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SUMMARY AND RECOMMENDATIONS                                29

Recommendations: 

I. The Government must supply a substantial portion of the financial resources for the supersonic transport development program. 

2. The competing firms must provide a share of the development money for the program.

3. The Government should seek to recapture at least part of its investment through royalty payments on delivered supersonic transports.

4. Development costs of new V/STOL and other foreseen civil transport and general aviation aircraft should be financed by the industry.


The Airline Financial Posture

Truck Airlines

The U.S. airline industry's physical and operational transition to jet transportation might suggest that it had met the financial challenge posed by the jet program and had satisfied its capital requirements. No such unqualified assumption would be warranted. The present low level of earnings, if continued, threatens the industry's financial structure. In addition, certain carriers are plagued with acute financial problems. One has already disappeared and several others face imminent financial crises. 

First, the carriers' financial condition is, in part, a reflection of, and has implications for, the nature and extent of regulatory action by the CAB in such areas as routes, competition, and fares. This is not to suggest that the carriers themselves do not have primary responsibility for their financial condition and structure. It is simply a realistic assessment of the pervasiveness of regulation. Second, the current airline financial posture has long-run implications with respect to the ability of the industry to purchase and absorb, on a timely basis, new types of aircraft and equipment when they become avail-