feasibility, even though they have to add 50,000 pounds to the plane, which is equivalent to their entire payload, in order to solve the noise suppression problem.

How does this strike you? What is your reaction to that position of Mr. Magruder?

Dr. RATHJENS. Well, I find it surprising, and at least in some respects inconsistent with what I understand the vice president of the Boeing Co. to have said. He, I understand, acknowledged when he was up in my State that there would be severe penalties, that you don't get something for nothing, I believe those were essentially his words, and the kind of penalty that he is reported to have indicated was something like a 50-mile reduction in range per DB. As I stated in my testimony, this amounts to something like 800 miles, if you are going to cut from 124 to 108 PNDB noise.

Now, one can trade off, of course, range against payload. You can take the penalty either way, but I think one way or other you are going to have to take a penalty.

You can do something about it, of course, if you scale the size of the airplane up. But as I suggested earlier, that could be a very major scaling job, and it could be a complete redesign of the aircraft.

We have been through one of those already, and if there were to be another one to meet that problem, it would mean a lengthy delay and very much greater expenditures.

PROTOTYPE LIMITATIONS

Senator PROXMIRE. What puzzles me is that we have been talking about an improvement in the plane that would permit us to have this 50,000 pounds additional, and no reduction to payload, no reduction in range, but presumably the prototype that we are developing now is the prototype which will serve as the model for the production planes that will be built.

Now, would there not have to be a subsequent prototype in order to prove out the feasibility of being able to operate with a plane which suppressed the noise and had this additional weight and yet would have the kind of payload that would be necessary to make it economically feasible?

Dr. RATHJENS. Well, I am not an aeronautical engineer, but it is my understanding that the prototype aircraft-that the noise reductions will not be achieved with the prototype aircraft, that it will be a substantially lighter aircraft than will be the final aircraft. The wing structure will be different, and that all things considered, I would think, as I indicated earlier, that one would in fact learn very little about this, and the delicate trade-off problem, from construction of the prototype.

FAA SUGGESTION THAT AIRCRAFT WILL INCREASE TRAFFIC TO DISTANT PLACES

Senator PROXMIRE. Now the FAA has suggested that the SST would greatly increase traffic to places more distant than Europe. Would you comment on that?

Dr. RATHJENS. Well, I think that that is an exaggeration, perhaps in several respects.

First of all, the traffic is going to be what business is, and the two big markets in this world are Western Europe and the United States, and you can talk all you want about flying a lot of increasing traffic routes between, say, Australia and the United States, but you are not going to increase it all that much with a population of, say, 10 percent or perhaps 5 percent of that of Western Europe, with which we deal. That is one of the points I make.

Now, the other one is that on these longer hauls, the SST, of course, has to stop to refuel.

Senator PROXMIRE. It has less range?

Dr. RATHJENS. It has sufficiently less range so that it is going to have to stop one or two times on these longer hauls.

Senator PROXMIRE. You are talking about from the coast to Japan, or to Australia?

Dr. RATHJENS. It would have to refuel in Hawaii, certainly, and I guess it can make it to Japan with one refueling, and to go to Australia I would think probably takes two.

I have not looked at the charts recently, but when you do that, you lose much of the advantage of the SST, because the other aircraft, which are not so constrained, can carry larger amounts of fuel and can do a good deal better in terms of making it a single hop to Japan.

COST CONSIDERATIONS

Now, beyond that, of course, even if you greatly reduce flight time, it does not mean you are going to reduce the cost very much; and Í submit that the increase you will perhaps get an increase in trade with Australia, Brazil, Japan, these other places, if you could reduce the costs, by factors of 2 or so, but you are not going to do that, even if you reduce the flight plan.

Costs are not going to be reduced. They are going to be at least as great, perhaps greater than with the 747.

EFFECT OF FUEL COST INCREASE

Senator PROXMIRE. You have indicated-and this is a very interesting testimony, I think you are the first witness that has given us this you have indicated the increase in fuel costs would hurt the SST more than subsonic aircraft, and you have pointed out the increasing shortage of oil and fuel that might be available.

