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69

HELICOPTER AIR SERVICE PROGRAM

STATEMENT OF ROBERT E. GILES, GENERAL COUNSEL, DEPARTMENT OF COMMERCE; ACCOMPAINED BY DANIEL O'KEEFER, GENERAL COUNSEL OFFICE; AND RALPH E. HAYS, STAFF MEMBER, OFFICE OF THE UNDER SECRETARY FOR TRANSPORTATION

Mr. Giles. Thank you, Mr. Chairman. I do have a statement. It is not too long. With your permission, I believe I will just read it, as well as furnish it for the record.

Senator Lausche. Very well.

Mr. Giles. I appreciate this opportunity to represent the Department of Commerce in these hearings concerning the Federal subsidy program for three commercial helicopter carriers.
The administration is opposed to continuation of Federal subsidy payments to these three carriers. The President, in his budget for fiscal year 1966, stated that "it appears undesirable, as a matter of national interest, to continue this program." The budget document further states that helicopter subsidies should be terminated by December 31, 1965, and that a petition to eliminate subsidized helicopter operations would be presented to the Civil Aeronautics Board.

The Department of Commerce has recently filed petitions with the Board to intervene in the proceedings which have been brought by the three subsidized helicopter carriers: Los Angeles Airways, New York Airways, and Chicago Helicopter Airways. These carriers have petitioned to have their certificates made permanent and to obtain approval for subsidy at stated annual ceiling through 1970. 
The day after filing our petitions to intervene, the Department of Commerce along with others were served with orders from the Board to show cause why the carriers' applications should not be granted. While issuance of these show cause orders appears to indicate a disposition on the part of the Board, in advance of hearings, to provide further subsidy to these petitioners, we are assuming that the Board will schedule the carriers' petitions for hearings as required by statute. Last week, we filed with the Board our objections to the show cause orders; and we requested that hearings be held. Copies of our petitions to intervene and copies of our objections to the Board's show cause order are submitted for the committee's record.
At the Board's hearings on these petitions, which we assume the Board will schedule, we will appear before the assigned hearing examiner and present evidence to show that there is no sufficient justification to continue the Federal subsidy program for these three helicopter carriers. We expect to show that the Federal subsidy cannot be justified in terms of the need of the postal service, the national defense and the commerce of the United States. As you can understand, we are not prepared to submit to the commitee at this time the case which we would make before the CAB examiner. However, the basic reasons for our opposition to continuing this 17-year-old "experiment" of Federal subsidy for helicopter service in these three communities can be briefly stated as follows:
First, as for the needs of the post service, the Post Office Department's positin is that subsidy support for the certificated heicopter operators cannot be justified on the basis of its value for mail operations. For example, for the most recent 3-year period of which we have the data, 1961-63, the Post Office Department paid a total of ap-