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that before the new design becomes obsolete he will be able to add enough sales to his initial orders to bring him a profit. 

Few manufacturers have been successful in selling commercial transport aircraft. For every commercial transport project which has been profitable, several have resulted in heavy losses. Only when a transport design meets military as well as civil requirements, or when driven to extreme measures by lack of the less risky military business, do the manufacturers generally enter the civil transport market.

In 1952 one of the local service carriers, Pioneer, took the initiative and bought nine Martin 202 40-passenger transports having a speed about 100 miles an hour faster than the eleven 21-place DC-3s which they replaced. The substitution admittedly required additional financial assistance in the form of mail pay; but the carrier contended that the traffic requirements warranted an equipment change and predicted that in the long run the new type equipment would show financial savings.

Another carrier, Southwest Airways, shortly afterwards, supplemented their DC-3 fleet with a few Martin 202s.

The Civil Aeronautics Board declined to support the action of the carriers, with the result that Pioneer transferred its 202s to a subsidiary corporation and went back to DC-3s, suffering a substantial loss in the process. Southwest Airways retained its new equipment and operating results appear to have vindicated the judgement of the management.

There seems to be little doubt that the reluctance of the regulatory authorities to encourage equipment changes in these instances has had a dampening effect on the development of new equipment for local service transportation.

Much has been said about the possibilities of replacing DC-3s with helicopters. The present status of the helicopter is discussed in further detail in another section of this report. In that section we show that the helicopter has many applications and that there is considerable evidence that it can ultimately be developed into a vehicle which will revolutionize local service transportation. The weight of evidence suggests, however, that it will be a good many years before the helicopter can serve as a replacement for the equipment now operated in local service transportation. The actual time

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