SEC. 20. Section 402 of the Civil Aeronautics Act of 1938, as amended, is amended by adding a new subsection as follows:

"Authority To Set Aside Rates, Fares, Charges, and Service

“(i) The Board, after notice and hearing, may set aside or suspend any rate, fare, charge, or service in foreign air transportation of a foreign air carrier or any classification, rule, regulation, or practice affecting such rate, fare, charge, or service, if it finds such action necessary in the public interest; and, during the pendency of such proceedings, may suspend any such rate, fare, charge, service, classification, rule, regulation, or practice."

SEC. 21. Subsection (a) of section 404 of the Civil Aeronautics Act of 1938, as amended, is amended by striking out the phrase "interstate and overseas." SEC. 22. Section 406 of the Civil Aeronautics Act of 1938 is amended to read as follows:

"PAYMENTS FOR TRANSPORTATION OF MAIL AND FOR ESSENTIAL AIR TRANSPORTATION

"Rates for the Air Transportation of Mail

"SEC. 406. (a) (1) Each air carrier holding a certificate authorizing the transportation of mail by aircraft shall be paid for transportation of mail at a rate or rates established under paragraph (2) of this subsection. Such payment shall be considered to include payment for transportation of mail by an air carrier by other means than aircraft whenever transportation by such other means is incidental to such transportation of mail in air transportation or is made necessary by conditions of emergency arising from aircraft operation. In the computation of such payment a minimum weight of each mail dispatch to each point to which mail is dispatched shall be fixed by the Board after notice and hearing. Such payments shall be made by the Postmaster General from funds appropriated for the transportation of mail by aircraft.

“(2) The Board is empowered and directed to determine and fix from time to time, after due notice and opportunity for hearing, fair and reasonable rates of compensation to be paid under paragraph (1) for the transportation of mail, the facilities used and useful for such transportation of mail and the services connected therewith; and considering thhe conditions peculiar to transportation by aircraft and to the particular air carrier or class of air carriers to prescribe the method or methods for ascertaining such rates of compensation by weight, space or distance, or otherwise, or any combination thereof, to fix different rates for different air carriers or classes of air carriers and different classes of service, and to publish the orders establishing such rates of compensation. In fixing rates for the foreign air transportation of mail the Board shall take into consideration among other factors the rates paid by the United States to foreign air carriers for similar service. Orders so made and published in proceedings under this paragraph shall continue in force until changed by the Board after due notice and opportunity for hearing. Thhe Board may fix different rates for different air carriers or classes of air carriers or different classes of service, or on the basis of any other reasonable classification of carriers, services, routes and route segments, or ay combination thereof. A proceeding under this paragraph may be begun upon the Board's own initiative, upon petition of the Postmaster General, or upon petition of an air carrier with respect to the rate received by it. An order entered under this paragraph may be made effective as of any date, determined by the Board to be proper, which is (A) on or after the effective date of this amendatory paragraph, and (B) on or after the date on which the proceeding was commenced.

"PROCEDURE AS TO RATES

"(b) (1) Any petition for the determination or revision of rates under subsection (a) of this section shall include a statement of the rate the petitioner believes to be fair and reasonable. The Postmaster General shall introduce as part of the record in all proceedings under subsection (a) of this section a comprehensive statement of all service to be required of the air carrier and such other information in his possession as he deems, or as may be deemed by the Board, to be material to the inquiry.

"(2) The Postmaster General is authorized to request the Board to obtain from any carrier certification for the transportation of mail, information necessary for the performance of his duties with respect to the intiation of and participation in mail rate proceedings under subsection (a) of this section.

“(3) Thhe burden of proof in any proceeding under subsection (a) of this section which is initiated by petition shall be with the petitioner.

