B-103315, JUL. 25, 1956

B-103315, JUL. 25, 1956

TO MR. RALPH T. REED, PRESIDENT, AMERICAN EXPRESS COMPANY:

WE HAVE CAREFULLY CONSIDERED THE CONTENTS OF YOUR LETTER OF APRIL 5, 1956, AND HAVE REVIEWED OUR GENERAL REGULATIONS NO. 123, DATED MAY 1, 1955, GIVING PARTICULAR CONSIDERATION TO THOSE PORTIONS OF PARAGRAPHS 4 AND 5 TO WHICH YOU DIRECT ATTENTION.

YOUR LETTER INDICATES PRIMARY CONCERN WITH THOSE PROVISIONS OF THE CITED PARAGRAPHS WHICH GENERALLY RESTRICT THE USE OF TRAVEL AGENCIES FOR PROCUREMENT OF PASSENGER TRANSPORTATION SERVICES BETWEEN THE UNITED STATES AND FOREIGN COUNTRIES FOR OFFICIAL TRAVEL FOR THE ACCOUNT OF OUR GOVERNMENT. IT IS STATED AS YOUR UNDERSTANDING THAT OUR OFFICE CONSIDERS THE CITED PARAGRAPHS AS PROPERLY INTERPRETING AND REFLECTING THE WILL AND INTENT OF THE CONGRESS AS SET FORTH IN SECTION 901 OF THE MERCHANT MARINE ACT OF 1936, 46 U.S.C. 1241 DESIGNED TO TAKE COGNIZANCE OF THE SERVICES OFFERED BY SUBSIDIZED AMERICAN FLAG CARRIERS BETWEEN FOREIGN COUNTRIES AND THE UNITED STATES AND ITS POSSESSIONS. THERE IS EXPRESSED YOUR BELIEF THE CONGRESS DID NOT INTEND SUCH LEGISLATION TO CONSTITUTE A BAR TO USE OF TRAVEL AGENTS SUCH AS YOUR COMPANY BY GOVERNMENT AGENCIES WHERE THEIR USE WOULD SERVE THE BEST INTERESTS OF THE UNITED STATES. YOU STATE THAT IT SEEMS QUITE OBVIOUS A TRAVEL AGENCY, LIKE AMERICAN EXPRESS, WHEN ARRANGING TRAVEL ACCOMMODATIONS FOR EMPLOYEES OF THE FEDERAL GOVERNMENT, NATURALLY AND NORMALLY WOULD UTILIZE AMERICAN FLAG CARRIERS WHENEVER AND WHEREVER POSSIBLE, IN CONFORMANCE WITH THE LETTER AND SPIRIT OF THE MERCHANT MARINE ACT OF 1936.

FURTHER, YOUR LETTER STATES THAT THE CITED PROVISIONS OF OUR GENERAL REGULATIONS NO. 123, WHICH LIMIT THE USE OF TRAVEL AGENTS, HAVE HAD SERIOUS AND ADVERSE EFFECTS UPON THE AFFAIRS OF YOUR COMPANY AND VARIOUS ADMINISTRATIVE BRANCHES OF THE UNITED STATES GOVERNMENT; THAT LOSS OF REVENUE TO YOUR COMPANY HAS BEEN WITHOUT COMPENSATING VALUE TO THE UNITED STATES; AND THAT AS A RESULT OF THE DIRECTION BY YOUR COMPANY OF SUBSTANTIAL EFFORT AND FUNDS ON BEHALF OF TRAVEL GENERALLY AND SUBSIDIZED AMERICAN FLAG CARRIERS ENGAGED IN INTERNATIONAL TRADE AND COMMERCE BENEFITED MATERIALLY.

PRIOR TO FINAL ISSUANCE OF GENERAL REGULATIONS NO. 123 THERE WERE CAREFULLY CONSIDERED HERE THE PRELIMINARY DRAFT SUBMITTED TO CIVILIAN AND MILITARY GOVERNMENT DEPARTMENTS AND AGENCIES, THE COMMENTS OFFERED BY THEM IN CONNECTION THEREWITH, CONGRESSIONAL ENACTMENTS AND HEARINGS RELATIVE TO THE SUBJECT MATTER OF THESE REGULATIONS, AND THE DUTIES AND RESPONSIBILITIES OF GOVERNMENT AGENCIES GENERALLY AND OF OUR OFFICE WITH RESPECT TO TRAVEL PERFORMED FOR OFFICIAL GOVERNMENTAL PURPOSES.

