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Senator CAPEHART. We are being asked here to appropriate $12,500,000 to build a prototype of such a plane. If it is not good for the manufacturers, evidently it is not good for the Government.

Mr. Ray. My estimate was $7,500,000 for this particular plane. That would be in addition to the $12,500,000 for testing the other prototype aircraft.

Senator CAPEHART. You understand that I do not know; I am just asking questions myself. I have no particular information on the subject excepting that you come here and say there is a great need for it.

We know that in the past there have been thousands of sales made on a comparable plane that you think might well be developed. You say none of them are doing it. Why?

Mr. Ray. I do not know. That is a mystery to me. Senator CAPEHART. Have they appeared before the committee? Mr. Davis. That question has not come up. Senator CAPEHART. Did not anyone ask them that question? Mr. Davis. No, sir. Senator CAPEHART. It seems strange to me. I do not understand it. Mr. Davis. Mr. Ray's testimony is the first that we have had on this matter, except for yesterday.

Senator CAPEHART. What is proposed under this prototype? Mr. SWEENEY. It includes testing of the feeder-line plane which they endorse. That is all that has been stated in the record up to this point.

Senator CAPEHART. This bill would appropriate $12,500,000 to build a prototype plane, would it not?

Mr. SWEENEY. No, sir. For the testing of prototype planes, turbine-powered aircraft that the manufacturers build and submit for testing.

Senator CAPEHART. This gentleman said they are not building. Mr. SWEENEY. That is correct.

Mr. Ray. I doubt if the inducements that are offered by this prototype bill will be sufficient to get the feeder-type plane built. If we do not get the feeder prototype built, we cannot test it or use it.

Senator CAPEHART. This bill calls only for appropriating money for testing and not for design or development.

Mr. Ray. That is correct.

Senator CAPEHART. We had better find out if there is going to be one to test, first.

Mr. Ray. That is the point I want to make. I want to accept that the testing of this feeder plane, which will be a rather simple aircraftit is just a straight-forward design-probably would not run more than, say, $200,000. Two hundred thousand dollars, I do not believe, is the reason why none of the manufacturers have gone ahead and built the feeder plane in the past. So if we are going to have a feeder plane to replace the DC-3, and get out from under the heavy operating costs that we are paying to keep the DC-3 flying, it seems to me that we should take stronger measures than just S. 3504.

Senator CAPEHART. For national defense, do we need a new type light plane comparable to the DC-3?

Mr. Ray. I think we do. I cannot talk with much authority on national defense problems.

Senator CAPEHART. Is the Army developing such a thing?

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Mr. Ray. As far as I know, they are not. During the last war we used the DC-3 and still smaller transports to a very great extent in this country for military transport purposes, and for purposes connected with military production and what not. If we get into another war there is no doubt in my mind but what we will do the same thing and the same kind of an aircraft will be needed.

Senator CAPEHART. This bill is for the Government to appropriate the money to build a prototype plane-S. 3507. This would mean the Government would appropriate the money and actually build a prototype plane? Mr. Davis. Yes, sir. Senator CAPEHART. Does it include one comparable to the DC-3? Mr. Davis. Yes, sir. Senator CAPEHART. How much money is called for? Mr. Davis. That is to be determined by the corporation set-up. Mr. SWEENEY. It sets up a $100,000,000 corporation.

Senator CAPEHART. To do engineering and development and build prototypes of all kinds? Mr. SWEENEY. Yes, sir. As they find essential. Senator CAPEHART. Then what good is S. 3504? Mr. SWEENEY. 3504 is the only bill the Bureau of the Budget will approve at this time.

Mr. Davis. The Bureau of the Budget is against all of the six bills pending before the committee at this time, except 3504, and they do endorse that.

Senator CAPEHART. Why?
Mr. Davis. Because it is in line with the President's policy.
Senator CAPEHART. What is the President's policy?
Mr. Davis. I do not know, sir.

Senator CAPEHART. This would appropriate $12,500,000 to test something that has not been developed, and according to this witness will not be developed, or at least is not in the process of being developed.

Mr. Davis. That is true. What they have in mind, for instance, they are putting turbo-prop engines in Convairs, and they want to test that. They also want to fly, perhaps, B-45's or jets over the airways for airways controls so that when we get into the high-speed planes we will know the operations.

Senator CAPEHART. In other words $12,500,000 might be spent for putting turbine motors and jets into existing planes and testing them; is that right? Mr. Davis. Yes, sir. Senator CAPEHART. Is there anything further? Mr. Ray. I do not believe I have anything further to add.

Senator CAPEHART. You were talking about a plane comparable to the DC–3. Do you have any ideas as to what it might cost?

