BEFORE THE
CIVIL AERONAUTICS BOARD
WASHINGTON, D. C.
In the Matter of the proceed- )
ing known as the )
REOPENED INTRA-ALASKA )
CASE )
(Kodiak Portion) )
Docket No. 6093, et al
ANSWER OF KODIAK
AIRWAYS, INC.
to EXAMINER’S
' SHOW CAUSE ORDER
of MAY 31, 1960
COMES now Kodiak Airways,
Inc., (Kodiak), by its attorneys,
and submits this answer to the
order of Hearing Examiner Paul
N. Pfeiffer contained in his Notice
to All Parties, dated May 31, 1960,
wiherein it is directed that:
“Kodiak Airways, Bureau
Counsel, and the Post Office De
partment are hereby directed to
show cause within five days from
receipt of this notice why the
(hearing should not be reopened
for the purpose of receiving tes
timony by James W. Harvey, of
Harvey Flying Service in Ko
diak, Alaska, at a time and place
to be fixed on or about July 13,
1960.”
1. The telegraphic protest from
James W. Harvey, dated May 30,
1960, which is the only reason
cited by the Examiner for his con
sideration of a further reopening
of this hearing, alleges that inter
ested parties, specifically Harvey
Flying Service, were not notified
of the date of Kodiak Airways’
latest reopened hearing on its ap
plication for certification. It should
be noted that Mr. Harvey does not
contend that he has ever been
without actual knowledge of Ko
diak Airways’ pending application
or the Board’s proceedings thereon
that have been in continuous pro
cess over the past seven years. The
fact that his present post-hearing
attempt to take a position in oppo
sition to Kodiak Airways’ applica
tion is not only in direct violation
of the Board’s rules of procedure,
but is also contrary to all prin
ciples of equity and without foun
dation in material fact, is made
abundantly clear by his letter to
the Board, dated May 31, 1960, a
copy of which is annexed hereto
as Appendix “A”. The contentions
that “all communications from the
•Civil Aeronautics Board (presum
ably meaning all opinions, orders,
notices, etc.) are to be forwarded
to all concerns engaged in air
transportation” and that “all inter
ested parties must be notified
(presumably by direct service by
the Board) before a true and valid
hearing may be conducted” (par
enthetical interpretations Sup
plied) are without truth in law,
regulation or logic. Mr. Harvey is
an air taxi operator. This type or
classification of carrier may oper
ate here, there, or anywhere else
during any given period of time.
His obvious objective in this in
stance is nothing more than to vex
and harass Kodiak Airways and to
endeavor to delay the Board’s final
decision on its application.
2. The Board proceeding entit
led an Investigation of Intra-Alas
ka Air Transportation, within
which proceeding Kodiak Airways’
application was consolidated, was
initiated by Order No. E-7322,
dated April 22, 1953. Kodiak Air
ways’ application was filed June 9,
1053.
On or about the year 1954 Mr.
Harvey was employed by Kodiak
Airways as a pilot.
The original hearing was held
in Anchorage, Alaska in June
1956. The Examiner’s Recommend
ed Decision was issued June 20,
1957, and the Board’s Decision on
January 14, 1959. Thereafter, the
Board issued its first Supplement
al Opinion and Order on December
29. 1959. and its second Supple
mental Opinion and Order on
March 15, 1960. In response to the
terms of the latter order, a pre
hearing conference was held on
March 24, 1960, and a report there
of was served March 31, 1960. The
Kodiak portion of the reopened
hearing was held May 26-27, 1960.
Copies of all Board orders and
notices of all procedural dates
have been served by the Board
upon all applicants, interveners
and other parties to this reopened
proceeding. Publication has also
been duly carried in the Federal
Register. The Board’s calendar of
prehearing conferences, hearings,
and arguments is periodically re
ported in trade publications such
as the Aviation Daily. Copies of
Kodiak Airways’ application and
all amendments thereto have been
served upon the Board’s Alaska
office in Anchorage, Alaska, the
Governor of Alaska, and the Chief
Executive Officer of the City of
Kodiak, Alaska.
