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HELICOPTER AIR SERVICE PROGRAM 

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In the course of this study we have made an independent evaluation of the area of military benefit without attempting to arrive at any precise dollar amount. The evidence submitted in the Chicago renewal proceeding on the S-58 benefits constituted the basis for evaluating benefits accruing from the operation of other aircraft types. Military benefits are not limited to these involved in the S-58 program. Commercial types operated by the scheduled carriers and which had military counterparts include Bell 47, Sikorsky types S-51, S-55, and S-61 and Vertol types 44 and, more recently, the 107.  

An analysis was made of the delivery to commercial and to the military, and the time between overhauls (TBO) for main rotor assembly, tail rotor assembly, main gear box, tail gear box, intermediate gear box, clutch and fan. Differences between TBO's in the initial period and in later periods after extensions were granted were noted for commercial operations and for Army, Air Force, Navy and Coast Guard Operations. 

The Nesbitt methodology, as applied to the S-58 program, was considered in relation to the operations of other aircraft type. Like the Hearing Examiner in the Chicago renewal case, we can see some reason to discount future S-58 benefits for the reasons he states, particularly in regard to savings arising from reduced overhaul requirements. At the same time, however, we agree with the Examiner that "benefits which will accrue in terms of reduced maintenance have not reached the midpoint of accrual and will continue until about 1970."

Furthermore, savings in maintenance are additive to the savings resulting from the extensions in TBO, rather than an alternative method of computing total S-58 benefits under the Nesbitt methodology. It is possible, therefore, that such future additive savings could very well offset any discounts which might be made to the Nesbitt estimate of savings of $77 million accruing because of lengthened periods of useful aircraft life. At any rate, the inclusion of all helicopter types operated by the military in any summation of total benefit accruing from the scheduled carrier operation would lift the benefit level well above the S-58 figure. 

We do not think that any summation of total military benefit is required to put the cost of helicopter subsidy in proper perspective. The helicopter subsidy costs to the Federal government have amounted to about $48 million since 1947. Based upon the record in the Chicago renewal case and on our own analysis of TBO extensions for other helicopter types, it appears that the level of benefits to present and future military programs will be well in excess of $48 million. This level of benefit should cover all subsidy payments which have been made in the past and those which will be required before the carriers achieve economic self-sufficiency. 

From a national interest point of view, it is significant that a new type of aircraft has been introduced into both the commercial and military phases of US aviation. Because the periods of civil and military experiment and initial development have been concurrent, generally speaking, there has been an interrelationship between the two programs. Because of this concurrence, it appears that the costs to the Federal government of introducing a new mode of commercial air transportation will be offset by savings accruing to the military side of US aviation. 


Outlook for the Future 

The preceding analysis of helicopter carriers in their present role has been necessary to establish trends in the basic determinants of economic self-sufficiency, to determine reasons why Federal subsidy is required and to make an accounting of public benefits which have been associated with public costs. The purpose of this section is to consider prospects for the future of helicopter carriers in their present role of providing airport transportation. In so doing we will consider future trends in the basic economic determinants-scale of operation, unit costs and unit revenues-and will consider the relationship between this type of air carrier and the nation's transportation needs. 

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Transcription Notes:
in reviewing - removed "" quotation marks and changed tall to tail twice.