Off to Miami

The long-awaited Civil Aeronautics Board decision on the rich New York-to-Miami airline run came last week. To little (eleven aging DC-3s, six early-model Convairs) Northeast Airlines (1955 net: $379,937) went the grandest prize in the CAB bag: permission to fly the "Gold Coast" run, with National and Eastern.

Of the seven lines competing for a slice of the world's best air route, Northeast had one of the weakest claims. A CAB examiner had recommended Delta; New York City and Baltimore had officially endorsed Pan Am. Northeast's very weakness, however, turned out to be its strength. It was the only domestic trunk-line still on Government subsidy, receiving $1.8 million from Washington every year, and CAB felt that it had a mandate to get all U.S. airlines off subsidy and flying on their own.

The CAB decision was first taken last fortnight by a three-to-two vote, with Republicans Chan Gurney and Harmar Denny in the minority. Ordinarily, the board would then have waited about a month to announce it in a formal order, but word quickly leaked to the "corridor walkers"--the airline lobbyists who have been putting tremendous heat on CAB. Suddenly, Northeast's ordinarily sluggish shares (only 249,600 traded in all of 1955) zoomed; in just one day 24,000 were traded, with the stock jumping from 9 1/2 to 12 1/2. Finally, as the rumor hit front pages and the lobbyists turned their strongest pressure on CAB to change its mind, the agency quickly convened, in a four-hour meeting clinched the matter by taking the unprecedented step of announcing its decision before issuing a formal order.

In the furor over the Northeast decision, newsmen and airline lobbyists missed another CAB ruling that may be even more important. Three days before it voted on Northeast, CAB voted 3-2, Democrats Joseph Adams and Joseph Minetti dissenting, to give Pan American a New York-Nassau route. With Pan Am already flying between Miami and Nassau, the ruling would, in effect, also bring Pan Am into the New York-Miami run--by way of Nassau. Since the unannounced Pan Am decision could still be reversed, new pressures will arise in Washington. The Gold Coast war is not over.

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