3. Mr. Harvey, by his telegraphic
protest, alleges that “Harvey Fly
ing Service has operated in the
Kodiak area for five years, the last
two years being year-round.” Ko
diak Airways would be more than
surprised if Mr. Harvey should see
fit to submit an affidavit to the
effect that he has been without
actual, specific, direct and timely
knowledge of the pendency of
Kodiak Airways’ application here
concerned or the day by day status
of the Board’s procedural actions
thereon. In fact, his above referred
to protest quotes directly from the
Report of Prehearing Conference
held March 24, 1960. It so happens
that this Report contains the
schedule of subsequent procedur
al dates including the date of the
reoepned hearing of which Mr.
Harvey now disclaims receipt of
notice. Moreover, both the Anchor
age Daily News and the Kodiak
Mirror carried current references
to these dates. Representative ex
cerpts are being obtained and will
be submitted.
4. Mr. Harvey, despite the pen
dency of Kodiak Airways’ applica
t'on over the past seven years, has
not seen fit to file an application
for a certificate, or petition to in
tervene, or to submit a statement
under Rule 14 of the Board’s Rules
of Practice, or to otherwise par
ticipate in this proceeding. He has
not even requested that he be
placed on the Board’s mailing list
for these notices, opinions, or
orders. Rule 15 (c) (2) provides
that petitions for leave to inter
vene in cases of this nature shall
be filed prior to the first prehear
ing conference and that a petition
which is not timely filed shall be
dismissed unless the petitioner
shall clearly show good cause for
his failure to file such petition on
time. As Mr. Harvey’s so called
orotest actually comprises nothing
more than an attempt to intervene,
after the close of the reopened
hearing, and with no showing
whatever of cause for failure to
file more timely, it is submitted
that his request to again reopen
this hearing should not be further
entertained. To hold otherwise
would be to render due process of
law and the Board’s procedural
regulations meaningless .
5. If Mr. Harvey’s protest is to
be considered without regard to
established legal principles and
the Board’s Rule 15, reference
must be made to the substantive
allegations contained in his tele
gram. He first takes “exception to
the testimony of Mr. Hall that this
concern (Kodiak Airways) is the
only year-round air service on the
Island.” The truth is that Mr. Hall
gave no such testimony. His actual
testimony (Exhibit KAI-A) was
that “With the exception of a
power boat which operates once a
month between Seward and some
nine points on Kodiak Island, Ko
diak Airways provides the only
regular transportation service for
persons, property or mail.” (Un
derscoring supplied.) Nonetheless,
had Mr. Hall used the expression
erroneously cited by Mr. Harvey,
he would have been entirely ac
curate. Kodiak Airways’ applica
tion is for a certificate of public
convenience and necessity provid
ing for regularly scheduled serv
ice for the transportation of pas
sengers, property and mail to spe
cifically designated points on Ko
diak Island. Under accepted trans
portation terminology, the unquali
fied statement that a locality has
air service or any other transporta
tion service is taken to mean that
it is provided common carrier
service on some regular or sched
uled basis. Non-scheduled or char
ter air services are always avail
able from any area to any point
in the world at any time. Kodiak
Airways has been providing a
scheduled passenger, property and
mail service under Board exemp
tion authority and Post Office mail
contracts since mid-1954. It pro
poses to continue the same type
and frequency of service if certifi
cated. Mr. Harvey neither provides
nor proposes a regular or sched
uled service of any kind. He con
ducts non-scheduled charter and
contract type operations carrying
passengers and property only. By
his own admission, even these lim
ited operations have been com
pletely discontinued for the win
ter months during three of the
fiev years he has allegedly oper
ated in the Kodiak area.
On information and belief, Ko
diak Airways alleges that on or
about the year 1956 Mr. Harvey
was an employee of the United
States Pish and Wildlife Service.
While he flew a Grumman-Goose
in the Kodiak area, it is believed
that the aircraft was owned by
the United States Government
and that it is therefore unlikely
that he engaged in commercial
operations of any kind.
