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to these routes retroactive to the date of our petition. Such retroactive payments when received will be credited to the periods in which they were earned and should have the effect of considerably minimizing, if not entirely eliminating, the losses reported for 1948 from the Bermuda operations. 

Equipment
The policy of your management has been to delay the purchase of aircraft of new design until such equipment is proved conclusively to be reliable and economical for commercial airline services. As you will no doubt remember, many of the new types of aircraft were grounded after being placed in commercial service resulting in severe losses of revenues. Your Company presently has in service thirteen Douglas DC-3's and two Douglas DC-4 type aircraft. The safety, reliability and performance records of these aircraft are not open to question. Both the DC-3's and the DC-4's are attractively outfitted and the cabin interiors are planned for the utmost fort and efficiency. We have experienced no decline in public acceptance of these types of aircraft operating in competition with these new designs, and current statistics show that their mechanical performance is most satisfactory by comparison. However, your management realizes that due to the limited capacity of the DC-3, as operating costs increase, we are planning a conservative equipment replacement program for a number of this type aircraft. 

In the summer of 1948, the President of the United States, the Civil Aeronautics Board, the Reconstruction Finance Corporation, and the Bureau of the Budget initiated a survey with the object of establishing a medium of adequate airline equipment financing on reasonable terms by governmental agencies. Your management anticipates with a great deal of interest the activation of such a program which appears to have the blessing and active support of the Congress of the United States. 

ROUTE EXPANSION AND INTEGRATION
The decisions of the Civil Aeronautics Board on our route applications were disappointing in 1948. In our annual reports for 1946 and 1947 you were advised of our efforts to obtain a simple connection* of Colonial's parallel domestic routes by linking New York-Washington and New York, Syracuse and Buffalo so that the Company could realize substantial improvement in revenue, efficiency and economy. The Board in a supplemental decision in the Middle Atlantic States Case certificated Allentown-Bethlehem as additional stop on our Washington-Ottawa route but refused to close the remaining gap of only 66 miles between Allentown-Bethlehem and Newark, N.J.** or the 82 miles between that point and LaGuardia Airport, New York. 

*The obvious logic of the award of these connections is strikingly shown by the map on the inside cover page. 
**Newark and New York are co-terminal points on Colonial's Route 72.

COLONIAL AIRLINES, INC. SOURCES OF REVENUE YEAR ENDED DECEMBER 31 1948
TOTAL: $4,993,834
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