Letter to the President of the Senate and to the Speaker of the House on Development of a Civil Supersonic Air Transport.

Dear Mr.______________:

The Congress has laid down national aviation objectives in the Federal Aviation Act of 1958. These include the development of an air transportation system which will further our domestic and international commerce and the national defense. These objectives, when viewed in the light of today's aviation challenges, clearly require the commencement of a national program to support the development of a commercial supersonic transport aircraft which is safe for the passenger, economically sound for the world's airlines, and whose operating performance is superior to that of any comparable aircraft.

Our determination that the national interest requires such a program is based on a number of factors of varying weight and importance:

A successful supersonic transport can be an efficient, productive commercial vehicle which provides swift travel for the passenger and shows promise of developing a market which will prove profitable to the manufacturer and operator.

It will advance the frontiers of technical knowledge--not as a byproduct of military procurement, but in the pursuit of commercial objectives.

It will maintain the historic United States leadership in aircraft development.

It will enable this country to demonstrate the technological accomplishments which can be achieved under a democratic, free enterprise system.

Its manufacture and operation will expand our international trade.

It will strengthen the United States aircraft manufacturing industry--a valuable national asset--and provide employment to thousands of Americans.

The cost of such a program is large--it could be as great as one billion dollars for a development program of about six years. This is beyond the financial capability of our aircraft manufacturers. We cannot, however, permit this high cost, nor the difficulties and risks of such an ambitious program to preclude this country from participating in the logical next development of a commercial aircraft. In order to permit this participation, the United States, through the Federal Aviation Agency, must proceed at once with a program of assistance to industry to develop an aircraft.

The proposed program, though it will yield much technological knowledge, is principally a commercial venture. Its aim is to serve, in competition with others, a substantial segment of the world market for such an aircraft. While the magnitude of the development task requires substantial Government financial participation, it is unwise and unnecessary for the Government to bear all of the costs and risks. Consequently, I propose a program in which (1) manufacturers of the aircraft will be expected to pay a minimum of 25 % of the development costs, and, in addition, (2) airlines that purchase the aircraft will be expected to pay a further portion of the Government's development costs through royalty payments.

The requirement for cost sharing by the manufacturers will assure that the cost of the program will be held to the absolute minimum. In no event will the Government investment be permitted to exceed $750 million. Moreover, the Government does not intend to pay any production, purchase, or operating subsidies to manufacturers or airlines. On the other hand, this will not exclude consideration by the Government of credit assistance to manufacturers during the production process.

Although the Government will initially bear the principal financial burden in the development phase, participation by industry as a risk-taking partner is an essential of this undertaking. First, the development of civil aircraft should be a private enterprise effort, a product of the interaction of aircraft manufacturers and their prospective customers. We wish to change this relationship as little as possible, and then only temporarily. If the Government were the full risk-taker, the degree of control and direction which it would have to give to the program, to the expenditure of funds, to the selection of designs, to the making of technical decisions, would of necessity be too great. If however, private industry bears a substantial portion of the risk, the degree of Government control and the size of the Government staff required to monitor the program can be held to a minimum.

Second, our objective is to build a commercially sound aircraft, as well as one with superior performance characteristics. This will require, at a relatively early stage, a determination whether the aircraft's cost and characteristics are such that it will find a commercial market. This is a difficult task, and our decision that we have succeeded in developing such a commercially sound aircraft will, in large measure, be attested to by industry's willingness to participate in the risk-taking.

If at any point in the development program, it appears that the aircraft will not be economically sound, or if there is not adequate financial participation by industry in this venture, we must be prepared to postpone, terminate, or substantially redirect this program.

Our first concern, however, must be to get the program launched. I am convinced that our national interest requires that we move ahead in this vital area with a sound program which will develop this aircraft in an efficient manner. For that reason I commend this proposal to your early attention. I will shortly submit to the Congress a quest for funds to meet the immediate requirements of this program, such as the detailed design competition. Then we will be started on the task of marshaling the funds of Government and the ingenuity and management skills, as well as funds, of American industry to usher in a new era of commercial flight.

Sincerely,

JOHN F. KENNEDY