comprehensive public interest platform built in. Yet the opposite and misleading impression is often given by critics as an emotional appeal to consumers. As we have shown, in fact it is the consumer who is the primary beneficiary of these procedures.

Adequacy of Service-Load Factors

As I have emphasized previously, in addition to meeting the need to provide reasonable prices, the primary function of our industry is to provide adequate and reliable service throughout the nation, to permit people and goods to move rapidly and smoothly from any one community to any other. This system, then, must provide service at the times and places desired by the public.

Senator Kennedy, in your statement on the Senate floor on December 16, you referred to the difficulty a student in Boston might experience in returning to his home in Detroit because of a lack of available seats on that route, I am sure you will recall that the system load factor standard established by the Board in the Domestic Passenger Fare Investigation was 55 percent. But the difficulty of relating any particular load factor to adequacy of service is clearly illustrated by your example.

In 1974, the average load factors experienced by the single carrier with nonstop operating authority in the Boston-Detroit market was 59 percent. Thus, though some critics of our industry believe our system load factors should average as high as 65 percent, you have cited an example of possible inadequate service at a load factor of 59 percent. In reality, you have underscored a point seldom understood by our load factor critics. To average 59 percent, the Boston-Detroit market shows a monthly load factor range from 52 to 67 percent, this example offering further demonstration of the seasonality of our markets (exhibit 7). In order to reach the higher system average load factor standards suggested by many, the airlines would be required to adjust capacity to conform to lowdemand periods, inevitably resulting in less service available to passengers in busier times.

The question of capacity, then, is not a simple one in the real world we serve. There is a common tendency among observers of the scheduled air transport industry to overlook the fact that, although 30 percent of our domestic traffic is produced by only 70 larger city-pair markets, 40 percent is derived from 840 markets, and another 30 percent is produced in some 57,000 smaller markets (exhibit 8). The units of capacity available to serve these disparate markets are not infinitely adjustable-they are not, in fact, those elusive available seatmiles we hear and read about; they are airplanes, each containing many seats. Thus, to add a few extra seat miles in a market, where the individual aircraft have maximum seating density, requires the addition of significant numbers of seats, represented by another flight, or the substitution of larger aircraft. It should be noted that increasing the size of aircraft does not increase frequency for the convenience of passengers in a smaller market. Similarly, the reduction of a few seat miles to adjust to a temporary down-turn in traffic in a particular market or to changing economic conditions normally requires the elimination of a flight. For example, one major carrier operates a single nonstop Boeing 707 between New York and Phoenix, producing on that one route 197 million seatmiles annually. How can a few seats be added or reduced on that route?

Whether or not the real world facts conform with any theoretical model, simply stated, the decisional units our industry planners work with are not easily fine-tuned. They cannot be easily adjusted without the danger of substantial elimination of needed public service, and without potential damage to the integrated air transportation network. And the macro-analysis frequently applied to our industry does not take into consideration the units of capacity we must deal with every day.

The Integrated Network-Through Flights and Connections

In light of these facts, how does the scheduled air transport industry provide service for more than 57,000 smaller markets, and integrate those markets into the network including the 70 major markets?

This achievement is the result of two essential devices-through flights and connections.

Through flights constitute extensions of flights to provide service for a smaller amount of local traffic to extended points and major markets. Similarly, through the connections offered by the integrated scheduled air transportation system, it is possible to make transfers onto other aircraft in order to reach any of the 540 airports served. Because the number of passengers in many of these local

markets is far below the level required to support single-plane service, it is by the use of through flights and connections that carriers are able to provide the present significant level of single plane service and transfer service.

Coincidentally, then, this process becomes the principal basis for the airlines' ability to serve an extended network of cities. Of course, it also results in lower industry load factors which are brought down by both through and connecting flights from low density cities.

The Operation of the Network

In a clear example of this process, one of the major scheduled airlines provides daily DC-8 one-stop through service from Fresno, California, via Denver to Chicago. At Denver, this flight is connected by 11 other flights, from such disparate originations as: Pueblo, Colorado; Cheyenne, Wyoming; Great Falls, Montana; Sacramento and San Jose, California. Figure 1 depicts this complex for an average of a peak and low traffic month. On this eastbound flight, 27 passengers originating at Fresno ultimately terminate at Chicago. In addition, approximately 42 passengers board the flight in Denver from 11 connecting flights. Out of a total passenger load of 85 from Denver to Chicago, therefore, over threefourths do not originate in Denver. The majority of passengers on that flight are fed to it through the highly integrated scheduled system, a fabric woven over 37 years of regulatory supervision of air transportation.

