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HELICOPTER AIR SERVICE PROGRAM     301

what distance is covered. For that reason I think if you cold have an average helicopter fair of $5 or $6 regardless of distance, you would be able to come out all right.

If you could divide up the Federal subsidy that we now have, together with a little better subsidy from the trunklines, plus a little more cooperation from the feeder lines, that you might be able to see this thing expand, and in expanding offer hope that we can operate subsidy-free as these lines receive better equipment. Certainly if you were in the black of getting a bigger amount from your trunklines so that the little bit that you are lacking in a break-even point was there, you financing costs would be less undoubtedly, wouldn't they?

Mr. BAGAN. Very much so.

Senator MONRONEY. Would you mind telling us what you have to pay for your money? You don't have to tell us.

Mr. BAGAN. We are in the midst of adding $1,200,000 right now. One is a long-term loan of $600,000, and one is a firm underwriting for $600,000 or $700,000. On the underwriting I will pay about 10 percent commission, and on the loan I will pay 6 1/2 percent.

Senator MONRONEY. That is rather high-priced money. If you had a guaranteed loan——

Mr. BAGAN. We are not General Motors, I agree. To me, in view of all the circumstances -

Senator MONRONEY. What I am driving at, if you are sure there is no longer an experiment and you are going on for a long period of time and you can look for a building up of traffic, and the Government intends to see it through, it might tend to reduce your cost of money, might it not?

Mr. BAGAN. If I were available for subsidy and had my permanent certificate, I think I could almost get 5 or 5 1/2 percent money.

Senator MONRONEY. Which would require less subsidy.

Mr. BAGAN. Very much so.

Senator MONRONEY. I am not trying to talk you into going on subsidy, but I am talking about the general aircraft picture.  

Mr. BAGAN. That brings me around to the subject. I have a little proposal to make to this committee. I would like to see, instead of having all the subsidy funneling to exclusively three cities, I would like to take $4 or $5 million, or add to the present carriers for their present subsidy, and another $5 million on top, and get service started in another eight or nine cities, with a subsidy of $4,000 or $500,000, and with an understanding that this subsidy will be only for 5 years, and that at the end of 5 years they must phase it out.

Take our case. If we had had $3,000 or $400,000 each year from the year we got started, we would be solidly in the black. It is a lot of this expense of getting started.

Senator MONRONEY. It is the learning curve.

Mr. BAGAN. That is correct. I think that there are political and practical implications here. I think you should spread the base.

Another thing, and I am not attacking anyone, I sincerely believe this, we have a large investment in this helicopter. This board phase-out program I sincerely feel will be nothing more than a deterioration of the helicopter movement in this country. I believe it. I am a businessman. I have found one thing. A business does not stand still. You either go backward or forward.

Transcription Notes:
And in the case of helicopters the business also goes upward and downward ;-)