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HELICOPTER AIR SERVICE PROGRAM     381

continue to decline as traffic volume grows. Despite the recent progress which has been made with turbine operations, however, the industry is still heavily dependent upon subsidy support. Subsidy accounts for roughly 50 per cent of total operating revenues. Until unit costs are lowered further with an increased scale of operation and load factors raised with higher traffic levels, any substantial reduction in subsidy would cripple the operations of the subsidized carriers at the present time. (Chapter III, pages III-10 through III-27.)

6. The prospects of carriers' achieving economic self-sufficiency in the future are good. The nation's intercity and international air travel will continue to expand and a major part of this travel will be funneled through the airports serving our large metropolitan areas. The pressures which account for severe surface traffic congestion in these urban areas will continue to grow. No technological improvements in surface transportation offering an alternative expedited service are in sight for the near future. Further unit cost reductions can be expected as increasing traffic demand and pending certification of all-weather operations increase the utilization of existing facilities, flight equipment and personnel.  Although the achievement of economic self-sufficiency is by no means certain, the characteristics of aircraft now available provide the potential for a drastic reduction or possible elimination of subsidy toward the end of a five-year period. (Chapter III, pages III-40 through III-60.)

7. There will be an increased public need for helicopter service as a part of our expanding air transportation system. This need will be expressed primarily in our largest cities, however, as it arises as a result of factors which exist mainly in large urban areas and result from national patterns of population growth and land use and from the high concentration of demand for air travel. These factors call for an expansion of helicopter service into metropolitan areas not served at present but this expansion will be limited in the next five to ten years. Only a very few areas can meet the criteria for scheduled helicopter carrier operations at this stage of development. The experience of the present operators will be beneficial in the extension of helicopter service to other areas. (Chapter III, page III-52.)

8. Urban transportation problems are urgent and severe in our large metropolitan areas. The physical capabilities of vertical-lift aircraft provide the potential for use in commuting from the suburb or fringe areas of our large cities to congested downtown areas. However, we see no significant use of vertical-lift aircraft as a part of local transportation systems in the foreseeable future. This conclusion is based upon the nature of the commutation market, the characteristics of vertical-lift aircraft. Where use is made of helicopter service--and such use will be rare and confined to areas where terrain factors are significant--in all probability the service will be provided as a component in an airport transportation system. (Chapter IV.)

9 The next stage of development in the application of vertical-lift aircraft to the nation's transportation needs will come in the area of short-haul intercity travel, primarily urgent business trips between city centers. The potential time saving over surface travel or other airplane travel requiring much surface travel to or from airports appears great enough to warrant the fare differentials that would be required over the

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