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Isn't that correct?

Mr. QUESADA. That is the arithmetic of it. But I am skeptical of the Government getting it back either with or without the 4.5 percent.

Senator PROXMIRE. Why are you?

Mr. QUESADA. I have a hard time convincing myself that there will be 500 of them built. I would hope so, but I have serious doubts about it. I just don't know where the passengers would come from to fly in them. I doubt if the demand would exist for them.

SST DEVELOPMENTS POSTPONEMENT BY INDUSTRY

Senator ProxMIRE. In all candor, do you think that the airlines want supersonic transports in 1978, in view of their present financial conditions and prospective financial conditions?

Mr. QUESADA. My personal opinion is that the air transport industry would like to postpone it. In my opinion, it is a logical extension of the state of the art, but here the air transportation industry has undertaken a tremendous investment in the 747, the trijet, the MacDonald-Douglas DC-1011. I think the air transportation industry as a whole this is my view and I am not speaking for them—would like to let that cycle of equipment have a longer run and permit a period of increased earnings which would result because of the dollar depreciation of the airplane.

Airplanes just don't wear out. They are not like old soldiers.

SST PURCHASES

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Senator ProxMIRE. What are the prospects they will be able to come up with $50 million per plane to buy the supersonic transports! Mr. QUESADA. At this time I think it is questionable.

Senator PROXMIRE. If they are going to buy 500 in a period of 12 years, they would have to buy something like 40 or 50 a year. an enormous capital investment; is it not?

Mr. QUESADA. It is a large capital investment, and the air transportation industry are real social climbers. If one air transportation company has a new hat or a new airplane, they all have to buy it.

Senator PROXMIRE. Isn't that the heart of their problem now, that one of the principal reasons why so many of them lost a whale of a lot of money last year—TWA lost $120 million, United lost $40 million-is because they have invested heavily in new equipment and have to pay for it?

Mr. QUESADA. That is only one.
Senator PROXMIRE. Isn't it a major reason for it?

Mr. QUESADA. I don't know if it is a major one but it is a substantial one. There are others. We are suffering from recession.

SIDELINE NOISE TRADEOFFS

Senator PROXMIRE. The Department of Transportation told us recently that the problem of sideline noise is under control, that it is possible to reduce from 124 down to 108 perceived noise decibels

. Can you give us some kind of idea what kind of tradeoffs might be entailed in terms of payload, and so forth? I tried to get that from Mr. Magruder this morning and he indicated that this new sound sup.

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pressor would give a better plane, that they would be able to take off with the same passenger load, no more cost, same range.

He said he had confidence that before 1978 they will be able to come up with answers to enable them to do that. I ask you: Maybe you can give us not rhetoric but some kind of statistics on what would be the effect of this kind of a reduction.

Mr. QUESADA. Sir, my confidence in the aircraft industry of this Nation is boundless. I have been living in this community since 1924, and I have seen the impossible accomplished time after time.

The ability of the industry to overcome, for example, the sideline noise, I think is there. I think they have the incentive to do it. I think they have the ability to do it, and I think they will do it.

Senator PROXMIRE. They have indicated in interviews that they can do it. Boeing has said they can do it. But to do it they have to reduce their range. They have to have a certain economic trade-off. It increases their weight, and so forth.

Mr. QUESADA. All of these things do have costs. They are not going to reduce sideline noise without cost. In the first place, right away the experimentation that they are doing now and will have to do in the future is very, very costly. Just to do it is cost. It just doesn't happen without effort, and effort can be translated into dollars.

The public is eventually going to have to pay it. In addition to dollar costs, it might very well turn out to entail other costs.

It might require, and probably will require, payload being traded for extra weight in the engine cowlings that are essential to overcoming these sideline noises.

It is traditional for a benefit to be achieved through compromise, and compromise nearly always can be measured in some costs.

