# Petition — American Airlines, Inc. v. World Airways, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1360%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1977 - **Citation:** 431 U.S. 915 ## Text Supreme Court, U. $ 7 FILED MAR 1 1977 MICHAEL RODAK, JR., CLERK IN THE Supreme Court of the United States OcrosEer TERM, 1976 wo. 76-1205 AMERICAN AIRLINES, INC., Trans Wort Arr.ines, Inc., Petitioners v. Worm Amways, Inc., Respondent PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT ALFRED V. J. PRATHER Ky P. Ewrna, JR. PRATHER SEEGER DOOLITTLE Farmer & EwIna 1101 Sixteenth Street, N.W. Washington, D.C. 20036 Attorneys for Petitioners American Airlines, Inc. Trans World Airlines, Inc. March, 1977 Pumes of Breow 8. Adams Paintizia, Inc., WASHINGTON, D. C. TABLE OF CONTENTS Page I oe ed ee ee 6 a dweh debts eebacess 1 I ie dis bbhines waws 4 teeta eae ies 2 QueEsTION PRESENTED ..............-+0- ps eee 2 Statutory Provisions INVOLVED ..............+see00. 2 eS OF GI 6 wie 0b bikes dda se cbdesiacsces 3 Reasons For GRANTING THE Writ Cocsuluec cuenta bedss 7 I. The Court Of Appeals Decided An Important Issue Of Federal Law That Should Be Resolved £ . Sere rere rer ree 7 II. The Court Of Appeal’s Decision Conflicts With This Court’s Decisions On Deference To An Agency’s Interpretation Of Its Own Statute ... 12 ee. 8 ee ce a paead saan tabeesks 15 Appenpix I Appenpix IT Appenpix III TABLE OF AUTHORITIES Cases : Alhemarle Paper Co. v. Moody, 422 U.S. 405, 431 SAAR EE ee erry oe se yee 14 Civil Aeronautics Board v. Delta Air Lines, 367 U.S. I a a aed ok Be a eee 13 Civil Aeronautics Board v. State Airlines, 338 U.S. 572, SE ae a oe iia tl ale saa 7,8 Columbia Broadcasting System, Inc. v. Democratic Na- tional Committee, 412 U.S. 94, 121 (1973) ..... 6, 7, 14 Columbia Gas Transmission Corp. v. F PC, 530 F.2d ey Be Cae Ge BPE on deSconcncsncccacecs 13 Committee For Open Media v. FCC, 533 F.2d 1 (D.C. Se SE ddbduddsenne ak wedeihessedeceeesesenes 13 ii Table of Authorities Continued Continental Air Lines, Inc. v. C.A.B., 519 F.2d 944, Ge Se MIEE. avd cccbinces cc cweteesess 13 Fry v. United States, 421 U.S. 542, 546, n. 6 (1975) ... 14 Johnson v. Robison, 415 U.S. 361, 367-68 >. Se 14 Norwegian Nitrogen Co. v. United States, 288 U.S. 294, Be GED) gona 6b deka aS ee snes op 0460845 0940008 15 Power Reactor Co. v. Electricians’ Union, 367 U.S. 396, CF GE kn bk cine £6 dank + bekea Sak daeeeess 15 Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381 SED ovo snccénanegdenedsecasdvansivaent Punks 7,14 Surgett v. Lapice, 8 How. 48, 68, 70 (1850) ,.......... 15 Trans World Airlines, Inc. v. C. A .B., 128 U.S.App.D.C. 126, 385 F.2d 648, "660 (1967), cert. denied, 390 U.S. Se EEE Suse bandas osncesdcehaceicsae cheoeeen 6, 13 Udall v. Tallman, 380 U.S. 1, 16 (1965) .............. 14 Unemployment Compensation Comm’n v. Aragon, 329 Sa, Se SEO 56 cv naneaeruckscsd se is that Congress intended to create two mutually ex- — classes of air carriers. If this intention were y clear from the structure of the legislation, it would 7 ae to explain why Congress felt compelled to in- ude the express prohibition in section 401(d) (3) against acquisition of supplemental authority by a regular car- rier. At the same time, the Board cannot rely on this express limitation in section 401(d) (3) as a basis for inferring its converse. As the Board concedes, see Docket 27693, supra, at 4, the restriction on regular carriers lent cuerted for a specific purpose, to protect the in- my supplemental industry from possible domination by ein a ae route carriers. Although the legislative _ + Meee A satay is rather thin, it fully supports the carriers in the market. Moreover the b . committee does = fon a A either feasible or desirable to authorize red transpo system in which the amount of service is H. REP. No. 1177, supra, at 11-12 (emphasis supplied). * The companion bills originally introduced and the Senate, H. R. 7318 and S. 1969 sr a ae contain any restriction on who could apply for supplemental 24a certification. Language precluding applications by regular carriers for supplemental certificates apparently was inserted by the Senate Commerce Committee staff following the close of hearings on S. 1969 before the Aviation Subcommittee. See Committee Print of S. 1969, 87th Cong., 1st Sess. (July 10, 1961). In reporting the bill out to the full Senate, the Com- merce Committee amended the earlier Committee Print to in- clude the precise restrictive language now appearing in scc- tion 401(d) (3). See S. REP. No. 688, supra, at 2. The most directly relevant materials appearing in the hear- ings before the Aviation