Viewing page 35 of 116

This transcription has been completed. Contact us with corrections.

- 34 -
no value to intangibles such a going concern, development and pioneer-ing, goodwill, and the potential productivity of Colonial as an integral part of Eastern's system.

Eastern points out that Colonial, as a going airline operation, has a substantial value as such and that it would require a tremendous ex-pense to set up and develop an organization the size of Colonial. It also contends that labor and expense incurred in the development and pioneering of Colonial are of substantial value. It points out that while no dollar value can be fixed for such items, the real worth is apparent from the fact that the Board in the Colonial Rate Cases 15/ allowed $138,000 for pre-operating expenses for the Bermuda route and $90,000 for similar expenses for Route 71F.

Eastern maintains that the goodwill of Colonial represents a valu-able asset. It is contended that the fact that Colonial has been in operation for 25 years, with a perfect safety record, has a substantial intrinsic value. Finally, it is contended that as an integral part of Eastern's system, Colonial's route would become more productive and its earning power increased thereby justifying higher consideration.

National does not dispute the fact that intangible values are factors to be considered in determining the "price" of the carrier. However, it questions the extent to which a carrier should be authorized

15/ Colonial Airlines, Inc., Bermuda Mail Rates, 9 C.A.B. 20 (1948), 12 C.A.B. 737, (1951) and Colonial Airlines, Inc., Mail Rates, 15 C.A.B. 279 (1951)