ALSO, A REVISED DRAFT OF OUR REGULATIONS, PREPARED AFTER RECEIPT OF GOVERNMENTAL AGENCY COMMENTS, WAS SUBMITTED TO DOMESTIC AIR, RAIL, AND HIGHWAY CARRIERS AS WELL AS AMERICAN FLAG AIR AND OCEAN CARRIERS ENGAGED IN INTERNATIONAL TRAFFIC FOR THEIR CONSIDERATION AND COMMENTS.

OUR REGULATIONS AS NOW PROMULGATED ARE CONSIDERED HERE AS MINIMUM REQUIREMENTS FOR OBSERVANCE BY GOVERNMENT AGENCIES GENERALLY AND REPRESENT NOT ONLY THE EFFORTS OF OUR OFFICE AND THOSE AGENCIES TO ESTABLISH UNIFORM PROCEDURES DESIGNED TO CONSERVE PUBLIC FUNDS BUT ALSO AN OVERALL GOVERNMENT CONFORMANCE WITH CONGRESSIONAL INTENT IN THE AREA OF OFFICIAL TRAVEL. AT THE SAME TIME THESE REGULATIONS ARE THOUGHT TO RECOGNIZE REALISTICALLY THE OPERATING RESPONSIBILITIES OF GOVERNMENT AGENCIES GENERALLY AND TO MINIMIZE TO THE EXTENT PRACTICABLE THEIR IMPACT IN AREAS OF ADMINISTRATIVE OPERATIONS.

WITH REFERENCE TO THE POSITIONS ADOPTED BY AMERICAN FLAG AIR AND OCEAN CARRIERS ENGAGED IN INTERNATIONAL TRADE AND COMMERCE, REPRESENTATIONS WERE ADVANCED BY THE AIR CARRIERS THAT THEIR OFFICES--- MAINTAINED IN THE UNITED STATES AND AT REASONABLY ACCESSIBLE POINTS THROUGHOUT THE WORLD--- OFFER, COMPLETE RESERVATION AND TICKETING FACILITIES, AND THE OCEAN STEAMSHIP COMPANIES POINTED OUT THE AVAILABILITY OF DIRECT TRAVEL PROCUREMENT FACILITIES AT EVERY IMPORTANT PORT OF CALL THROUGHOUT THE WORLD AS WELL AS DIRECT COMPANY REPRESENTATION IN ALMOST EVERY IMPORTANT CITY IN FOREIGN COUNTRIES.

WHILE THE REGULATIONS WERE BEING FORMULATED THERE WAS CONSIDERED HERE THE ABILITY OF PERSONNEL IN OFFICES OF OUR GOVERNMENT LONG ESTABLISHED IN FOREIGN COUNTRIES, ACQUIRED BY YEARS OF EXPERIENCE, TO SERVICE THE TRANSPORTATION NEEDS OF PERSONS TRAVELING FOR THE OFFICIAL ACCOUNT OF THE UNITED STATES, AS WELL AS THE SIMILAR ABILITY OF INDIVIDUALS WHOSE TYPE OF EMPLOYMENT BY OUR GOVERNMENT ENVISIONS REGULAR AND PERIODIC CHANGES OF LOCATIONS OF SERVICE. ALSO, THERE WAS BROUGHT TO ATTENTION THE NORMAL INTERNAL OPERATIONS OF GOVERNMENT AGENCIES WITH CONTINUING SUBSTANTIAL ORGANIZATIONS STATIONED AT VARIOUS POINTS OUTSIDE THE UNITED STATES, WHICH SCHEDULE PERSONNEL CHANGES WELL IN ADVANCE OF ACTUAL DATES OF MOVEMENT AND GIVE TIMELY ADVICE OF SUCH CHANGES TO AFFECTED STATIONS AND PERSONNEL SO AS TO PERMIT ORDERLY AND TIMELY ARRANGEMENTS TO BE MADE FOR SUCH TRAVEL AND TRANSPORTATION AS IS REQUIRED FOR OFFICIAL PURPOSES.

