidy charge upon the Treasury for two of these carriers.

In the Civil Aeronautics Act, the Congress has provided detailed procedures for the certification of airlines on particular routes, and except in extraordinary or unusual circumstances these procedures should be followed. Long experience has proved that necessary regulation in the public interest of complicated industries is best provided when an expert regulatory body applies the standards established by law to the facts of specific situations as they are developed by investigation and in open hearings. The Congress found, however, among other things, that the complete dependency of Alaska upon air transportation presented unusual circumstances in this case, and that those circumstances were similar to those which led the Congress last year to enact legislation granting permanent certification to the intra-Alaska and intra-Hawaii carriers.

A little more than two years ago the Civil Aeronautics Board, with my approval, extended the temporary certificates of Pacific Northern Airlines and Alaska Airlines for five years, and extended the temporary certificate of Northwest Airlines covering the inside route through Edmonton, Canada, for three years. Because the Air Coordinating Committee had found that the number of carriers operating to Alaska was excessive, it was hoped that Alaska Airlines and Pacific Northern Airlines might effect a merger. No merger has taken place and in the last two years the annual subsidy charge on the Government for the services of these two airlines has risen by about $900,000. At the present time that charge is over $3,000,000.

The carriers themselves contend that the short duration of their certificates has made it impossible for them to finance modern equipment or make long-range plans, with the result that they have had a difficult time competing with the two stronger permanently certificated carriers--Pan American World Airways and Northwest Airlines. This in turn, they contend, has increased their need for subsidy.

In enacting this legislation the Congress has found that permanent certification will over the long run actually reduce the need for subsidy, since under permanent certification the carriers will be in a better position to finance modern, economical equipment, and make long-range plans. I hope this finding turns out to be correct. I still am convinced, however, that the number of States-Alaska carriers is excessive, and that reduction of this number is essential in the interest of strong, competitive air service between the United States and Alaska. In order that the permanent certification provided for in this bill will not have the effect of doing away with the incentive to reduce this number, I have asked the Civil Aeronautics Board to continue taking all appropriate steps to facilitate and encourage mergers.