Subcommittee are the following ex- changes, first, between Senator Monroney and the Chairman of the CAB, Alan S. Boyd and, second, between Senator Cot- ton and Mr. Boyd: Senator Monroney. Assuming enactment of S. 1969, does the Board contemplate consolidating into a single pro- ceeding applications for regular and supplementa! cer- tificates ? Mr. Boyd. No sir. That, as I understand it, would be legally possible, but we have no contemplation of that. Hearings on S. 1969 Before the Aviation Subcomm. of the Senate Committee on Commerce, 87th Cong., Ist Sess. 29 (June 26-30, 1961). Senator Cotton. Under this bill [S. 1969] could a regu- larly certificated carrier also apply for a certificate as a supplemental carrier? Mr. Boyd. Yes, sir. Senator Cotton. Is it conesivable that the CAB would ever permit a regularly -ertificated carrier to have a certificate as a supplemental carrier as well? Mr. Boyd. I can only say that the Board has no contem- plation of such a possibility, Senator Cotton. Senator Cotton. At present, a carrier could not form a separate corporation which would be in a sense con- trolled by it, to attempt to go into the supplemental carrier business. Is that correct? Mr. Boyd. Absolutely. We have very good safeguards. Senator Cotton. And that is legally provided against, and is the subject of checking constantly by the CAB? [Continued } 25a The Board argues that Con oar gress could not have meant the possibility of holding both regular and tire Hore authority to turn on which type of certificate is obtained first. In its written opinion the Board reasoned : .. . if a prospective new entrant into air tr tation filed simultaneous applications for same ant supplemental certificates it could not be awarded both certificates if the route case were decided first because it would then be a scheduled carrier seeking . nes certificate—the very situation which )-og — the language of the Act prevents. = ~ r hand, again pursuant to World’s views, e Board could grant the new entrant both certifi- cates if the Board decided the supplemental certifi- cate case before the route case. Frankly, we think that it is inconceivable that Congress could have the Board should not arbitrarily determin j plication to consider first, but de sandien = ~_, tion so as to carry out the limited statutory purpose of protecting supplemental carriers from domination by lar carriers. We presume, for example, that a pros- pective new entrant would have a strong case in favor 7 having the supplemental application considered first, the route authority at stake would not be significant a to raise a danger of undue domination. Of course the route application were filed subsequent to award of the supplemental certificate, then the problem would ** [Continued] Mr. Boyd. Yes, sir. Id. at 33. In addition, Senator S , , parkman appeared ness and expressed his feeling “that this comedies foal make every effort to protect the su seli pplemental tru small businesses of civil aviation.” Id. at — ae 26a i lementa! carrier ise.” And, in any event, the supp: a avned to convince the Board that its ne responsibilities will not be neglected if it acquires rou authority. We reverse the order of the Board dismissing 4 tioner’s application, and remand for proceedings not in i is opinion. consistent with this op 90 te 00 evdeved. | if i i te authority a3 ld argues that if it were to acquire rou it sonia aa te renewal of = one ait ey, authority under section 401(g), S.C. — Bente n t be constrained by the restri ion it ti at is unnecessary to decide this question, < en the posture of the case before us. We note, — er, ; i World’s permanent supplemental authority would no affected by the 401(d) (3) restriction. 27a APPENDIX III 76-1-88 Unrtep States or AMERICA Crvm. Agronavutics Boarp Wasurneton, D. C. Docket 27693 Served: January 23, 1976 — Application of World Airways for a Certificate of Public Convenience and Necessity Decided: January 23, 1976 World Airways’ application for a certificate to engage in transcontinental regularly scheduled route service dis- missed. Held: The Board does not have authority to issue a supplemental air carrier certificated route au- thority without requiring the surrender of carrier’s authority to engage in supplemental air transporta- tion. APPEARANCES: Frank J. Costello and Jerrold Scoutt, Jr., for World Airways. J. Kerwin Rooney for Oakland Parties. Reuben B. Robertson, III for Aviation Consumer Ac- tion Project. Alexander P. Humphrey, IV for U.S. Department of Transportation. Elliott M. Seiden for Department of Justice. Ky P. Ewing, Jr. for American Airlines and Trans World Airlines. Howard A, Pulsifer for United Air Lines. Ronald B. Natalie for Northwest Airlines. 