Just how serious would that effect be if, for example, fuel costs doubled by 1990?

Dr. RATHJENS. Well, the problem here is that the SST really does consume a lot of fuel; and if you look at the FAA figures, roughly 20 percent, I believe, of these operating costs have to be ascribed to fuel consumption, whereas for an aircraft like the 747 it is more like 8 percent.

Now, I suggested earlier that if you look again at FAA figures, that to make the same rate of return for the 747 and the SST, you would have to have a surcharge on the SST; and I suggested it would be 10 percent if the SST made all of its specifications, which I very much doubt. In fact, I believe the surcharge would have to be much larger than that.

But assuming only a 10-percent surcharge to get the same rate of return, and assuming the same fuel costs, let's see what happens if you double the cost.

Well, if you double the cost of fuel, that will affect both aircraft. but it will affect the SST much more severely, and that would mean that surcharge would be perhaps twice as large, more like 20 percent instead of 10 percent for the airlines to make the same rate of return.

SST-747 PRODUCTIVITY COMPARISON

Senator PROXMIRE. Now, a great deal has been made about the advantageous productivity of the SST compared to the 747. It would fly so much faster that its productivity is a great deal higher. Would you comment on that?

Dr. RATHJENS. Yes. I would like to comment on that. I think that it might be higher, but it is certainly not going to be much higher, as has been suggested by the FAA.

The studies that I have seen, the projections I have seen, I believe, generally have been called calculated on the assumption, for example, that the SST would make four trips across the Atlantic for a 24-hour period, whereas with a 747 one can only make a couple.

I think if you really try to figure out the schedules, and put in some realistic times for maintenance, and some realistic turnaround times. perhaps a 3-to-2 ratio might be more appropriate.

Now, if the SST makes three or these trips where the 747 makes two, then you are going to get just about the same productivity, because the 747 carries roughly 50 percent more passengers.

CARGO-CARRYING CAPABILITY

Now, beyond that, the 747 has excess payload. That means it can carry cargo, and there is no room for any excess payload in the SST. You take into account that cargo-carrying capacity of the 747 or other modern subsonic jets, there is a further bonus there that makes the productivity of the SST look less impressive.

AIRCRAFT OPTIMIZATION FOR SINGLE ROUTE

Finally, there is another additional point that I make, and that is that because this SST is so delicately balanced in terms of fuel consumption and payload, you really have to optimize the aircraft for essentially a single leg. That means if you optimize the aircraft, say, for the New York-to-London route, or New York to Paris, it is going to be a less than optimum aircraft in fiying, say, from New York to Rome. You are going to pay a very heavy penalty in that case.

So while it might look pretty good compared to the 747 on the particular route for which it is optimized, it will look less satisfactory if you pick any other route, and the fact is that you are probably only going to build really one basic airframe. You are going to build an airframe that is optimized for one flight pattern, and you are not going to build a totally different aircraft to fly from New York to Italy on the one hand and from New York to, say, London on the other.

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POSSIBLE SST SURCHARGE AND MARKETABILITY REDUCTION

Senator PROXMIRE. I did not hear you put into your calculations the difference in capital costs between the SST and the 747. The cost is more than-it would probably be more than twice as great, certainly twice as great for the SST as the 747.

Now, if you include the capital cost, and recognize, as you have, I think, well documented here, the fact that the productivity is about the same, then it just does not make any economic sense at all to buy an SST, it would seem to me.

Dr. RATHJENS. Well, if you do that, of course, it is about twice the cost; and my earlier estimation which I gave you, which suggested that you have to pay something like a 10-percent surcharge on the SST, are predicated on the FAA's estimate of its superior productivity.