9 The Domestic Route System-Analysis and Policy Recommendations, Bureau of Operating Rights, CAB, October, 1974, p. 79.

connections is even more apparent, as shown on figure 2. Denver, and terminating in Fresno, the intricate fabric of through flights and

On the return flight, originating in Pittsburgh, operating through Chicago and

Unrestricted entry or exit would cause serious consequences to this system. There can be little doubt that if one, two, three, or more of these feeder connections, or the beyond segments on through flights, were eliminated from this complex the fabric itself would disintegrate.

As is clear in the cited examples, the profitability of the primary market, in this case Denver-Chicago, is dependent on the many smaller secondary markets it serves. If even a few of the secondary markets ceased being served regularly and dependably, the primary market may well become less profitable. As a result, it would receive less service, and the remaining smaller feeder markets would also receive less indirect service. The ultimate effect, then, of small market adjustments can be extreme.

Further dramatic examples of this principle are readily available, e.g., Albuquerque, New Mexico; Moline, Illinois; Nashville, Tennessee; Portland, Oregon; Providence, Rhode Island; Tucson, Arizona, are readily accessible to Akron/ Canton, Ohio, with a single connection and never more than a single stop.

Furthermore, in 1972 this system provided single plane service to all markets with over 70 passengers a day, and to all but three markets carrying more than 60 passengers daily-a direct result of the combination effect of through traffic between several markets on a single linear route.10 Additionally, in 1972 on flights between cities less than 100 miles apart, 90 percent of all passengers transported connected to other flights or were carried as through passengers; on flights between cities 600-800 miles apart, such connecting or through passengers comprised about two-thirds of the total " (exhibit 9).

The Interdependence of the Network

The quality of service to the 57,000 smaller relatively low-demand markets. therefore, is directly dependent on the highly integrated, stable air transport system. The system operates without significant changes in the number of carriers offering service, without the instability which would characterize unrestricted freedom of entry and exit, and with the CAB-imposed requirement that service continue to be provided where warranted in the public interest. Lapses in service resulting from carrier failures, from large scale withdrawals of service, or from lack of a tie-in to ticketing, baggage handling, or other benefits of the present system, would inevitably disrupt that system, and would inevitably work hardship first on those living in sinaller communities who rely on quality scheduled air service to meet their transport needs. Moreover, automobile gasoline consumption would increase as people are unable to use air transportation and are forced into the use of ground transportation. Further, it would represent a major cost to the nation in time lost in conducting business or time shortened for personal or pleasure reasons.

In January, 1973, Dr. Gary Fromm of Data Resources, Inc., completed a study for ATA on The Value of Aviation Activity. The study estimated cost and time differentials in 1970 among four modes of service over the average airline flight distance of 679 miles. Cost and time estimates covered the entire trip, including not only enroute but terminal and local access costs and time as well.

The DRI study also estimated the average family income of an air traveler in 1970 to be $22,500 a year. If such a traveler valued his time at an hourly rate equivalent to his annual salary ($10.47 per hour), the following table would illustrate the monetary value of traveling by air versus alternative modes:

12

Birmingham, Alabama, to Miami, Florida, is about the same trip distance (661 miles) as the average distance used in the DRI study, In 1970 there were an estimated 29,000 passengers in this market who started their air trip in one of these cities and whose final destination was the other city. The dollar value of the time savings in this market alone would be:

13

Air/rail Air/bus Air/auto

10 Ibid., p. 62.

11 Ibid., p. 65.

Time savings (in millions)

1.9

2.4

2.1

12 Fromm, Gary, and Data Resources, Inc, Value of Aviation Activity, ATA, January, 1973. pp. 9 and 12.

13 CAB, Origin-Destination Survey of Airline Passenger Traffic, Domestic, table 8, 4th quarter 1970, p. 86.