A Pattern for the 70s

For the past three years, 17 U.S. airlines have been in a fierce fight for control of new territory. Up for consideration before the Civil Aeronautics Board have been all the existing U.S. air routes and all the new routes that the airlines would like to fly over a vast area washed by the Pacific Ocean. The final allocation of flight lines will affect American-flag traffic over half the globe--including great swaths of North America, Asia and Australia.

After studying the airlines' voluminous claims and proposals, CAB Examiner Robert L. Park, 48, recommended a parceling of routes among seven applicants. They include the three Pacific veterans--Pan American, Northwest and United Air Lines--and three newcomers, including Trans World Airlines, Eastern and Western. Cargo-carrying Flying Tiger Line also got a piece of the action. Approval of the CAB's full five-member board and the President is required before Park's decision becomes final, but the $23,700-a-year examiner's 215-page recommendation gave the front runners a long lead on what Park called "the basic pattern in the Pacific for the next ten years or more." What they stand to win:

· Pan American, whose Clipper flying boats pioneered transpacific air services in the 1930s, would lose its long monopoly on U.S.-flag service to the South Pacific islands. But it would receive new lift elsewhere, including New York-to-Tokyo Great Circle flights in competition with Northwest and new services to Hawaii and the Orient from three West Coast cities. It would also get permanent permission for its recently inaugurated flights from New York to Hawaii and the Orient. Passenger stopover privileges on these flights, now limited to San Francisco and Los Angeles, could be expanded to other West Coast cities. All of which would put Pan Am on a better footing with its main Pacific rivals: Qantas, Japan Air Lines and BOAC.

· Northwest, which now faces new Pan Am competition on the North Pacific route, which it once had to itself, would get a potential gold mine in fast-rising tourist traffic to Hawaii and the Orient, with direct routes from eleven cities ranging from Minneapolis to Boston.

· United, the domestic carrier that is the nation's biggest airline (1967 revenues: $1 billion), lost its bid to go international, but was given a chance to tap new mainland cities for its rich Hawaiian trade, which already accounts for a third of its earnings.

· TWA was promised its first transpacific routes to the Orient (via Hawaii and Guam), a chance to become a genuine global airline in full competition with Pan Am for the fast-growing round-the-world passenger traffic.

· Eastern, which as recently as 1963 was shaky enough to ask for a $33 million subsidy, got a chance to change from a domestic carrier into a major international airline, giving Pan Am its first U.S.-flag competition in such South Pacific areas as New Zealand, Tahiti and the Fiji Islands--not from U.S West Coast cities (which Pan Am serves), but from eleven mainland points plus Mexico City and Acapulco.

· Western may join the Hawaiian rush with flights not only from Western and Midwestern cities, but also from Anchorage, Alaska.

· Flying Tiger will become the first and only transpacific all-cargo airline, with five-year permission to fly routes to Hawaii and the Orient--routes on which air-cargo traffic is growing at more than twice the overall world rate.

Inexorable Interest. The new westward thrust was long overdue. An earlier CAB effort to reapportion the Pacific was vetoed in 1961 by President Eisenhower on the grounds that new services were not needed. Today, said Park, "from every point of view--defense, the economy, trade, tourism--the interests of the United States are being drawn inexorably toward the countries of the Pacific basin."

The airlines regard the area as the next great frontier in air-traffic growth. Traffic between the mainland U.S. and Hawaii is expected to climb to 2,500,000 passengers by 1970, for a 170% increase in five years. Over the same period, South Pacific traffic should climb by 315%, to 500,000, and Orient passengers should rise by 290%, to 1,500,000 a year. And because the Ion" Pacific routes--2,400 miles from San Francisco to Hawaii alone--are particularly economical for jets, they are uncommonly profitable. Pan Am, which makes an impressive 12% profit on its overall invested capital, clears 21% on its Pacific service.

The airlines, understandably, clamored for just about everything but service to the moon. "Sure we asked for everything," admits one airline executive, "but so did everyone else." The CAB heard testimony from more than 70 "interested parties," among them city governments, chambers of commerce and Hawaiian interisland airlines wary of newcomers. Politicking grew so intense that at one point CAB Chairman Charles Murphy, citing "extensive receptions and similar functions," warned the airlines "not to exceed the bounds of propriety."

Lucrative Lake. With so much at stake, the losers were understandably distressed. Los Angeles-based Continental Airlines, which longs for major-airline status, laid a great deal of groundwork in the Pacific by providing considerable military charter services, setting up a local air service in Southeast Asia and investing in hotels in Micronesia, Hawaii and Okinawa. When Continental failed to win any routes, partly because Examiner Park felt that Eastern could do more to develop South Pacific traffic, Continental President Bob Six declared that he was "outraged" by the recommendation, which left his airline to be "swallowed by the fat cats or nibbled bloody by the kittens."

No less astonished was American Airlines, whose longtime chairman, C. R. Smith, was appointed Secretary of Commerce by President Johnson two months ago. American, which had been plugging for a route network that would compete on virtually every present Pacific run, was turned down cold by Park on the grounds that its "all or nothing" proposal was an "extreme oversimplification" of the needs of the area.

Examiner Park's plan may yet come in for some changes, either by the full CAB, which will hold hearings this summer, or by the White House, which must give final approval, probably early next year. Whoever finally wins, prospects are that by 1970, when the new routes are being flown, the Pacific, like the Atlantic, will begin shrinking to a large, lucrative lake.

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