6. The contention that “The is
suance of a subsidized certificate
to one of two such services within
a given area would exclude the
self-supporting operation and force
upon an unwilling public an un
happy state of having no choice of
such air service as is needed,”
indicates that Mr. Harvey is also
confused, intentionally or uninten
tionally, as to the procedures for
obtaining a certificate as well as
to the consequences of certifica
tion. The Board cannot grant Mr.
Harvey a certificate as he has not
even filed an application. Should
Kodiak Airways’ application be
granted, Mr. Harvey would remain
free to continue his operations
just as at present. Certification of
Kodiak Airways would in no way
exclude or restrict his right to
operate the same non-scheduled
charter and contract type service
which he has been and is provid
ing. On the other hand if Kodiak
Airways’ application is denied, and
its future commercial and mail
contract revenues should be less
than its expenses, the unwilling
public would indeed be faced with
the “unhappy state of having no
choice of such air service as is
needed.” They could only stand in
line for Mr. Harvey’s Flying Serv
ice and the wait would be long as
he could not possibly handle the
volume of traffic currently car
ried by Kodiak Airways. Should
Kodiak Ariways’ application be
granted and its future commercial
revenues plus service mail pay
equal its expenses plus a reason
able return on investments, as pre
scribed by the Board, it would re
ceive no subsidy whatever. This
would actually represent a reduc
tion of over $23,000 in Kodiak
Airways’ present contract mail pay
and. of course, a like savings to the
Government.
7. While Kodiak Airways does
not agree that the question of
whether someone other than an
applicant carrier may or may not
be relied upon to provide a non*
certificated service commensurate
with the recognized requirements
of public convenience and neces
sity is a proper issue in a proceed
ing under Section 401(d)(1) of the
Federal Aviation Act of 1958, the
answer in this instance need not
remain in doubt. The fact that Mr.
Harvey did not appear or other
wise represent his cause during
prior proceedings does not leave
the Board without adequate knowl
edge of the operations which he is
now conducting and the reliance
that may be placed upon his serv
ice to reasonably respond to the
essential local air transportation
needs of Kodiak Island. There are
currently on file, in the Board’s
Docket Section, CAB Form 243
Reports from Harvey Flying Serv
ice detailing its operations over
the 18-month period ended March
31, 1960. As the Examiner and
Bureau Counsel know, these re
ports are filed by all so-called
Alaskan Air Taxi Operators, such
as Harvey Flying Service, in ac
cordance with the requirements of
Regulations Part 293 and 243.3 (1).
The latest suoh report, which is
signed by Mr. James W. Harvey,
covers the six-month period ended
March 31, 1960. It reveals that
Harvey Flying Service operated
a one-passenger Piper Cub, PA
18-A, No. 9938 D, and a three-pas
senger Stinson Station Wagon,
108-2, No. 9510 K.
Mr.| Harvey has subsequently
acquired another one-passenger
Cub. It is understood that this
was for the purpose of qualifying
under the terms of a proposed
contract with the Alaska Depart
ment of Fisheries.
Both are single engine float geared
aircraft. Personnel consisted of Mr.
James W. Harvey and Mr. Charles
E. Weir. Total revenues received
during the period equaled $6,944.
50 and the traffic carried consisted
of 259 passengers and 10,236
pounds of freight. During the pre
vious six-month period ended Sep
tember 30, 1959, Harvey produced
total revenues of $29,441.78 from
the carriage of 1,078 passengers
and 27,704 pounds of freight. For
the year thus represented he re
alized total revenues of $36,386.28
and carried 1,337 passengers and
37,940 pounds of freight. During
the calendar year 1959 Kodiak Air
ways carried 7,765 passengers
(KAI-70 Revised), 118,388 pounds
of mail and 153,180 pounds of
freight (KAI-47) and realized total
revenues of $254,010.53 (KAI-21).