SURVEYS CONDUCTED BY REPRESENTATIVES OF OUR OFFICE STATIONED IN EUROPE, THE AREA WHICH GENERATES THE LARGEST VOLUME OF PERSONAL TRAVEL FOR OFFICIAL PURPOSES, AS WELL AS BY REPRESENTATIVES OF OUR OFFICE WHO CONTACTED OFFICES OF OUR GOVERNMENT IN EUROPE WHICH SERVICE A CONSIDERABLE NUMBER OF PERSONS USING COMMERCIAL TRANSPORTATION FACILITIES FOR TRAVEL ON OFFICIAL BUSINESS OF CIVILIAN AND MILITARY AGENCIES OF THE UNITED STATES, FAIL TO DISCLOSE ANY SERIOUS PROBLEMS IN PROVIDING ADEQUATE TRANSPORTATION ACCOMMODATIONS TO THE EXTENT AUTHORIZED BY LAW, OUR REGULATIONS, AND THE INTERNAL REGULATIONS PROMULGATED BY PARTICULAR AGENCIES.

THERE MUST BE BROUGHT TO ATTENTION THE PROBLEMS WHICH CONFRONTED GOVERNMENT AGENCIES AND OUR OFFICE IN CONNECTION WITH AUTHORIZATION FOR USE OF TRAVEL AGENTS GENERALLY. SURVEYS WITHIN OUR OFFICE, AS WELL AS INFORMATION OTHERWISE AVAILABLE TO IT, HAVE CAUSED INCREASED CONCERN HERE WITH REFERENCE TO WHAT APPEARS AS DIMINISHING COMPLIANCE IN OVERSEAS AREAS WITH THE LETTER AND THE SPIRIT OF LAWS OF OUR GOVERNMENT RESPECTING OFFICIAL TRAVEL. NOT ALONE WAS IT BROUGHT TO ATTENTION THAT TRAVEL AGENCIES GENERALLY IN FOREIGN AREAS TOO OFTEN ROUTE TRAFFIC OVER CARRIERS IN DIRECT COMPETITION WITH THOSE OF AMERICAN FLAG REGISTRY, BUT SUCH AGENCIES APPEAR TO EXERT TOO LITTLE EFFORT TO INSURE THAT OFFICIAL TRAVEL IS ROUTED IN A MANNER CONSISTENT WITH THE LETTER OR SPIRIT OF THE EXPRESSED LAWS AND REGULATIONS OF OUR GOVERNMENT.

THE REGULATIONS HERE CONSIDERED WERE DRAFTED BY OUR OFFICE IN COOPERATION WITH THE AGENCIES AND DEPARTMENTS OF THE GOVERNMENT MOST SERIOUSLY AFFECTED THEREBY, WITH THE VIEW OF OFFERING OFFICIAL TRAVELERS AND TRANSPORTATION PROCUREMENT PERSONNEL AND GUIDE LINES AND PROCEDURES BEST SUITED TO DISCHARGE THEIR OBLIGATIONS UNDER LAW AND PERTINENT ADMINISTRATIVE REGULATIONS. SO FAR AS CAN BE ASCERTAINED HERE AT THIS TIME THERE HAVE NOT ARISEN SITUATIONS OF SUBSTANTIAL CONTINUING IMPORTANCE WHICH WOULD WARRANT A MATERIAL REVISION OF PROCEDURES AND LIMITATIONS NOW SET FORTH IN OUR GENERAL REGULATIONS NO. 123.

