By reason of these facts, the Board, in November 1942, addressed a letter to the parties to the contract proposing that they cancel the existing contracts and, if they wished to continue the contract relationship, present revised contracts applicable for the future in such form as would permit their approval pending final determination of the express agency-air carrier relationship. In this connection the parties were advised: 1. The provisions of the present contracts in section 4 which provide that the "Air Company agrees that during the time in which operations are carried on under this contract it will not accept express business, as described above, or otherwise, from any party other than the Express Company, *"must not appear in the new contract or must be amended so as to eliminate the prohibition against acceptance of express business from persons other than Express Agency. This does not necessarily mean that the air carriers must make provision to handle express matter directly. 2. The provisions of the present contracts in section 4 which provide that the Express Company will not make an agreement with another air carrier for a similar service without giving the air carrier notice thereof and permitting the air carrier to provide a comparable or better service, must not be inserted in the new contract or must be amended in such manner that they will not permit one carrier to prevent or delay the extension of the facilities and service of Railway Express Agency to a competing carrier. 3. The provisions in section 8 of the present contracts that the Express Company shall not be required without its consent to establish air express rates less than twice the existing first class rail express rates between the same points unless required by law must not be inserted in the new contract or must be amended in such manner that the establishment of air express rates will not be dependent in any way upon the rail express rates. 4. The provision of the present contracts in section 20 which provides that "The Express Company shall not during the period of this agreement enter into the air express transportation business by operating its own aircraft in competition with the Air Company" shall not be included in the new contract. 2 From time to time counsel for the Express Agency and counsel representing all but three of the contracting air lines advised the Board of the progress being made in conferences on this matter and on February 22, 1943, notified the Board that they had agreed upon revisions of the contracts in line with the suggestions of the Board. Revisions of their original contracts with the Express Agency, dated February 24, have now been submitted by All American Aviation, Inc., American Airlines, Inc., Chicago and Southern Air Lines, Inc., Colonial Airlines, Inc., Continental Air Lines, Inc., Delta Air Corporation, Eastern Air Lines, Inc., National Airlines, Inc., Northwest Airlines, Inc., Pennsylvania-Central Airlines Corporation, United Air Lines Transport Corporation, and Western Air Lines, Inc., C. A. B. Nos. 199, 9, 42, 72, 43, 44, 45, 79, 70, 71, 82 and 84, respectively. An examination of the revisions discloses that the contracts as revised include all of the modifications suggested by the Board as well as certain modifications agreed upon by the parties and to which the Board finds no objection. Section 412 provides: (a) Every air carrier shall file with the Authority a true copy, or, if oral, a true and complete memorandum, of every contract or agreement (whether enforceable by provisions for liquidated damages, penalties, bonds, or otherwise) affecting air transportation and in force on the effective date of this section or hereafter entered into, or any modification or cancelation thereof, between such air carrier and any other air carrier, foreign air carrier, or other carrier for pooling or apportioning earnings, losses, traffic, service, or equipment, or relating to the establishment of transportation rates, fares, charges, or classifications, or for preserving and improving safety, economy, and efficiency of operation, or for controlling, regulating, preventing, or otherwise eliminating destructive, oppressive, or wasteful competition, or for regulating stops, schedules, and character of service, or for other cooperative working arrangements. (b) The Authority shall by order disapprove any such contract or agreement, whether or not previously approved by it, that it finds to be adverse to the public interest, or in violation of this Act, and shall by order approve any such contract or agreement, or any modification or cancellation thereof, that it does not find to be adverse to the public interest, or in violation of this Act; * * * 2 All American Aviation, Inc.; Pan American Airways, Inc.; Trans-Canada Air Lines. Under the provisions of this section, it is the function of the Board to determine whether the agreements filed violate the Act or are adverse to the public interest. The term "public interest" cannot be precisely defined. Consequently, our decision in this matter necessarily involves the exercise of our discretion in the light of the broad policies and objectives of the Act, particularly as outlined in section 2. We recognize the necessity of uninterrupted air transportation service in the interest of the war effort and believe that the most efficient discharge of the emergency demands growing out of the war require the maximum attention of air carriers and their personnel. Upon consideration of the provisions of the contracts as revised, we see nothing which would justify us, in the light of existing conditions, in finding that they are adverse to the public interest or in violation of the Act, and therefore they should be approved. As has been been stated heretofore, the Board is advised that revised contracts between the Express Agency and the other certificated air carriers involved in our investigation, Docket No. 325, will be filed in the immediate future. The Board will act upon each such contract as filed in accordance with the conclusions stated herein. It should be noted that section 412 (b) provides that the Board shall by order disapprove any contract or agreement "whether or not previously approved by it" that it finds adverse to the public interest or in