"PAYMENTS TO FOREIGN AIR CARRIERS

"(c) In any case where air transportation is performed between the United States and any foreign country, both by aircraft owned or operated by one or more air carriers holding a certificate under this title and by aircraft owned or operated by one or more foreign air carriers, the Postmaster General shall not pay to or for the account of any such foreign air carrier a rate of compensation for transporting mail by aircraft between the United States and such foreign country, which, in his opinion, will result (over such reasonable period as the Postmaster General may determine, taking account of exchange fluctuations and other factors) in such foreign air carrier receiving a higher rate of compensation for transporting such mail than such foreign country pays to air carriers for transporting its mail by aircraft between such foreign country and the United States, or receiving a higher rate of compensation for transporting such mail than a rate determined by the Postmaster General to be comparable to the rate such foreign country pays to air carriers for transporting its mail by aircraft between such foreign country and an intermediate country on the route of such air carrier between such foreign country and the United States.

"Weighing of Mail

"(d) The Postmaster General may weigh the mail transported by aircraft and make such computations for statistical and administrative purposes as may be required in the interest of the mail service. The Postmaster General is authorized to employ such clerical and other assistance as may be required in connection with proceedings under this Act. If the Board shall determine that it is necessary or advisable, in order to carry out the provisions of this Act, to have additional and more frequent weighing of the mails, the Postmaster General, upon request of the Board, shall provide therefor in like manner, but such weighing need not be for continuous periods of more than thirty days.

"Subsidy Payments for Essential Air Transportation

"(e) (1) The Board is empowered upon petition of any air carrier holding a certificate authorizing the transportation of mail in air transportation, and in the interest of encouraging the development of an air transport system properly adapted to the present and future needs of the foreign and domestic commerce of the United States, of the postal service, and of the national defense, after notice and opportunity for hearing, to make an offer or offers on behalf of the United States to such air carrier to make payment in such amounts as are necessary to enable such air carrier, under honest, economical, and efficient management, properly to perform the air transportation authorized by any certificate or certificates of public convenience and necessity held by such carrier. Such offer may be accepted by the air carrier concerned by agreeing, in the form and manner specified by the Board in the offer, (A) to continue to furnish the air transportation to which the offer relates for the term thereof, and (B) when directed by order, to repay to the United States any sum which the Board may find to be due and owing to the United States pursuant to paragraph (2) of this subsection. Such acceptance when filed with the Board, together with the offer to which it relates, shall constitute a binding contract between such carrier and the United States for the term specified in the offer, not less than three no more than seven years. Any such contract may be amended by consent of the parties at any time. Payments by the Board under this subsection shall be made out of funds appropriated to the Board for this purpose. Each petition filed under this subsection shall state in detail the amount of payments the petitioner needs in order to effect the purpose of this subsection, and the petitioner shall have the burden of proving such need.

"(2) Upon the expiration of the term of the contract referred to in paragraph (1) of this subsection, the Board shall compute the amount, if any, which is due to the United States from the air carrier concerned in the following manner: The total payments received by the carrier under the terms of the contract shall be added to all other revenues accruing to the carrier during the term of the contract. From this sum there shall be deducted all proper and reasonable charges and expenses, including taxes, properly allocable to the performance of the

transportation contracted for, including the amount found necessary by the Board to assure the carrier a fair return under honest, economical, and efficient management, but without regard to capital gains or capital losses. One-half of the remainder, without recomputation of income taxes, shall be the amount due from the carrier under paragraph (1) of this subsection, but in no case shall such amount exceed the total amount of payments made under the contract. Any such repayment by an air carrier shall be made to the Treasurer of the United States, and shall be credited to appropriations made available for the purposes of this subsection.

"(3) In determining whether any payments should be made to a carrier under this subsection, and the amount of such payments, the fact that such a carrier holds a certificate of public convenience and necessity authorizing it to conduct certain services shall not be deemed conclusive of the issue as to whether any such service is sufficiently required for the purposes of this subsection to justify the amount of payments that would be required under this subsection to enable such carrier to continue such service. In any proceeding in which any such issue is raised, the Board shall give notice to interested communities in the United States receiving such service and permit such parties to be heard. If the Board shall determine that the need for such service does not justify the amount of payment that would be required under this subsection to continue it, its final order denying such payment shall be accompanied by an order authorizing such carrier either to suspend or abandon such service as the carrier may elect, at any time within one year from the date of such order.