Mr. Ray. I think to develop it would probably cost about $7,000,000 to $7,500,000. To manufacture it after it was developed, and the development costs written off, I hope would run about $200,000.

Senator CAPEHART. That is about $75,000 more than the DC-3 presently costing?

Mr. ŘAY. Yes, sir, the increase in cost is due to increased labor costs and increased cost of materials now, over what we had before the war.

I have some data to submit for the record.
Senator CAPEHART. That may be placed in the record.
(The material is as follows:)

The following closely related ideas are pertinent to my written testimony but in the interest of timesaving have not been included:

Some of the 161,000,000 miles are paid for on a compensatory rate.
Some of the DC-3's are nearly depreciated.
Other available aircraft of similar performances.
Market potential of the proposed prototype.
Military value of the proposed prototype.

COMPENSATORY RATE Eastern, TWA, and United fly DC-3's and are paid on the so-called compensatory rate. These companies operate more modern aircraft, too, which helps lower their mail-pay requirements. In 1949 their average payment was 71.43 cents a ton-mile which is about 11 cents higher than they were paid per ton-mile for their passenger load.

Thus, they were paid a higher or premium rate for mail. Also, there is nothing fixed about a compensatory rate of pay. If the costs can be decreased the rate can be adjusted to pass at least a good part of the saving on to the Government.

DC-3'S DEPRECIATED Some of the airlines have owned their DC-3's for a long time and have completely depreciated them. In exhibit A the direct DC-3 per mile cost of 46 cents includes 5.18 cents per mile depreciation. If we deduct this amount from the 11cent difference in operating cost of the two aircraft the new difference becomes 5.82 cents.

Thus, if we assume that every DC-3 flying mail is completely written off, which is by no means the case, the loss in direct flying costs to the Federal Government becomes 5.82 cents per mile. This is still $9,370,000 for the 161,000,000 miles flown last year. Less expensive ground handling plus more traffic because of better service could easily get up to a figure of 12 to 15 million a year.

However, it is unfair not to compare the aircraft on an all-inclusive basis. The situation of one aircraft with and one without depreciation is a temporary situation.

NEAREST AIRCRAFT TO DC-3 There is only one American transport aircraft smaller than the Convair 240 and the Martin 202. This is the Super DC-3 which is not a new design but is a revamp of the DC-3. The Douglas Co. has improved this aircraft considerably in speed and performance.

However, the aircraft has become larger and carries more load which is not needed by the feeder airlines. The new version is about 5,000 pounds heavier and carries up to 37 passengers. Its landing field requirements have gone up and its per mile operating costs have actually increased because of its jump in size.

The local service operators are presently carrying about seven passengers as an average load. Thus, the Super DC-3 seems to have shifted size in the wrong direction.

MARKET POTENTIAL In addition to a good number of these replacement aircraft needed here in the United States, there should be a considerable foreign market for them. In an attempt to determine the probable size of this market exhibit B shows all of the passenger transport aircraft of the world broken down by various sizes which are used in scheduled passenger operations. In addition to a potential 461 aircraft as replacements in the United States, there are 903 potential replacements in other parts of the world. Also, some of the 463 smaller than DC-3 aircraft shown in this exhibit might be replaced with this new aircraft.

These figures do not include the large number of aircraft that are flown by the irregular air carriers, freight and cargo operators, executive-type aircraft, etc.

DIRECT OPERATING COSTS OF FEEDERS The direct operating cost for all the feeder airlines last year was 47.77 cents per mile. This compares with the 46 cents shown in exhbit A. Of this figure 7.73 cents was depreciation. Exhibit A carries a depreciation figure of 5.18 cents per mile.

MILITARY VALUE During the last war small executive aircraft were used in large numbers in this country for military and war effort transport. I see no reason why the same thing would not happen again. Having a newly designed, more efficient small transport aircraft certainly should be of real value.

Senator CAPEHART. Our next witness is Mr. Langdon P. Marvin, Jr., Library of Congress Annex, Washington, D. C.

Mr. Marvin. They have not finished typing my statement yet. I will yield at the present and come back later.

Senator CAPEHART. We will decide the time before we adjourn this morning. I rather suspect it will be Tuesday, inasmuch as you are not prepared. Maybe we can finish with the next witness first.

Mr. MARVIN. It will be completed in about a half hour they tell me.

Senator CAPEHART. Captain Schildhauer? You may proceed in your own way.

