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Civil Aeronautics Board of its Statement of Policy with respect to its Economic Program for 1949. In this statement the Board interprets the objectives of the Civil Aeronautics Act of 1938 as "an obligation to foster the economic soundness of the individual carriers comprising the United States civil air transportation system." Pointing out that the trend toward profitable operation is encouraging, the Board continues, "Our principal objective during the coming year is the complete return by the air transport industry to a sound and profitable condition from which it can withstand the ordinary vicissitudes of economic fluctuations." The report outlines a number of constructive and encouraging actions which the Board will take in implementing its announced policy.

Mail Rates
The Civil Aeronautics Act provides that the Board in fixing and determining fair and reasonable rates of compensation for the carriage of mail shall take into consideration, among other factors, "the need of each carrier for compensation for the transportation of mail sufficient to ensure the performance of such service, and together with all other revenue of the carrier, to enable such carrier under honest, economical, and efficient management, to maintain and continue the development of air transportation to the extent and of the character and quality required for the commerce of the United States, the Postal Service and the National Defense."

Under this statutory mandate, and under established policies of the Civil Aeronautics Board, your company is entitled to receive  mail pay applicable to its entire domestic route system retroactive to April, 1946, equal to the allowable operating losses it has sustained plus a fair return on its invested capital. We are presently receiving mail payments computed on a temporary inadequate domestic mail rate while awaiting action by the Civil Aeronautics Board on our application for a compensatory permanent domestic mail rate retroactive to April, 1946. 
Upon petition of your management the Board on December 30, 1948, increased our temporary domestic rate applicable to the period from April 15, 1946 to April 30, 1948. Payments received under this increased temporary rate aggregated $688,957 resulting in a credit to surplus account of $648,794 allocable to 1946 and 1947. The remainder of $40,163 allocable to the period January 1, through April 30, 1948, is reported as income in the financial statements for 1948 submitted herewith. 

Your Company is also currently receiving inadequate mail compensation over its routes between New York and Bermuda and Washington and Bermuda. In April, 1948, we filed a petition with the Board for an increase in the mail rate applicable to these international routes and we are prepared to justify the increased rate requested whenever the Civil Aeronautics Board schedules this case for consideration. We are confident that the rate, when determined, will be adjusted substantially upward and we will received additional mail compensation applicable

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COLONIAL AIRLINES INC. EXPENDITURES YEAR ENDED DECEMBER 31, 1948 
TOTAL: $5,724,864