Senator PROXMIRE. Wouldn't it make sense that if you are going to have to increase the weight as has been estimated from 750,000 pounds to 800,000 pounds, you would have to increase the fuel, you would have to reduce the range, you would have to reduce the payload, and all of those would deteriorate the economic feasibility of the plane?

Mr. QUESADA. All of those things result in cost. The airplane might have to be bigger. As soon as it gets bigger, the structure has to be changed to more structure. When you put in more fuel you have to have bigger tanks, with more structure. All of these things represent cost.

In the final analysis, the person who rides in that airplane eventually

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pays for it.

RESEARCH, DEVELOPMENT, AND PRODUCTION: GOVERNMENT ASSISTANCE

Senator PROXMIRE. One other question that has bothered me a lot, and I think the advocates of the SST have a very strong point here and I haven't heard it satisfactorily answered and I hope you can answer it, is that they say the argument has been made that the spinoff from military planes gave us the kind of research and development and the kind of prototypes that made the 707 and the other subsonic jets possible; that that same military development is not present with the supersonic plane, especially with brushed titanium honeycombed metal involved and, therefore, that it is necessary, if you are going to have a plane, for the Federal Government to do the research and development and prototype production.

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The military is not going to do it. Our whole history has been that the Federal Government does it in a military way first and then the private sector picks it up.

What is your answer, if there is an answer to this!

Mr. QUESADA. The answer that I give will only be mine, sir, and I hope you don't give it any more weight than my answer is entitled to.

A supersonic transport such as is now being developed, in my opinion, achieving a substantially lesser help from military programs than most commercial aircraft have received in the past.

The engine for the supersonic transport is substantially a new engine that is not the result of a military requirement. To the extent that they say the costs for the development of that engine has to come from some other source, it is, in my opinion, quite true.

Certain manufacturing techniques that are essential to producing this aircraft, within the state of the art, to a large extent are new and the cost is being thrust almost totally upon the aircraft companies.

However, I don't want to say that the supersonic transport is getting no assistance from military programs, because it is. Guidance systems that are available today, blind landing systems that are available today, many of the subsystems that are available today, many of the techniques of making blades for engines that are available today are the result of military programs.

Senator PROXMIRE. And those would be applicable to the SST as well as others?

Mr. QUESADA. Many would be applicable.

747 DEVELOPMENT AND PRODUCTION

Senator PROXMIRE. Just one other point. Was there a military equivalent of the 747 from which the Boeing people benefited in developing that fine plane?

Mr. QUESADA. That is what I tried to emphasize. The Boeing Co. in my opinion, deserves the accolade of the decade for building that airplane with very, very little military assistance.

It is an extraordinary airplane, one of the most efficient that the industry has ever come forward with, and it has done so with relatively little aid from prior military programs.

Senator PROXMIRE. Thank you, Mr. Chairman.

B-1 BOMBER

Senator MAGNUSON. General, could you answer this for my information : Isn't the B-1 supposed to be a supersonic military plane?

Mr. QUESADA. Yes, sir.
Senator MAGNUSON. If it goes ahead, it would be supersonic?

Mr. QUESADA. It would be a supersonic airplane and an airplane that has a sustained supersonic speed. The military have developed many supersonic airplanes, but the B-1, with the exception of another

Senator MAGNUSON. I wasn't clear on that.

Mr. Quesada. It is a supersonic airplane whose concept is sustained supersonic speed.

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ECOLOGICAL PROBLEMS

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Chairman ELLENDER. General, as I understand your statement, if private enterprise were to build this, the question raised by ecologists that it would disturb our environment wouldn't bother you, am I correct in that?

Mr. QUESADA. I think that there are certain ecological problems that are to be faced, but I am not impressed by the degree to which some ecological groups have raised what I think are absolutely foundless fears.

This country has not progressed because it is afraid.

Chairman ELLENDER. My reason for asking that is that opposition to the construction of this plane developed in the last 18 months, and it was caused, I believe, by ecologists and people who thought that the construction of this plane would affect our environmental situation.