violation of the Act. As hereinbefore indicated, in our evaluation of the public interest as affected by the express contracts, we have necessarily recognized the existence of the present emergency. We will therefore be prepared to give further consideration to a final determination of the express agency-air carrier relationship when the public interest warrants. Appropriate orders will be entered. Pogue, Chairman, Warner, Branch, Ryan, and Lee, Members of the Board, concurred in the above opinion. EXHIBIT No. 385 MAY 10, 1944. List of Air lines with which Railway Express Agency, Inc., concurrently has contracts, and the dates thereof List of Air lines with which Railroad Express Agency, Inc., concurrently has contracts, and the dates thereof-Continued Remarks Covers execution of Pan American Inter Covers transportation of air express be- EXHIBIT No. 386 PROMOTION OF AIR EXPRESS It is the tradition of the express-company organization and its present pracfice that all employees are responsible for the development of all services offered to the public by the company. The promotion of air-express service became one of those responsibilities on the date the service was started. The same methods used in promoting railexpress traffic became effective plus the added impetus furnished by a new, highly publicized, and dramatic type of transportation. Development of air-express traffic started with announcement of the effective date September 1, 1927, through operating, accounting, and promotional bulletins to employees. The September 1927 issue of Express Messenger, a house organ distributed to all employees and to an extensive list of shippers and individuals, carried a detailed explanation of the new service with maps, schedules, and chart of the rates. These initial announcements brought the new service directly to the attention of not only employees at the few airport offices on the original routes, but to the officials and employees of the entire organization throughout the country. This first release placed emphasis on the value of the new air service to the off-airline shippers who could use the rail express service for the relatively short hauls to or from an airport city. Announcement of the new air-express service was made to the public through news releases to newspapers and magazines. Talks, some of them broadcast over the radio, were made before service organizations. Express vehicles carried large posters announcing the effective date of the service. Express representatives, ably assisted by pick-up and delivery vehiclemen, vied with each other to build an impressive number of "first flight" shipments for the initial flights from each airport office. In doing so, they made calls on thousands of firms, leaving information relative to rates, schedules, and service at each place. Initial flights were further publicized by extensive newspaper articles including pictures of special shipments, notables participating in the inaugural ceremonies and various loading scenes at airports. As the result of such activities the birth of air-express service on September 1, 1927, was thoroughly publicized to expressmen, shippers, and individuals. Similar promotional methods have been used as the original 26 airport offices gradually increased through the years to the present 350. "First flight" labels introduced in 1934 as an inducement to collectors, added to the interest, publicity, and the number of shipments handled. Shipments of unique nature, of unusual weight or forwarded under unusual circumstances continued to have news value and to result in considerable publicity for several years. Full advantage was taken of these opportunities by express representatives who also persuaded merchants to use such shipments as the basis for window displays. Each new class of shipper who was persuaded to use the service each new type of commodity that was secured became in effect the basis of a research into possibilities for the same kind or similar traffic throughout the country. Full details were sent from one office to the department of public relations, thence relayed to all offices as a guide for similar sales promotion. The latest sales promotion methods of each current year since September 1, 1927, have been applied to the development of the air express business. These have improved in quality with the general improvement in sales practice and in volume as the express sales organization, or public-relations department as it is now called, was developed to its present strength. The growth of air-express traffic in volume and in importance contributed a great deal to the expansion of the sales organization. The present selling or public-relations organization consists of specially trained representatives who devote their exclusive time to promotional work and others who devote a portion of their time to the supervision or the actual performance of public-relations work. Responsibility for the development of all business of Railway Express Agency is centered in a department of public relations under a general manager. On his immediate staff are men trained in various promotional activities-an assistant to general manager; superintendent, public relations; superintendent of training; publicity representatives; and production specialists. In the field are 13 district managers, public relations who direct the publicrelations work in the company's 13 operating departments. (The title is commercial superintendent in Chicago and New York City.) Reporting direct to the district managers, public relations are 58 traveling commercial agents, an average of one for each of the company's operating divisions. These men call on shippers, hold meetings with employees, check all publicrelations activities and in general guide the promotional work done in the territory they cover. A total of 234 resident commercial agents are located in the more important cities. In addition to calls on shippers, they supervise the distribution of promotional literature, arrange window displays, are instrumental in securing a great deal of publicity, give talks before local service groups, handle adjustments requiring diplomacy and train employees in public-relations work. The department of public relations, including the district managers, traveling commercial