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I

THE PUBLIC CONVENIENCE AND NECESSITY REQUIRE HELICOPTER SERVICE IN THE WASHINGTON-BALTIMORE AREA

With the opening of Dulles, the Washington-Baltimore area will have a unique need for helicopter service because of its combination of three airports, unusually long surface times and service to two major cities, including the Nation's Capital.  That this service will be used is demonstrated by the outstanding growth of helicopter traffic in other other cities under less suitable conditions and with the handicaps of single-engine operation.  Moreover, the service would sharply improve the national air transportation system by eliminating the disproportionately long surface times.  Overall, there is no real question that helicopter service would provide substantial public benefits. The central issue is whether, with the new twin-engine helicopters, these benefits can be provided at reasonable subsidy levels. 

A. The Extension of Helicopter Service to the Washington-Baltimore Area Is Justified by a Cost and Operational Breakthrough Which Will Minimize Subsidy Requirements.

The high subsidy level of certificated helicopter operations has been a product of uneconomic equipment plus the small size of the helicopter companies.  This section will analyze the substantial subsidy reduction made possible by the new twin-engine helicopters.  Part II will analyze how the selection of NYA will further minimize subsidy by creating a helicopter company of a more economical size.

1. The high cost and unsatisfactory operating characteristics of single-engine piston helicopters have prevented subsidy reduction.

The helicopter subsidy problem has been, in important part, an equipment problem.  Subsidy requirements for single-engine helicopters with direct costs of from 24¢ to 47¢ per available seat mile were inevitably high. Indeed, costs were so high that additional traffic could not earn sufficient revenue to cover even direct costs. With the V-44B, even at a 50% load factor, subsidy of $165,000 per aircraft was required just to cover the direct costs.