7 ee ee 28a Jerry W. Ryan for Braniff, Eastern, National, Pan American and Western. Paul S. Quinn for the American Society of Travel Agents. OPINION By Tue Boarp: Background and Conclusions The central focus of this opinion is on whether the Board may lawfully issue a route certificate to a supplemental air carrier without requiring the surrender of the carrier’s supplemental authority. The legal question has been raised in connection with World Airways’ application in this docket for a certificate of public convenience and necessity to provide scheduled air transportation between the coterminal points Newark, N.J. and Baltimore, Md., on the one hand, and Oakland and Ontario, Calif., on the other hand. World proposes a high- density, high-load-factor service, featuring a one-way fare of $89.00 per passenger and a number of marketing inno- vations. World has also filed a motion for an expedited hearing on its application. Answers in support of World’s motion were filed by numerous governmental, civic and private entities, and by United Air Lines (one of the three scheduled carriers in the transcontinental markets). Answers in opposition were filed by American Airlines and Trans World Airlines (the other two incumbents) and by Northwest Airlines. Each of the three objecting carriers raised as a threshold issue the question of whether the Act bars a supplemental air car- rier from receiving a route certificate. In Order 75-7-2, the Board stated that in view of the legal objections presented it perceived an obligation on its part to render an interpretation of its statutory authority, 29a and that it would be more conductive to the orderly admin- istration of its business if the legal issues were settled before an evidentiary hearing was undertaken. Accord- ingly, the Board requested the filing of briefs by interested persons on the following issues: 1. Whether the Board may issue a certificate for regu- lar route air transportation under section 401(d) (1) or (2) of the Act to a carrier holding a certificate for supplemental air transportation under section 401(d)(3) of the Act without requiring the surrender of the latter. 2. Whether the Board may issue an exemption under section 416 of the Act to World to perform the sched- uled air transportation proposed in World applica- tion. The Board also stated that if it determined that it had the legal authority to grant the relief requested it would set World’s application for expedited hearing because, inter alia, the application is unique and could have far- reaching consequences. However, the Board explained that if it determined that it had no such authority, it would dis- miss World’s application. ‘‘Such action would enable World to seek judicial review. ...’’ Order 75-7-2, p. 3. American and Trans World, the American Society of Travel Agents (ASTA), the Aviation Consumer Action Project (ACAP), ‘‘Certain Trunkline Carriers’’* the De- partments of Justice (DOJ) and Transportation (DOT), Northwest, the ‘‘Oakland Parties,’’? Overseas National Airways and Saturn Airways, Frans International Air- lines, United, and World Airways have filed briefs in re- 17.e., Braniff Airways, Eastern Air Lines, National Airlines, Pan American World Airways, and Western Air Lines. *7.e., The City of Oakland, Calif., Port of Oakland, and the Oakland Chamber of Commerce. Voy wees ie ok lis Cee | ef. ee ————eO 30a sponse to the Board’s order. Oral argument has been heard, and the legal issues stand submitted for our deci- sion. After full consideration of all matters presented, the Board is of the opinion that as a matter of law it does not have the authority to issue a route certificate to a supple- mental air carrier without requiring the surrender of the carrier’s supplemental authority.’ We now turn to a discussion of our findings and con- clusions. 2. General Considerations—Section 401(d)(3) of the Act Section 401(d) of the Act authorizes the Board to issue two types of air transportation certificates: (1) certificates to engage in regularly scheduled air transportation (401 (d)(1) and (2)), and (2) certificates to engage in supple- mental air transportation (Section 401(d)(3)). Section 401(d)(3) provides: (3) In the case of an application for a certificate to engage in supplemental air transportation, the Board may issue a certificate, to any applicant not holding a certificate under paragraph (1) or (2) of this subsec- tion, authorizing the whole or any part thereof, and for such periods, as may be required by the public con- venience and necessity, if it finds that the applicant is fit, willing, and able properly to perform the transpor- tation covered by the application and to conform to the provisions of this Act and the rules, regulations, and requirements of the Board hereunder. Any cer- tificate issued pursuant to this paragraph shall con- *Since the Board has concluded that it may not lawfully au- thorize a supplemental air carrier to simultaneously hold a route certificate, and since World has not applied for exemption au- thority and has manifested no intention of doing so, we shall lay the 416 question aside here without further comment, and shal! focus our discussion on the dual certification issue. 