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Senator CANNON. Thank you, Mr. Chairman.

Senator MONRONEY. Thank you. If you phase out as you propose to do, what would this involve in possible default or postponement, or failure to pay in full on the due date to the several equipment loans that have been made?

Mr. BOYD. My guess--

Senator MONRONEY. These are underwritten, I might add, by the Federal Government. So the major equity in the equipment has not yet been earned by the helicopter purchaser.

Mr. BOYD. I think, Mr. Chairman, that the carriers would probably try to sell the equipment. If there were a sale, then the Government would be repaid. If there were not--

Senator MONRONEY. If they are moving out, even from these prime points, and abandoning that, would that not discourage the sale?

Mr. BOYD. We think so; yes. We think this would also have a rather discouraging effect on exports.

Senator MONRONEY. I notice that in your statement. I think that is a very significant dollar earner at the moment, and is becoming increasingly more. Yet, an announcement around the world that we were abandoning helicopter service, by phasing it out so that we will be out of business by 1971, would certainly be a signal for other nations not to think of engaging in such transportation.

Mr. BOYD. It would not be a vote of confidence for the helicopter.

Senator MONRONEY. The problem used to be that we didn't have equipment that could carry an adequate load; therefore, the subsidies were required because the helicopters were destined for everybody to be in the red.

Mr. BOYD. Yes, sir.

Senator MONRONEY. Now, would you not say that because of the rather spectacular results in reducing the percentage of earnings that have to be subsidized by the drastic amount? By your testimony, I think your average passengers have increased; for example, in the Los Angeles Airways from 2.8 to 10.4, direct costs per available seat-mile decreased from 32.95 cents to 11.59 cents, and the ratio of subsidies to total operating revenues decreased from 66 percent to 47 percent. That is, I believe, for the Los Angeles Airways System.

Others are comparably good, excepting for the temporary situation existing in Chicago.

Would you say that the reduction of this subsidy, as you propose to do-- which would mean the withdrawal of more service-- will not, probably, restore the disadvantageous figures we used to have and, again instead of enlarging the percentage of revenue earned as to that portion which is furnished by subsidy, which has been going up, that it will probably go down as the service diminished?

Mr. BOYD. We think that, with the inauguration of the instrument flight authority, the direct operating costs should be reduced to some than offset the reduction in the subsidy. Also, with the instrument flight authority, the direct operating cost should be reduced to some extent, due to greater utilization.

We are just in the-- I hate to keep saying that prosperity is right around the corner, because that is a somewhat discredited phase--

Senator LAUSCHE. Because that is what you mean?

Mr. BOYD. We are not only here with our wheels spinning, Senator Lausche. The fact is that the jet engines on the new helicopters had