"(4) During the pendency of proceedings to determine the amount of payment to any air carrier under this subsection, the Board is authorized, with or without hearing, to make an advance, out of funds appropriated for the purpose of this subsection, to such carrier upon a showing that the need for such an advance is essential and urgent. Before receiving such an advance such carrier shall be required to agree to repay within a reasonable time such advance, or any part thereof, which exceeds the payment, if any, to such carrier finally determined by the Board under this subsection. Such repayments shall be made to the Treasurer of the United States, and shall be credited to appropriations made available for the purpose of this subsection.

"(5) The Board shall by order terminate any payments under this subsection upon finding, after due notice and opportunity for hearing, that gratuities (in the form of entertainment, gifts, or otherwise) were offered or given by such air carrier or its agent or representative to any officer or employee of the Government with a view toward securing favorable treatment under any provisions of this Act and the obligation of the United States to continue such payments shall terminate on the effective date of such order."

SEC. 23. Paragraph (2) of section 416 (b) of the Civil Aeronautics Act of 1938, as amended, is amended by inserting at the beginning of said paragraph the following:

"The Board shall not exempt any air carrier from the requirement of subsection (a) of section 401 of this title except (A) to the extent that the air transportation performed by such air carrier is performed with aircraft, the maximum gross takeoff weight of which does not exceed twelve thousand five hundred pounds, or (B) where such air carrier holds a certificate of convenience and necessity and such exemption is issued for the purpose of permitting such air carrier temporarily to supplement the service authorized thereby. Notwithstanding any other provision of law any exemption issued under section 416 of the Civil Aeronautics Act of 1938, as amended, which would be prohibited by this paragraph, if not previously terminated by the Board in the course of proceedings under this Act, is hereby terminated one year after the date on which this section becomes effective."

SEC. 24. The Civil Aeronautics Act of 1938, as amended, is amended by inserting after Title IV thereof the following new title:

"TITLE IV-A-AIR CONTRACT SERVICE REGULATION

"LICENSE OF AIR CONTRACTORS

"License Required

"SEC. 450. (a) No person shall engage in any air contract service unless there is in force a license issued by the Board authorizing such person to engage in such service. No license to engage in any interstate or overseas air contract service shall be issued under this section to any person who is not a citizen of the

United States. Any person engaged in any air contract service at the time this title becomes effective may continue such operations for a period of one hundred and twenty days thereafter without a license and, if application for such license is made within such period, such person may, under such regulations as the Board may prescribe, continue such operation until the Board has passed upon such application.

"Application for License

"(b) Application for a license (1) shall be made in writing to the Board and shall be verified; (2) shall contain a detailed description of the points or areas between which or the areas within which service is proposed, the particular type of operation proposed, the type of aircraft to be utilized, the commodity or commodities or classes thereof proposed to be transported; (3) shall be accompanied by copies of all contracts for air contract service which the applicant has entered into and under the terms of which the applicant proposes to operate; (4) shall be in such form and contain such other information as the Board may by regulation require; and (5) shall be accompanied by proof of service upon such interested persons as the Board shall by regulation require.

"Notice and Hearing

"(c) Upon the filing of any such application the Board shall give due notice thereof (1) to the public by posing a notice of such application in the office of the Secretary of the Board, and (2) to such persons as the Board may by regulation determine. Any interested person may file with the Board a protest or memorandum of opposition to or in support of the issuance of a license. A public hearing shall be held on such application if the applicant, or any person having a substantial interest in the proceeding, shall so request within such time as the Board shall by regulation provide, and the Board shall dispose of such application as speedily as possible.

"Issuance of License

"(d) The Board shall issue a license authorizing the whole or any part of the air contract service covered by the application, if it finds that the applicant is fit, willing, and able properly to perform such service and to conform to the provisions of this Act and the rules, regulations, and requirements of the Board hereunder, and that such service, and the performance thereof by the applicant, are consistent with the public interest; otherwise such application shall be denied. If the Board finds that the public interest requires such service only for a limited period or periods, it shall issue a license only for such period or periods and any such license so issued shall be deemed not to have been issued with reference to an activity of a continuing nature. In considering whether the granting of an application for a license to a foreign air contractor is consistent with the public interest, the Board shall take into consideration, among other things, the international obligations of the United States and the reciprocal treatment accorded air contractors and air carriers by foreign nations.