3la tain such limitations as the Board shall find necessary to assure that the service rendered pursuant thereto will be limited to supplemental air transportation as defined in this Act. World’s principal contention is that Section 401(d) (3) clearly and unambiguously does not prohibit a supplemen- tal air carrier from simultaneously holding route author- ity. Thus, it maintains that the ‘‘ plain meaning of this pro- vision is that a scheduled carrier may not obtain a supple- mental certificate, not vice versa .. .,’? and ‘‘[mJore im- portantly, the route certification provisions, Section 401 (d)(1) and (2), do not contain any limitation on who may obtain a certificate other than the standard requirement that the applicant be fit, willing and able. In World’s opinion, this should be dispositive of the question.’’ * Although World argues that the Board need not look beyond the literal language of Section 401(d) (3), it never- theless also maintains that the legislative history is consis- tent with its position. In World’s view that history shows that Congress deliberately barred route carriers from ac- quiring supplemental certificates, but contains nothing that indicates that Congress intended to bar the reverse situ- ation. It may be conceded that a literal reading of Section 401(d)(3) supports World’s position. However, we do not agree with World that the literal language of that statu- tory provision is in the circumstances presented disposi- tive of our legal inquiry. On the contrary, as World itself appears to recognize, and as the usual canons of statutory construction otherwise require, the language of that statu- tory provision must be read in consonance with other aids to statutory interpretation in order to discover its true legislative intent or meaning. Indeed, it is a recognized * World Brief at 3 & 6. ie 2 we ee 32a principle of statutory construction that if the literal im- port of a statutory provision is inconsistent with legisla- tive intent, or leads to unreasonable results, the words of the statutory provision must be modified by the intent of the legislature. United States v. American Trucking Assoc., Inc. 310 U.S. 534 (1940). Southland Gasoline Co. v. Bayley, 319 U.S. 44 (1943); Chicago and Southern Air Lines, Inc. v. Waterman Steamship Corp., 333 U.S. 103 (1948) ; Mastro Plastics Corp. v. Labor Board, 350 U.S. 270 (1956). Applying this principle, we find that our empowering legislation does not permit an air carrier to simultaneously hold certificates for regular route and supplemental air transportation. As we shall demonstrate, the concept of dual certification cannot be reconciled with pertinent pro- visions of the Act and, if accepted, would produce arbi- trary and unreasonable results which Congress could not have intended. Moreover, the plain implication of these provisions is that Congress intended to create a distinction between supplemental and route carriers and, pursuant to that distinction, intended to prevent the same carriers from simultaneously engaging in regular route and supple- mental air transportation. The legislative history supports this statutory interpretation. It demonstrates that Con- gress, in passing these amendments, contemplated a broad regulatory scheme whereby supplemental air carriers would be certificated as a separate and distinct class of air carrier specializing in ‘‘charter trips.’