Even though Mr. Harvey should
attempt to claim capability to pro
vide a regularly scheduled year
round service, and this is not indi
cated by his present operations or
his statement that winter schedules
cannot be maintained with reason
able regularity,* it is apparent that
he could not begin to satisfy the
need.
*Small single engine float type
airplanes of the type operated
by Harvey Flying Serveice are
not equipped with adequate de
icing provisions for winter oper
ations.
This lack of capacity and inability
to operate during winter months
undoubtedly explains why he has
never been a contender for the
mail contract. While the record
herein discloses certain commonly
experienced difficulties in comply
ing with Post Office Department
bonding requirements (Tr. 30),
Mr. Harvey could, nonetheless,
have entered into negotiations for
a contract as has Kodiak Airways
each year since 1954. The reason
he did not was that Harvey Flying
Service is not equipped to carry
the volume of mail concerned in
conformity with the schedules
specified by the Post Office De
partment. (Tr. 180-181).
8. In recognition of the need for
reaching a final decision in this
case as promptly as possible, the
Board’s Supplemental Opinion and
Order reopening this proceeding
(Order No. E-15016), adopted Feb
ruary 24, 1960, states that “Final
decision in this matter need not
be long withheld . . .” At the re
opened hearing just ended Mr.
Hall. President of Kodiak Airways,
testified that “the instabilities and
uncertainties with which we are
faced in operating this service with
out a certificate leaves us no alter
native but to conclude that we can
not continue the present non-cer
tificated service beyond the end
of this coming September” (KAI
A). At the close of the reopened
hearing on May 27, 1960, it was
directed that Bureau Counsel
would submit the Bureau’s state
ment of position on June 14, 1960,
and that all parties would ex
change briefs on June 27, 1960.
The Examiner’s Notice in question
suspends these dates pending de
termination of whether the hearing
will be reopened in Kodiak, Alaska,
on or about July 13, 1960, in ac
cordance with Mr. Harvey’s tele
graphic request. As a normal prac
tice the Board does not schedule
briefs or other such procedural
actions during the month of Aug
ust. In view of the time that will
inevitably be required to there
after accomplish the usual pro
cedural actions, including Board
decision and approval thereof by
the President, any further reopen
ing of this hearing will render
final decision absolutely impossi
ble until long after the end of this
coming September. This will ex
pose Kodiak Airways to critical
and irreparable damage and jeop
ardize the continued provision of
essential transportation services to
the residents of Kodiak Island.
Kodiak Airways has no desire to
exclude any material evidence
from the record but it must be
recognized that the reports of
Harvey Flying Service, now on file
with the Board, are current, com
plete and adequate and that Mr.
Harvey’s request for a further re
opening of this hearing offers no
indication of any additional factual
evidence which could be remotely
material to the Board’s decision
herein. His apparent purpose is
merely to delay decision on Kodiak
Airways’ application. He is aware
of the fact that Kodiak Airways’
operations during the winter sea
son consistently and unavoidably
involve substantial financial losses,
that Mr. Hall has already mort
gaged his home and assigned his
personal life insurance to secure
Kodiak Airways’ currently out
standing bank loan, and that the
bank recently declined to grant
a requested additional loan unless
and until Kodiak Airways is grant
ed a certificate (KAI-20A and Tr.
40-41). If this hearing is reopened,
Mr. Harvey will have accomplished
his aim and the people of Kodiak
Island and Kodiak Airways will be
losers. A final straw in this most
unfair, irregular and indeed im
proper effort to obstruct this pro
ceeding will be that, if his state
ment that the “costs (to Harvey)
of presenting argument in Wash
ington are prohibitive” is accepted,
Kodiak Airways will be faced with
the need to bear the expense of
bringing counsel from Washington
to Kodiak for the reopened hear
ing.
WHEREFORE the above prem
ises considered, Kodiak Airways,
Inc., respectfully and sincerely
urges that the request of Mr.
James W. Harvey, Harvey Flying
Service, to reopen this hearing be
denied and that every reasonable
effort be thereafter made to facili
tate the Board’s final decision on
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