Decision Against Northeast

As President Kennedy sunned on board the Honey Fitz off Hyannis Port on a recent Sunday, a Piper Cub droned back and forth overhead, towing a ban ner with a pointed message: JFK PLEASE HELP NORTHEAST AIRLINES. A few days later, Teddy Kennedy made his maiden speech in the Senate -- and demanded that the Civil Aeronautics Board reverse its "tentative" decision against renewal of Boston-based North east's certificate to fly the New York-Miami route. Fearful of losing their jobs, Northeast's 2,200 employees organized a lobby, and some Northeast pilots even implored airborne passengers to wire Washington in protest.

Too Great a Strain. Rarely has the CAB been subjected to such intense pressure. But last week, on the very day that a Senate hearing convened to hear Freshman Senator Kennedy's complaints, the CAB formally took the Florida run away from Northeast. It ordered the financially ailing airline to stop all operations south of New York by Oct. 14, concentrate on its lagging service in New England. "It became apparent," CAB Chairman Alan S. Boyd told Senators, "that New England was the tail and Florida was the dog--and Northeast was interested in the dog."

Northeast has never been in robust financial shape, but it was not helped by the CAB's well-intentioned 1956 decision to try to strengthen the line by allowing it to fly the lucrative New York-Miami route in competition with National and Eastern. The strain of financing long-range equipment, plus the difficulty of battling the established carriers, proved too much for Northeast; the line went more than $44 million into the hole during its seven years on the run. For the past 2 1/2 years, it has been kept aloft only by financial transfusions from Industrialist Howard Hughes, whose Hughes Tool Co. owns 80% of Northeast's stock. To soften the effects of its decision, the CAB offered to grant Northeast a subsidy; by coincidence, the offer came on the same day that the White House released a special CAB proposal to reduce drastically all regional airline subsidies.

Back & Forth. Among federal regulatory agencies, the CAB seems to have a special aptitude for trouble. In recent months, it created an international furor by its attempt to block scheduled transatlantic fare increases (only to compromise later), enraged both U.S. regional carriers and the British by refusing to let the U.S. carriers buy British short-range jets, and kicked up a ruckus in the airline industry with its highhanded advice to Pan American and W. R. Grace to sell Panagra to Braniff. "I'm doing the job the best way I know how," says Chairman Boyd, "and I expect the staff and members to perform in the same way. I don't give a damn whose toes get stepped on."

As the supreme economic court for the nation's 68 trunk, regional and nonscheduled airlines since its founding by Congress in 1938, the CAB grants routes, sets domestic fares, investigates accidents and pays out subsidies. The board is composed of five members who are appointed by the President for six-year terms at $20,000 a year. U.S. airlines complain that the board members, all without much experience in aviation, rely too much on the advice of the agency's 800-man staff, have no consistent overall policy of their own.

Democrat Boyd, who joined the board under Eisenhower and was named chairman by Kennedy, privately concedes that the board is slow and unwieldy. The board regularly divides between its two Republicans and two Democrats, with Boyd the decisive vote. By siding with the Republican members to cut back Northeast, Boyd faced the economic reality that Northeast should never have been given the Florida route extension in the first place.

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