YOUR LETTER APPEARS TO REPRESENT VIEWS ADVANCED IN SOME RESPECTS PRIMARILY AS TO THE EFFECT OF OUR REGULATIONS ON THE BUSINESS OF YOUR COMPANY AND IN OTHER RESPECTS OFFERS COMMENT ON BEHALF OF TRAVEL AGENTS GENERALLY. THE PROBLEMS CITED AS CONFRONTING YOUR COMPANY ARE HERE CONSIDERED AS BEING STATED ONLY AS ILLUSTRATIVE, SINCE IT IS ASSUMED YOU DO NOT REQUEST TREATMENT FOR YOUR COMPANY WHICH IN ANY RESPECT DIFFERS FROM THAT TO BE ACCORDED ANY OTHER TRAVEL AGENCY. ALSO, AS TO MOST OF THE COMMENTS AND VIEWS SET FORTH IN YOUR LETTER, INFORMATION SIMILAR THERETO WAS FURNISHED INFORMALLY TO OUR OFFICE BY YOUR COMPANY DURING THE PERIOD THESE REGULATIONS WERE UNDER CONSIDERATION. THE INFORMATION FURNISHED WAS CAREFULLY EVALUATED WITH RELATION TO THE PRIMARY OBLIGATIONS OF OUR OFFICE AND GOVERNMENT AGENCIES GENERALLY AND TO THE EXTENT LEGAL, PRACTICAL AND WARRANTED, USE OF TRAVEL AGENTS IS AUTHORIZED.

AS TO THE INTENT OF THE CONGRESS IN ENACTING SECTION 901 OF THE MERCHANT MARINE ACT OF 1936, 42 U.S.C. 1241, THAT SECTION SPECIFICALLY DIRECTS USE OF AMERICAN FLAG VESSELS BY OFFICERS AND EMPLOYEES OF THE UNITED STATES TRAVELING ON OFFICIAL BUSINESS OVERSEAS OR TO OR FROM ANY OF THE POSSESSIONS OF THE UNITED STATES, WITH CERTAIN EXCEPTIONS. EACH YEAR THE CONGRESS HAS CONCERNED ITSELF WITH SUBSIDIES PAID AMERICAN FLAG AIR AND OCEAN CARRIERS, AND IT APPEARS REASONABLE THAT AGENCIES OF OUR GOVERNMENT SHOULD BE REQUIRED TO DEAL DIRECTLY WITH THESE CARRIERS WHEN SUCH ACTIONS TEND TO CONSERVE CARRIER REVENUES AND THUS REDUCE THE SUBSIDIZED AMOUNTS WHICH OUR GOVERNMENT OTHERWISE WOULD CONTRIBUTE. IT WOULD NOT APPEAR THAT OUR OFFICE, IN INSTANCES WHERE USE OF AMERICAN FLAG OCEAN CARRIERS WOULD NOT IMPEDE OR IMPAIR NORMAL GOVERNMENTAL OPERATIONS, SHOULD AUTHORIZE A DIVERSION OF AMERICAN FLAG OCEAN CARRIER REVENUE IN THE FACT OF A CONGRESSIONAL DIRECTIVE WHICH INDICATES AN INTENT OTHERWISE.

WITH REFERENCE TO YOUR COMMENT THAT AMERICAN FLAG CARRIERS ENGAGED IN INTERNATIONAL TRADE AND COMMERCE HAVE BENEFITED MATERIALLY AS A RESULT OF DIRECTION BY YOUR COMPANY OF SUBSTANTIAL EFFORT AND FUNDS ON BEHALF OF TRAVEL GENERALLY, THERE APPEARS NO REASON TO DOUBT THAT THE EFFORTS OF YOUR COMPANY AND THE MANY OTHER COMPANIES AND ORGANIZATIONS ENGAGED IN SIMILAR ACTIVITIES HAVE GENERATED A PASSENGER TRAFFIC VOLUME FROM WHICH AMERICAN FLAG AND FOREIGN FLAG CARRIERS DERIVE MATERIAL BENEFIT. IT SEEMS APPARENT, HOWEVER, THAT THESE ACTIVITIES HAVE NO CONNECTION WITH PASSENGER TRAVEL FOR THE OFFICIAL ACCOUNT OF THE UNITED STATES. THE CONGRESS EACH YEAR CAREFULLY SCRUTINIZES THE REQUESTS OF GOVERNMENT AGENCIES FOR FUNDS FOR OPERATIONS OUTSIDE THE UNITED STATES AND FOR THE TRANSPORTATION OF PERSONNEL ON OFFICIAL BUSINESS. THESE REQUESTS ARE PREDICATED UPON ESTIMATED MINIMUM NEEDS FOR OFFICIAL GOVERNMENT PURPOSES AND UNDER PROPER AGENCY MANAGEMENT CONTROLS ARE PROJECTED AS PERSONNEL TRAVEL NEEDS REPRESENTING MINIMUM OPERATING REQUIREMENTS. SUCH ESTIMATES, THE TRAVEL ACTUALLY UNDERTAKEN, AND THE COSTS THEREOF, ARE SUBJECTED TO EXAMINATION CONSTANTLY BY INTERNAL MANAGEMENT, OPERATING AND FISCAL PERSONNEL WITHIN AGENCIES, BY THE BUREAU OF THE BUDGET, AND BY OUR AUDITORS AS TO THE NECESSITY THEREFOR FOR OFFICIAL PURPOSES AND, RESULTANTLY, REPRESENT GENERALLY ONLY THE BAREST MINIMUM REQUIRED TO DISCHARGE AGENCY RESPONSIBILITIES AS COMPARED WITH OPERATING REQUIREMENTS AND RESTRICTIVE LAWS AND AGENCY REGULATIONS. CERTAINLY IT CANNOT BE ASSERTED VALIDLY THAT THE EFFORTS OF YOUR COMPANY AND OTHERS TO GENERATE PASSENGER TRAVEL HAS ANY DIRECT INFLUENCE IN INCREASING THE VOLUME OF PASSENGER TRAVEL FOR THE OFFICIAL ACCOUNT OF THE UNITED STATES. SUCH INCREASED OFFICIAL TRAVEL AS IS REQUIRED STEMS MAINLY FROM EXPANDED OR RELATIVELY NEWLY ESTABLISHED AREAS OF OPERATIONS OUTSIDE THE UNITED STATES, BUT CERTAINLY NOT IN RESPONSE TO THE EFFORTS OF EITHER CARRIERS OR TRAVEL AGENTS TO INCREASE TRAFFIC VOLUME.

