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296 HELICOPTER AIR SERVICE PROGRAM We have had, as a nonsubsidized airline, we have had to price our service in relation to a reasonable load factor to break even and make money. This has been our whole premise of our operation to date. Everyone can tell you they don't have unions, they have better, they have experienced personnel. All these things are fine, great. When it really gets down to basic economics of what we price our service for, we have priced our service to what it costs. In checking this with other schedule helicopter services, some of these carriers - we have raised the policy decision with the CAB - the price is below even what the seat mile cost. Senator MONRONEY. Do you handle mail? Mr. BAGAN. No; I am glad you brought that up. The mail pay is $2.58 a ton-mile. We cannot afford to carry it for that. And this thing has been pending since 1954. The certificated airlines, who are drawing subsidy, really had no problem, or had no- Senator MONRONEY. They say they do. They say they can't afford to carry it, either. Mr. BAGAN. They have no incentive to raise it with the CAB, because they didn't particularly care which pocket the money came out of, the Post Office or the CAB. Because as a nonsubsidized- Senator MONRONEY. Actually this is not a subsidy, that which they get from the Post Office. As a matter of fact if $2.58 is not an economic rate it ought to be raised to $3 or whatever the fare rate would be to pay the cost per seat miles that you are displacing when you put a load of mail on. Mr. BAGAN. This is correct. Within 30 days after we received our certificate, I had a board of directors meeting and we came to the conclusion that $2.58 was not a compensatory rate, and as a nonsubsidized airline we are not going to subsidize the post office. In effect we almost conceled all mail. We filed an immediate petition with the CAB to open this rate and to raise it. That has been over 1 year ago. I haven't heard one thing on our petition. I have made calls, I made long distance calls- Senator MONRONEY. CAB is the one that can raise it. Mr. BAGAN. That is correct. There is a petition before the CAB right now to raise it. And it has been pending 1 year. I have made long distance calls as late as last week. "How about my new mail rate?" They have a good excuse, that their staff is busy on other urgent problems. I pointed out that this is urgent to a little nonsubsidized airline out here, too. Senator MONRONEY. It sure is. Mr. BAGAN. It is pending, I hope. The $2.58, I made a search; I was with CAB 8 years, and I have never been able to find anyone to tell me how they arrived at that figure. Senator MONRONEY. This was the rate in existence way back in 1953. This is now 1965, 12 years later. Certainly the truck rates and bus rates, and I know the rural mail carrier rates, for using a car, I don't think there is a form of transportation where rates have stood still for a 12-year period. Mr. BAGAN. SFO can't subsidize the Post Office Department. This is what we were doing.