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STATEMENT OF C. H. SCHILDHAUER, AERONAUTICAL

CONSULTANT, WASHINGTON, D. C. Mr. SCHILDHAUER. Mr. Chairman, I appear as a private individual who has been interested in seeing that our country is adequately prepared by having available airlift capacity to meet a national emergency which, from indications about us, may arrive at any time. This interest is more intense at present than it was when I was called to active naval service in December 1941, and organized the Naval Air Transport Service. After attending hearings before your committee, hearing and reading statements of our defense officials, studying the Report of the President's Air Policy Commission, and the Report of the Congressional Aviation Policy Board, I feel that, at present, we are proportionately less prepared to meet our overseas airlift requirements than we were on Pearl Harbor day. Today we are planning a defense of mobility and speed via the air routes, but that planning has not produced adequate airlift capacity, in being, to meet our requirements, should we have to move on the defensive in Europe or southeast Asia. The Berlin Airlift and the recent Operation Swarmer should not make us sit back in self-satisfaction. Stretch the distances in those operations of a few hundred miles to several thousand and you will have the inadequate airlift capacity that we are so concerned about.

The deficit in airlift requirements appears in your record (S. Res. 50), in the statements of the Deputy Secretary of Defense, Mr. Early, the Secretary of the Air Force, Mr. Symington, the Chairman of the Munitions Board, Mr. Howard, and was summed up by the Administrator of Civil Aeronautics before the House Interstate and Foreign Commerce Committee on February 27, 1950 (reading]:

There is widerspead support of a plan for the Government to provide funds for two types of testing of new transport aircraft, including jet-powered transports and low-operating-cost cargo transports. Under such a plan, testing for type certification, service testing and certain modifications during testing would be done at Government expense to help stimulate development of new transport planes.

It appears obvious that some type of Government assistance is necessary if the United States is to maintain its lead in transport aircraft design. The cost of design and development of increasingly complex modern transports has become so heavy that manufacturers are reluctant to make the investment in the face of doubtful financial returns.

The need for constantly improving transport aircraft is a military as well as, civil problem. As World War II demonstrated, the equipment and personnel of the airlines and of military air transport service can be used interchangeably to support the war effort. Our airline equipment is thus part of our pool of military reserve and this part of our military reserve is largely self-supporting.

Transport-type civil planes immediately available to the military in an emergency now number less than 1,300, including those now in use by both scheduled and irregular carriers. These are Douglas, Martin, Lockheed, Convair, Boeing, and Curtiss planes, together with a few miscellaneous makes.

A recent report by the Military Air Transport Service included the following statement:

“The present strategic lift capability of the Military Air Transport Service is three-quarter billion annual ton-miles toward meeting the requirements of 772 billion annual ton-miles (in case of war). If all civilian strategic aircraft are made available, they will provide an additional lift of 112 billion ton-miles, or a total of 274 billion. It is estimated that 10 percent of this lift will be required for route support, leaving 2 billion annual ton-miles to be applied to the annual requirement, and leaving a deficit of almost 572 billion annual ton-miles.”

The deficiency described in this MATS report is more than twice our entire present civilian and military fleets combined. It is obvious that anything which stimulates the production and use of better air-carrier craft will be a direct contribution to national defense with minimum expense to the taxpayer.

As early as January 15, 1949, the Prototype Aircraft Report prepared by the Civil Transport Aircraft Evaluation and Development Board, submitted to the Air Coordinating Committee their report with the following conclusions (reading]:

The studies contained herein indicate the possibility of developing cargo airplanes and operating techniques that would allow operating costs in the range of 9 to 10 cents costs per ton-mile. According to the Air Cargo Potential Group's estimate, this would permit the realization of a domestic air-cargo volume of 3,000,000,000 ton-miles per year by 1955. International air cargo carried by American-flag operators, should add substantially to this volume.

The results of this study further emphasize the primary importance of low cost if the above volume is to be realized. This can best be done with the longhaul cargo airplane. The cargo aircraft necessary to haul this volume would provide an invaluable auxiliary airlift in time of national emergency.

The early development of a jet transport is of importance to permit the orderly and safe integration of this coming civil transport vehicle into our transportation system, to encourage development of the most advanced type of aircraft and to maintain our lead in world aviation.

To be of assistance in formulating legislation to meet this problem of cutting down the deficit in airlift requirements and meet foreign commercial design competition we must develop a long-range program. Such a program should provide for the minimum of Government interference with individual and private enterprise and at minimum cost to the taxpayer. In the research and development phase, the program should initiate and support (1) research and experiments looking toward the development of the most modern and efficient types of transport aircraft and (2) the actual development, including the testing for airworthiness certification and airline operation, of transport aircraft provided they meet the defense requirements as a type which can be readily adapted and used for military and naval purposes or as a type that is considered by the Civil Aeronautics Board suitable for efficient use in air commerce to meet foreign commercial airtransport competition.

The domestic air-cargo potential is approximately 3 billion tonmiles annually when the revenue tariff is approximately 10 cents a ton-mile. This will require approximately 300 large cargo transports. The international traffic potential will require an additional amount of large cargo transports. The large new transports will take time

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