If you take into account a more realistic estimate of productivity, then it seems to me you are not talking about a 10-percent surcharge. You are talking about a very, very much larger surcharge for the airlines to get the return on the investment; and, of course, as I said, when you introduce that larger surcharge, the demand goes down, the number of aircraft you sell will decrease, the cost per aircraft will go up, and you are on a really vicious circle.

And it is for that reason that I am skeptical about the possibility of 300 aircraft being sold, and even somewhat skeptical about a hundred of them being sold.

GOVERNMENT LOSS OF INTEREST ON INVESTMENT

Senator PROXMIRE. Just one final point, or one final question.

You told us, and you are the first witness who has given us the arithmetic on this, and I think it is most helpful, that even if the Government sells, even if the SST is sold, 300 copies, that the Government will lose $2 billion in interest payments, although it gets its capital back, so it is out.

And my calculations are, on this basis, that if we sell 500 copies of this, which is quite optimistic, and would make it a big success, as far as Boeing is concerned, and the airlines, the Government would be out $1 billion in interest.

Dr. RATHJENS. I think that is about right. That is about right. It does depend a little bit on the time phasing of the sales. If the sales

Senator PROXMIRE. So as far as the contract is concerned, considering interest payments, and so forth, there is no way, but no way the Federal Government can come out ahead.

Dr. RATHJENS. It is bound to lose. I believe that.

Senator PROXMIRE. Thank you.

Chairman ELLENDER. Any questions?

Senator CASE. A question, Mr. Chairman.

Senator MAGNUSON. May I just put in the record just one-half second?

Chairman ELLENDER. Senator Case.

Senator MAGNUSON. The airlines have now, and this is 4 years down the line-I don't know how many more-$22 million for positions reservations and $59 million for R. & D., $81 million.

Chairman ELLENDER. Senator Case.

LIMITATIONS OF PROPOSED PROTOTYPE

Senator CASE. Dr. Rathjens, at the bottom of page 6, and this follows a bit Senator Proxmire's line of questioning just now, you say, "The prototype production and experience might well make sense if, with the prototypes, the critical uncertainties could be resolved. In fact" you go on, "the prototypes will be only marginally useful in this regard."

And then you discuss, as you had recently in your colloquy with Senator Proxmire, the fact that there are going to be different engines in the prototype than those which might meet the objections, so that you get nothing from building the prototype in regard to sound suppression.

In regard to the various concerns that have been expressed already, publicly and here last evening, in testimony on the effect upon the stratosphere, what will you get from building prototypes?

Dr. RATHJENS. Well, again, I have to say I am not an aeronautical engineer, but I would think you would learn something about fabrication techniques.

There will be a great deal of similarity, though perhaps not a oneto-one correspondence, in the problems of building the prototype and in building the final version of the aircraft, so I think you probably would learn something in terms of fabrication. You would learn something

Senator CASE. You mean in the handling?

Dr. RATHJENS. The handling of titanium.
Senator CASE. The metal frame?

Dr. RATHJENS. And the metal frame, and in the use of the integration of the avionics within the aircraft. I think you would learn something there.

Much of this I think you have already learned, I might say, through the construction of aircraft like the SR-71, but you would learn more. Senator CASE. Would it be useful, the building of the prototypes, as proposed in this budget proposal? Is that the best way to get that information? Is it the only way, or the best way?

Dr. RATHJENS. I don't see any particular reason to do it, because it seems to me that when we want to-if you really wanted to build this aircraft, I should think the prototype you would want to build would be really more of a prototype. It would be more like the real aircraft.

I prefer to see the noise suppression problem solved first and to build an aircraft that had the kind of engines and noise suppressors on it that would meet the noise standards, and fly that as a prototype, one that would carry a payload that would be more consistent with the kind of payload you are going to have to carry to make this an economically feasible venture.

SUGGESTED POSTPONEMENT OF PROTOTYPE DEVELOPMENT PENDING IMPROVED STATE OF ART AND ECONOMY

Senator CASE. What you are suggesting is, it would not only do no harm, but it would be a positive advantage to delay building, a commitment to building a prototype.