"Terms and Conditions of License

"(e) Each license issued under this section shall specify the maximum number of shippers to be served the points or areas between which, or areas within which, air contract service is to be permitted, the nature of the traffic and scope of the business to be authorized thereby, and the commodity or commodities authorized to be transported: Provided, That, in order to avoid performance by an air contractor of common carrier service, the Board shall not authorize any air contractor in any license to perform air contract service for any air freight forwarder or foreign air freight forwarder or to operate with more than eight contracts at any one time. There shall be attached to the exercise of the privileges granted by such license, or amendment thereto, such reasonable terms, conditions, and limitations as the public interest may require, including limitations on the minimum number of flights for which contracts may be made, except that no term, condition, or limitation shall restrict the right of the contractor to change or add contracts within the scope of the license or, consistent with the public interest, to change or add to its equipment or facilities for performing the authorized service; but such license shall not authorize operation as a common carrier.

"Effective Date and Duration of License

"(f) Each license shall be effective from the date specified therein and shall continue in effect until suspended or revoked as hereinafter provided or until the Board shall certify that operation thereunder has ceased, or if issued for a limited period of time under subsection (d) of this section, shall continue in effect until the expiration thereof, unless, prior to the date of expiration, such license shall be suspended or revoked as provided herein, or the Board shall certify that operations thereunder have ceased.

"Authority to Modify, Suspend, or Revoke

"(g) (1) The Board, upon petition or complaint or upon its own initiative, after notice and opportunity for hearing, may alter, amend, modify, or suspend any such license held by an air contractor, in whole or in part, if the public interest so requires, or may revoke any such license, in whole or in part, for intentional failure to comply with any provision of this title or any order, rule, or regulation issued hereunder or any term, condition, or limitation of such license: Provided, That no such license shall be revoked unless the holder thereof fails to comply within a reasonable time to be fixed by the Board, with an order of the Board commanding obedience to the provision, or to the order (other than an order issued in accordance with this proviso), rule, regulation, term, condition, or limitation found by the Board to have been violated.

"(2) The Board, upon petition or complaint or upon its own initiative, after notice and opportunity for hearing, shall by order suspend or revoke any license the holder of which was deemed by the Board to be a citizen of the United States at the time such license was issued or transferred to such person, if at any time it finds that the holder thereof is not a citizen of the United States: Provided, That the Board, whenever it deems such action to be in the public interest, may postpone the effective date of such suspension or revocation for such period of time as it may deem necessary to permit the submission to and approval by the Board, and the consummation, of a plan or plans of reorganization of the holder designed to reestablish it status as a citizen.

"(3) The Board, upon petition or complaint or upon its own initiative, after notice to the holder, may alter, amend, modify, suspend, cancel, or revoke any such license held by a foreign air contractor, whenever it finds such action to be in the public interest. In determining the requirements of the public interest, the Board shall take into consideration, among other things, the international obligations of the United States and the reciprocal treatment accorded air contractors and air carriers by foreign nations.

"(4) Any interested person may file with the Board a protest or memorandum in support of or in opposition to the alteration, amendment, modification, suspension, cancellation, or revocation of a license.

"Transfer of License

"(h) No license may be transferred unless such transfer is approved by the Board as being consistent with the public interest.

"Certain Rights Not Conferred by License

"(i) No license shall confer any proprietary, property, or exclusive right in the use of any airspace, Federal airway, or air navigation facility.

"DUAL OPERATIONS

"SEC. 451. Unless, after notice and opportunity for hearing, the Board shall find for good cause shown that both a certificate of public convenience and necessity or a foreign air carrier permit issued under title IV and a license issued under this title may be so held consistently with the public interest

"(1) No person, or any person controlling, controlled by, or under common control with such person, shall hold a certificate as an air carrier or a permit as a foreign air carrier authorizing it to engage in any air transportation over a route or within a territory if such person, or any such controlling person, controlled person, or person under common control, holds a license as an air contractor or foreign air contractor authorizing it to engage in air contract service over the same route or within the same territory; and

"(2) No person, or any person controlling, controlled by, or under common control with such person shall hold a license as an air contractor or foreign