High Flying Prices at HSA

Once again, bitter controversy has flared up around the Harvard Student Agencies. The present furor over the European Charter Flights Agency is aggravated by memories of former feuds, and a highly complicated situation has been reduced to simplistic accusations on the one hand and a puzzling silence on the other.

The popular case against the HSA's chartering operations is simple: This summer's flights to Europe are too expensive. They cost more than last year's and considerably more than those of many other universities, for example Columbia. Therefore the HSA must be making exorbitant profits.

If these accusations are just, the Flights Agency is behaving not only immorally, but also illegally. The International Air Transport Association (IATA), which regulates all major transcontinental airlines, prohibits a chartering agency from making a profit or from charging more than "reasonable administrative fees." And though providing no exact definition of "reasonable," IATA clearly disallows two practices commonly attributed to the HSA.

First, no agency employee should earn a commission on receipts from a flight; he must, instead, receive an hourly or weekly wage. That is, as more flights are chartered the benefits of scale economies must be passed on to the passengers. Second, "unreasonable" fees are not made reasonable by passing them on to HSA agencies less successful than the Charter Flights business. In IATA's eyes, it is not enough that the HSA as a whole be non-profit; each flight must also be non-profit.

At first glance, the case against the HSA seems overwhelming. But, in fairness, it should be noted that all airlines do not charge the same prices to all chartering agencies. Chartering operates in a sellers' market, and a travel agent can usually obtain low prices only from those airlines whose business and favor he has carefully cultivated.

The HSA's agent, University Travel Service, has traditionally done its charter business solely with BOAC. Last summer BOAC unexpectedly terminated most of its chartering operations, and UTS was obliged to deal with airlines unfamiliar to it. Unfamiliarity itself probably meant higher charges. Furthermore, because planes are always in short supply, only the very expensive airlines, Swissair and Air France, would negotiate with UTS on such short notice.

So higher costs have understandably necessitated higher HSA prices. But there is, at present, no way of knowing how much of this year's price can be blamed on higher costs. A major Boston charterer has told the CRIMSON that, to his best knowledge of BOAC, Swissair and Air France prices, the HSA charged $30 per passenger in administrative fees last year, and is still charging at least $15 this year. According to this source, the usual amount, and IATA's working definition of "reasonable," is $6 to $10.

If these estimates are accurate, IATA is legally entitled to fine the airlines involved up to $100,000 apiece for dealing with an unethical chartering agency. These fines would, of course, result in the cancellations of HSA's European flights.

All these estimates of costs and profits are at present speculative. To end speculation, the HSA ought to open its books to the public. Dean Monro has asserted that the HSA, being a legal corporation, need not disclose its financial arrangements. But surely the HSA is more than a corporation; it is a non-profit monopoly, supposedly operating in the best interests of the Harvard community. Just as a state government can view the books of a public works corporation, the Harvard student body and Faculty should have free access to HSA accounts and contracts. This applies particularly to to the Charter Flights Agency, which falls under an IATA regulation that every flight passenger be permitted to know the costs, basic and administrative, of his chartering organization.

Chartering will always be a monopoly operation at Harvard. Competition between rival agencies, aside from providing opportunities for irresponsible business ventures, would undoubtedly result in an overabundance of planes, many remaining unfilled and therefore grounded. But the monopoly, whoever runs it, must be closely regulated. And the first principle of sound regulation is a detailed and publicized investigation of the monopoly's procedures.