agents and resident commercial agents, devote their exclusive time to promotional work. Supporting these specially trained representatives who devote all their time to supervision and/or performance of public-relations work are operating officials and employees who devote various portions of their time. Included in this group are the following: Four managers-Air express, one for each operating vice president's territory. Thirteen supervisors of training who in supervising training classes of employees each month include the sale of the service of which air express is a part. These employe-training classes covering all phases of the express business are particularly valuable at the present time because of the large number of new employees. All of our 67,000 employees spend 2 hours each month (supervisors 2 hours in conference and 2 hours in group meetings) attending training classes. Each monthly training bulletin used in the class work deals in part with air express. Eleven bulletins are being issued during the current year. Three of them deal exclusively with air express-two domestic and one international. For the discussion of the bulletins on air express we will devote a total of 402,000 man-hours or 55,068 man-days. Two hundred and twenty-five route agents who have general supervision over subdivisions of operating divisions. Three thousand one hundred and forty-eight exclusive general agents and agents who are responsible for all local activities including the sale of the service. Railroad agents who sell express service and handle it on a commission at all other agencies served by the rail lines. Drivers, receiving clerks, cashiers, and other employees who because of the nature of their duties meet the shipping public daily. An idea of the cumulative impact of this group on shippers may be gained from the fact that the pick-up from shipper and the delivery to consignee of rail express traffic during 1943 furnished a minimum of 358,416,720 contacts with customers which does not include all of the other contacts made for various reasons in connection with the handling of the business and not for the exclusive purpose of selling the service. The sales training of employees is pointed toward making each one of these operating contacts to some extent also a sales contact. The employees are reached directly through local public relations meetings held at least once each month. Employee training meetings also held each month, although including some instruction of promotional nature, deal principally with matters relating to improvement in operations and service, thus indirectly contributing to the sales effort. Meeting programs furnished by the department of public relations insure a national concerted effort on the various topics of which air express is a definite part each month. The Express Messenger, the house organ previously mentioned, each month contained a minimum of two pages devoted exclusively to air express service. In this publication now discontinued for the duration, employees received credit for exceptional sales work and secured new sales ideas and technical information. Serving, formerly Selling, is addressed to and devoted to the express employees in contact with the public. A minimum of 25 percent of this four-page monthly promotional paper is devoted to air express. Portions of the material in this paper are used to help build the monthly programs for meetings. Airline representatives, who have standing invitations, attend many local meetings of employees bringing their contribution to the knowledge and interest of employees in air-express service. Records kept during the last 12 months-a busy wartime period-show that exclusive public relations representatives devoted 11.4 percent of their total time to employee educational activities. Agents and others responsible for the education of employees and promotion of business at individual agencies for a number of years attended district meetings at centrally located points. These meetings, scheduled at least twice each year, in some districts once each quarter, have been curtailed for the duration of the war due to restrictions on travel. Air-express service provided a substantial portion of the material for these meetings. General sales conferences under the direction of the general manager, public relations, were started in 1936 and have been held each year since. These generally have been 3-day planning and inspirational conferences attended by public relations leaders and operating executives, including President Head if other duties did not prohibit. Attendance has ranged from approximately 30 at the first one in 1936 to over 500 at four sectional conferences in 1940. A very definite part of each conference was devoted to development of airexpress business. A check of the proceedings of the last pre-war conference shows 30 percent of the subject matter was on air express exclusively. In addition to the general sales conferences, district meetings of agents and local meetings of employees, all of which provide specific sales training and inspiration, other meetings are held by the general manager, public relations, where he has the opportunity of meeting not only sales people, but also supervisory operating people in small group conferences. Much of the material presented to the group is based on ideas originated at the general sales conferences. This provides the careful blending of sales and operations which facilitates the development of business. Joint meetings of air line and railway express public relations and operating supervisors were so successful in some sections of the country that they have been set up as part of the routine throughout the country. They are scheduled about 90 days apart at points served by two or more air lines with an agenda to which air lines and rail expressmen contribute. The district manager, public relations, acts as chairmen of each meeting in which sale of the service receives prominent attention. Supplementing the sales training passed to employees through the various meetings described and the promotional literature mentioned, a booklet, Driver's Guide to Wartime Shipping by Air Express, has been distributed to expressmen who come in contact with the public. It is a handbook on air express shipping |