The Air Route Problem in the United States

Journal of Air Law and Commerce The A ir Route Problem in the United States M. George Goodrick 0 0 Lecturer in Business Administration, School of Commerce, Northwestern University; Cornell College , B.A., 1934; Columbia, M.A., 1949. Formerly, Management Analyst , Office of the Secretary of Commerce Recomme nded Citation M. George Goodrick, Th e Air Route Problem in the United States, 18 J. Air L. & Com. 281 (1951) https://scholar.smu.edu/jalc/vol18/iss3/3 - Article 3 Follow this and additional works at: https://scholar.sm u.edu/jalc By M. GEORGE GOODRICK W ITH the exception of a very few years, commercial aviation in the United States has not been a profitable industry. From the very beginning of commercial air transportation, the carriers found that their normal revenues were insufficient to meet their operating expenses; and every principal carrier, including the 16 certificated trunk line carriers which now dominate our air transportation system, has been the beneficiary of substantial direct financial aid from the Federal Government in the form of an air mail subsidy. Moreover, the cost of the Federal Airways has been borne by the Federal Government, and the cost of constructing airports and related terminal facilities has been shared between the Federal Government and the state and local government agencies. The air carriers themselves have paid no significant part of these costs though they are admittedly the principal users of airways and airports constructed and maintained at public expense.' In spite of this failure to develop sufficient revenues from commercial sources, and the continuing need to rely on Government aid, the industry has experienced remarkable growth. Prior to 1926, when the first air mail contracts were granted, there was no scheduled commercial air transport of any consequence in this country. Today the nation is criss-crossed with more than 140,000 miles of scheduled air routes. How does one account for such rapid expansion of an industry that has failed to earn enough to pay the expenses of its operation? The answer seems to be in the policies of the Federal Government whereby the operations of the air carriers have been subsidized. Indeed, the policies of the Federal Government have probably contributed much to both the expansion of our air transport system and the fact that it has thus far failed to achieve economic self-sufficiency. For the failure of the industry to achieve economic independence is largely a consequence of the fact that the supply of air transportation offered, in total, has consistently exceeded the demand for such transportation, with the exception, perhaps, of the two or three war years. 1 For specific data supporting these general statements see M. George Goodrick, "Air Mail Subsidy of Commercial Aviation," JOURNAL OF AIR LAW AND COMMERCE, Summer 1949. Federal Aid to commercial aviation was first accepted as an appropriate public policy on the assumption that as the industry grew it would be able to assume the full burden of its costs of operation so that federal aid would no longer be necessary. This expectation has not thus far been realized. Indeed, the amount of federal aid has been growing rather than decreasing in recent years and the role of the Federal Government in the operations of the industry is such that the costs to be borne by the taxpayer will probably continue to increase rather than decrease as the volume of air transportation grows. It is the purpose of this paper to review the growth of our air transportation system, to call particular attention to the role of the Federal Government in the development of air routes, and to consider some of the reasons why federal participation has contributed to the expansion of air transportation services beyond the point which the demand for such services will support. EXPERIENCE BEFORE 1938 Postal Service Beginnings Commercial aviation in the United States received its most important early stimulus from the efforts of the Post Office Department to demonstrate the benefits and practicability of transporting mail by air. 2 The first regularly scheduled air mail flight took place on May 15, 1918, from New York to Washington, a distance of about 218 miles. In 1919 service was begun on air routes west of New York and within a few years thereafter regular transcontinental air mail service was being maintained by the Post Office Department from New York to San Francisco, via Cleveland, Chicago, Omaha, and Cheyenne. The Post Office Department owned and maintained its own planes, it surveyed and charted the first air routes, and designed, built, installed and maintained the air navigation facilities required for its operations, including rotating beacon lights and air-ground radio communication facilities. By 1925 the air mail service was well established under Post Office Department operation. The Postmaster General believed the time had come when it could safely and properly be transferr (...truncated)