NOTWITHSTANDING THE FOREGOING, THERE IS EVERY DISPOSITION ON THE PART OF OUR OFFICE, TO THE EXTENT IT IS AUTHORIZED AND CONSISTENT WITH ITS DUTIES AND RESPONSIBILITIES, TO ASSIST IN EVERY WAY PRACTICABLE EVERY AMERICAN COMPANY IN ANY PROPER FIELD OF BUSINESS ENDEAVOR. THERE DOES NOT EXIST HERE, HOWEVER, AUTHORITY TO SINGLE OUT FOR FAVORABLE ATTENTION ANY ONE COMPANY IN A FIELD IN WHICH SO MANY OPERATE, NOR IS IT BELIEVED OUR RESPONSIBILITIES PROPERLY CAN BE DISCHARGED BY RELAXING OUR EFFORTS TO BEST PROTECT THE INTERESTS OF THE UNITED STATES AND CONSERVE THE EXPENDITURE OF PUBLIC FUNDS. TO THE EXTENT NOW DEEMED PRACTICABLE OUR GENERAL REGULATIONS NO. 123 ARE DIRECTED TOWARD ESTABLISHING, WITH THE ASSISTANCE OF GOVERNMENT AGENCIES GENERALLY, PROPER SAFEGUARDS WITHIN OUR GOVERNMENT AS TO USE OF ITS FUNDS FOR OFFICIAL TRAVEL AND AT THE SAME TIME ADVISE CARRIERS AND TRAVEL AGENTS WHAT ARE THOUGHT TO BE THE REASONABLE LIMITS ESTABLISHED BY THE LAWS AND INTENT OF THE CONGRESS BEYOND WHICH OUR OFFICE CANNOT EXTEND OFFICIAL AUTHORITY OR APPROVAL.

IT IS TO BE REGRETTED IF THE ACTIONS WHICH APPEAR REQUIRED OF OUR OFFICE TEND TO ADVERSELY AFFECT THE BUSINESS OF ANY AMERICAN COMPANY, BUT IS IS HOPED THE FOREGOING FURNISHES ADEQUATE EXPLANATION OF THE POSITION WHICH WE BELIEVE MUST BE ADOPTED UNDER EXISTING CIRCUMSTANCES.

WE TRUST THE FOREGOING ANSWERS ALL OF THE SUBSTANTIAL MATTERS CITED IN YOUR LETTER OF APRIL 5, 1956, THE ANSWER TO WHICH HAS BEEN DELAYED TO INSURE MATURE CONSIDERATION OF ITS CONTENTS.