OBJECTION TO MANNER OF CONSTRUCTION

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I am just wondering if you ever objected to the construction of this plane before?

Mr. QUESADA. I don't object to it now, I object to the manner in which it is being done.

Chairman ELLENDER. Did you object to the manner in which it was financed before now?

Mr. QUESADA. Yes, sir, I have. If you will permit, me, sir, I do want to comment again. It distresses me because I think, perhaps wrongly that Congress has responded more to the emotions of the ecologists than the substance of their objection justifies.

Chairman ELLENDER. I think you are correct.
Are there any further questions?

FINANCIAL CONDITION OF AIRLINES AND ABILITY TO FINANCE NEW GEN

ERATION OF AIRCRAFT

Senator Percy. Yes, Mr. Chairman. I am terribly sorry. I know the hour is quite late.

Chairman ELLENDER. We have another witness coming.

Senator Percy. I want to express my personal appreciation for General Quesada's being here. He is one of the most respected figures in American aviation. His past record as Administrator of FAA was most distinguished.

As director of the American Airlines, you have kept very current on the problems of the airlines. Could you comment on the financial condition of the airlines today and their ability to finance a new generation of aircraft?

Mr. QUESADA. Senator Percy, I think the public at large knows that the air transportation industry, like several other industries, are currently undergoing a very severe impact from what might be called a recession that the country is going through.

In the case of the air transportation industry this is accented by the fact that the industry is at this moment, right now, going through a cycle that requires the outlay of tremendous amounts of funds in the purchase of new equipment.

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This is putting a tremendous strain on the air transportation industry. The borrowing power of the air transportation industry is reaching its limits.

I am not suggesting that this won't be changed in the forthcoming years, but a direct answer to your very direct question and very appropriate question is that the air transportation industry by and large has a very, very full plate generated primarily because they have to buy the 747, the tri-jet, and the DC-10. They are re-equipping. This cycle is coming all too frequent.

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PRESTIGE OF DEVELOPMENT AND PRODUCTION

Senator PERCY. The question has been raised in the past concerning national prestige. As a matter of fact, when the House committee in 1960 appropriated funds for this, it was really in response, as I read the testimony at the time, to the Sputnik.

Do you see the prestige in our having an SST to be so great that it can be likened to a walk on the moon or something like that!

Mr. QUESADA. No sir; I do not.
Senator ALLOTT. Would the Senator yield for a slight correction!
Senator PERCY. I would be happy to.

RELATIONSHIP OF SPUTNIK WITH SST PROGRAM

Senator ALLOTT. The Senator from Washington is here. I was part of this. I want to state unequivocally that I know of nothing in the record that would even indicate in the slightest that the commencement of the SST program had any connection with Sputnik whatever

. Senator PERCY. With the chairman's permission, I should like to insert into the record at this point the testimony from the House, relating to the necessity of our developing the SST in order to keep up with technology and science, and keep in the forefront, and keep our national prestige high.

It was my understanding from reading that testimony that that was a very strong argument at the time.

Senator ALLOTT. I don't want to take time, but I wanted to make the point. I couldn't sit here and let that pass. It was not as a reaction to Sputnik. The statement in the context you make it is true, that we could not afford to let technology pass us by.

Senator MAGNUSON. In all the months we were reviewed, this was never discussed, Senator Percy.

Chairman ELLENDER. Senator Percy, as I understand, this is in a printed record by the House?

Senator PERCY. Yes. I would like to extract sections of the arguments given at the time that would reinforce my feeling that at the time we were told, the country was told, that we needed the SST in order to keep our technology up, to have the prestige of being out in front, and that we had lost a great deal of prestige in the Sputnik.

We did many, many things, including the Defense Education Act and other things, to regain our preeminence in the scientific field.

I think certainly the moon shot was pushed forward by our desire to regain our supremacy. And it did.

I think the return on investment in world prestige was immense, but I do no think that the SST can be put in this category of national

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