? On the one hand, Congress (as correctly noted by World) protected the supplemental class from possible domination by the larger route carriers by prohibiting the route carriers from acquiring certificates to engage in supplemental air transportation. On the other hand, Congress prohibited the supplemental air carriers from engaging in regularly scheduled air transportation pursuant to a certificate of public convenience and necessity in order to ensure that the newly created class would ‘‘supplement,’’ é.e., comple- 33a ment, not duplicate, the service provided by the regular route carriers. Finally, we believe the postenactment his- tory of the 1962 supplemental legislation demonstrates that the statutory mandate limiting supplemental air car- riers to charter service has been clearly understood by the courts, and, in fact, by Congress in subsequent legislation. We now turn to a detailed consideration of our findings and conclusions. Dual Certification Cannot be Reconciled With Either the Letter or the Purpose of the 1962 Amendments to the Act. It is a cardinal rule of statutory interpretation that a section of a statute is not to be read in isolation from the content of the whole Act, and that the courts are guided by the provisions of the whole law. Mastro Plastics Corp. v. Labor Board, supra; United States v. American Truck- ing Assoc., Inc., supra; Labor Board v. Lion Oil Co., 352 U.S. 282 (1957); Richards v. U.S. 369 U.S. 1 (1962). As the Supreme Court explained in Power Comm’n. v. Pan- handle Eastern Pipe Line Co., 337 U.S. 498, 514 (1949): ‘**If possible, all sections of the Act must be reconciled so as to produce a symmetrical whole.’’ Accordingly, when Section 401(d)(3) is read in part materia with other rele- vant sections of the Act, especially those that were con- temporaneously enacted with Section 401(d) (3), we believe it is evident that Congress intended that the supplemental air carriers should provide a separate and distinct class of service and intended to prevent the same carrier from simultaneously holding certificates authorizing regular route and supplemental air transportation. To begin with, Section 401(a)(6) of the Act had author- ized those carriers holding certificates issued under Sec- tion 401(d)(1) or (2) to engage in charter trips and special! services without regard to the points named in their cer- tificates. The 1962 supplemental air carrier legislation ee ee ae ee eee 34a amended this section to deny supplemental air carriers this authority. Section 401(n) of the Act either authorizes, or imposes, a number of special requirements relating to sup- plemental air carriers that are not applicable to route car- riers. These include provisions relating to insurance, mini- mum service, and ‘‘eontinuing fitness.’’ Section 406(b) had authorized the payment of subsidy for all carriers. That section was also amended by the 1962 supplemental legis- lation to preclude subsidy for supplemental air carriers. If World were to receive a certificate under Section 401 (d)(1) or (2) and at the same time was permitted to retain its supplemental certificate, it would still be a supplemental carrier by definition. The wholly anomalous result would be that the carrier would at one and the same time be (a) granted and denied Section 401(e)(6) authority; (b) sub- ject to and not subject to Section 401(n) requirements; and (c) eligible and not eligible for subsidy. We think these sections demonstrate that Congress did not intend to per- mit the same carrier to hold both route and supplemental air carrier certificates. Indeed, no citations are needed for the proposition that statutes are to be construed to avoid unreasonable, let alone absurd, results. World maintains that its interpretation of Section 401 (d)(3) and the provisions of Sections 401(e)(6) and 406(b) are ‘‘capable of coexistence,’’ since the latter may be read as applicable either to World’s route operations or to its supplemental operations. However, Sections 401 (e)(6) and 406(b) permit no such reasonable construction. They unequivocally speak to supplemental air carriers, not supplemental operations, and create a clear distinction be- tween the supplemental and route carrier classes by pro- hibiting supplemental air carriers from receiving benefits and engaging in services specifically reserved for the route carriers. Similarly, Section 401(n) reinforces what we per- ceive to be the intended distinction between the classes by imposing certain unique requirements on supplemental air carriers, not merely supplemental operations. 35a It is equally significant that Congress, in enacting Sec- tion 417, appears to have contemplated special conditions which must be met before a supplemental carrier can per- form individually ticketed service—conditions which World describes as ‘‘extraordinary.’’ The existence of Section 417 confirms the manifest statutory distinction be- tween supplemental air carriers and route carriers and provides equally strong evidence that Congress did not in- tend supplemental carriers to perform route transporta- tion on a regular basis. Finally, a number of trunk carriers maintain that World’s interpretation of Section 401(d)(3), if accepted, would produce a further anomaly. Specifically, it is argued that if World obtains a route certificate it could not, there- after, be issued new or renewed authority because Section 401(d)(3) literally prohibits the issuance of a supplemen- tal certificate to a carrier holding route authority.’ World disagrees, arguing, imter alia, that section 401(g), not 401(d), governs renewed or expanded supplemental au- thority. Therefore, in its view, a supplemental carrier may obtain a route certificate under 401(d)(1) or (2), and later seek new or renewed supplemental authority under section 401(g). We believe that World’s argument elevates form above substance. For example, pursuant to World’s views, if a prospective new entrant into air transportation filed simultaneous applications for route and supplemental cer- tificates it could not be awarded both certificates if the route case were decided first because it would then be a scheduled carrier seeking a supplemental certificate—the very situation which World concedes the language of the Act prevents. On the other hand, again pursuant to 5 Significantly, World’s overseas and foreign supplemental air transportation authority are temporary. That carrier seeks renewal of that authority and new supplemental authority in the Supple- mental Renewal Proceeding, Docket 23944, while it contemporane- ously seeks route authority in this proceeding. 36a World’s views, the Board could grant the new entrant both certificates if the Board decided the supplemental certifi- cate case before the route case. Frankly, we think that it is inconceivable that Congress could have meant that such arbitrary procedural circumstances should control the fun- damental role that a carrier should play in the air trans- portation system. In our judgment, there is considerable merit in the trunk carriers’ contention that the issuance of route authority to World could potentially vitiate much of World’s supplemental air carrier authority and that this result cannot be reconciled with the Congressional purpose of certificating supplemental air carriers. In summary, it is our conclusion that the language of those statutory provisions which are relevant and material to resolution of the legal question at issue establish that a single carrier may not simultaneously hold one certificate issued under Section 401(d)(1) or (2) and another issued under Section 401(d)(3). On the other side of the coin, it is evident that World’s contrary interpretation of the law would produce arbitrary and unreasonable results that Congress could not have intended. Board Policy and Practice Prior to the 1972 Supplemen- tal Air Carrier Legislation Precluded Dual Certification. Prior administrative policy and practice represents an- other accepted source of guidance in determining how statutes should be construed and applied. Transcontinental and Western Air, Inc. v. C.A.B., 336 U.S. 601 (1948); Delta Air Lines v. Summerfield, 347 U.S. 74 (1954); W. T. Grant Co. v. Fleming, 159 F.2d 720, 723. (U.S. Em. Ct. App., 1946). It is significant, therefore, that it was the Board’s policy for a period antedating the 1962 supple- mental air carrier legislation to preciude dual certification. For example, in 1955, the Board issued its decision in the so-called ‘‘ public interest’? phase of the Large Irregular 37a Air Carrier Investigation, 22 C.AB. 838. It determined that the large irregulars, thereafter to be called supplemental air carriers, should be permitted to conduct expanded op- erations and, pending disposition of the remaining phases of the proceeding, it granted all applicants an exemption authorizing the new operations. This grant was subject, however, to the following condition: ‘*4. That the exemption . . . shall terminate 60 days after the Board makes a final disposition of the appli- cation or applications of each such carrier in this proceeding: Provided, however, That in the event a certificate of public convenience and necessity is issued to any supplemental air carrier the exemption granted herein to such carrier shall terminate on the date such certificate becomes effective.’’ (22 C.A.B. at 876, em- phasis added). One of the carriers receiving this exemption was Trans Caribbean (TCA). By the time the Board decided the re- maining phases of the case, granting certificates for sup- plemental operations to the carriers found qualified, TCA had received a certificate as a regular route carrier. With respect to its application in the Large Irregular case, the Board said (Large Irregular Air Carrier Investigation, 28 C.A.B. 224, 255 (1959) : ‘*As regards Trans Caribbean Airways, whom the examiners ... found well qualified on the facts before them, the Board in its recent decision in the Service to Puerto Rico Case [26 C.A.B. 72] certificated this ———@garrier for a route between New York and Puerto Rico. ‘The established policy of the Board is that au- thorization for irregular or supplemental carriage ter- minates when the carrier receives a route certificate. This is because supplemental air transportation must retain a character fundamentally distinct from and supplemental to, rather than duplicative of, the serv- eS» =~ = ey «_ —_~ ~~ — Ee CU ee a a Pet 38a ices provided over the Nation’s cert.ucated route net- work, which is the basic component of our national air transportation system. This distinct and supplemen- tal character would be undermined if carriers which assume the burdens of maintaining portions of the basic route network were to continue to perform sig- nificant transportation supplemental to that network. The best energies of a route certificate holder are ex- pected to be devoted to the development of its route, and it would be inconsistent to entertain this expec- tation if the carrier also holds broad supplemental authority which it is encouraged to exercise to the ex- tent of its capabilities and the available markets.”’ The Board concluded, therefore, that Trans Caribbean’s status as a regular route carrier precluded it from also being a supplemental carrier. We believe that the Board’s historic proscription against permitting the same carrier to hold both regular route and supplemental air carrier authority is entitled to significant weight in the circumstances of this case. First, it is consistent with our finding that the pertinent provi- sions of the Act preclude dual certificaion. Second, there is little question that Congress in considering the 1962 sup- plemental air carrier legislation was aware of the Board’s policy.’ Third, there is no evidence that Congress intended to disturb that policy. On the contrary, as we shall now explain the legislative history of the 1962 supplemental air * For example, in dealing with a proposed amendment to the Act involving ‘‘grandfather’’ rights, the Conference Report noted that: ‘The conference committee is informed that this provision de- seribes an air carrier which was originally certificated as a supple- mental carrier and subsequently certificated as a cargo carrier. Under Board Regulations such carrier could not hold two types of certificates; therefore the supplemental certificate initially issued was cancelled.’’ Conference Report, H.R. Report No. 1950, 87th Cong. 2nd Sess. at 15, (1962). 39a carrier amendments shows that Congress expected that policy to continue. Legislatiwwe History and Postenactment History In the previous sections of this opinion we have focused primarily on the s.a.ute itself and on the Board’s policies antedating the passage of the 1962 supplemental air car- rier legislation as they bear upon the issues in this case. The history of that legislation adds further support for our conclusion that the Act does not vest in this agency the authority to permit the same carrier to hold regular route and supplemental air carrier authority. a. Legislative History—Congress Acts To Prohibit Supplementals From Operating Regularly Scheduled, Individually Ticketed, Services. One of the most important, and hotly contested, issues before Congress in connection with the 1962 supplemental air carrier legislation was whether, and to what extent, supplemental air carriers should be permitted to operate regularly scheduled, individually ticketed air transporta- tion services. Prior to the 1962 legislation, the large irreg- ular carriers had been allowed to operate 10 individually ticketed flights per month between any two points in the United States. The 1962 bill submitted by the Board would have permitted the supplementals to continue this type of service on a permanent certificated basis. The Board also supported legislation that would have permitted supple- mentals to provide individually ticketed services pursuant to ‘*temporary operating authorizations’’ (1.e. a 30-day award under what is now Section 417). The scheduled car- riers, on the other hand, supported a bill which would have precluded any scheduled service by supplemental carriers. Both options were considered by the Congress. Initially the Senate approved legislation permitting the Board to certificate supplementals to provide permanent ee ee SS Ss eee ee ee a ee 8 ee on | Pal 40a individually ticketed operations without any reference to the specific number of flights that they could provide. The Senate’s bill would have merely required the Board ‘‘to include in the certificate such terms and limitations as it finds are necessary to insure that such services will not result in significant diversion of traffic from the certifi- cated route carriers authorized to render service between the same points.’’’ Explaining this legislation on the floor of the Senate during the initial debate on the Senate version, Senator Monroney (Chairman of the Senate Aviation Subcommit- tee and floor manager) entered into the following discus- sion with Senator McCarthy: ‘Mr. McCarthy: I have a question with regard to Sec- tion 401 and I pose this question to the Senator from Oklahoma. If that section is retained, could the CAB certificate a supplemental airline to provide scheduled service between New York and Los Angeles, or be- tween any other pair of cities? Mr. Monroney: Subject to such limitations as were required to protect the scheduled certificated carriers it could. Furthermore, under Section 417 if the number of planes available were inadequate, it might be neces- sary to authorize daily service for a temporary period by supplemental carriers to supplement the regular service.’ ® The service suggested by Senator McCarthy bears a close resemblance to the service proposed by World in this docket. However, Congress declined to pass the Senate version. Instead it approved the House version of the sup- plemental amendments which, except for the narrow grant of authority contained in Section 417, limited supplemental 7 See Senate Report No. 688, 8th Cong., Ist Sess., at 7 (1968). ® 107 Cong. Rec. 17165 (August 28, 1961). 4la carriers to ‘‘charter trips. .. .’” The Conference Report in its comments on ‘‘individually ticketed and waybilled serv- ices,’’ explained: ‘Under the House amendment, the term ‘‘supple- mental air transportation’’ did not include individ- ually ticketed and waybilled services, therefore sup- plemental air carriers could not have engaged in such services on a permanent basis. Under the Senate amendment, such term did include individually tick- eted and waybilled services and therefore such car- riers could have engaged in such services on a perma- nent basis. The substitute agreed to in conference adopts the pro- visions of the House amendment with respect to the prohibition of individually ticketed and waybilled services on a permanent basis.’’® In sum, Congress had before it bills that would have authorized the Board to certificate a supplemental air car- rier to provide service similar to that proposed by World herein. Congress declined to pass that legislation. We point out that on brief World concedes that Congress has prohibited ‘‘supplemental air carriers’’ from engaging in certificated individually ticketed operations pursuant to their supplemental certificates. However, World argues nonetheless that Congress has not prohibited supplemental air carriers from acquiring route certificates. It cites the following excerpt from the House Report on the 1962 sup- plemental legislation in support of its proposition: ‘*It is the committee’s view that the granting of such temporary special operating authority [under Section 417] by the Board should not be regarded as constitut- ing any vested right or interest in the route by the carrier so authorized. If the insufficiency of capacity is * House Report No. 1950, 87th Cong., 2nd Sess., at 14 (1962). a i | 3 42a a chronic problem over the particular route, and can be solved only by an additional carrier, the solution should be in permanent or temporary certification un- der Section 401(d)(1) or (2) of existing laws.’’ * We have two brief comments with respect to World’s contention. First, if, as World concedes, Congress has pro- hibited ‘‘supplemental air carriers’’ from engaging in scheduled service under the supplemental licenses, it makes little sense to conclude that Congress has, nevertheless, permitted the supplementals to engage in scheduled air transportation by acquiring a route certificate. This result would permit World and other supplementals to do indi- rectly that which the legislative history shows they may not do directly. Similarly, if a supplemental carrier obtains regular route authority, there would be no substantive dis- tinction between the scheduled and supplemental classes— a result which we also believe is inconsistent with Congres- sional intent. Second, we believe the excerpt from the House Report relied upon by World also permits the infer- ence (which we find more reasonable overall) that the reference to certification under section 401(d)(1) or (2) was intended to cover the ordinary route carriers rather than the supplementals or both the supplementals and route carriers. The fact is that the House version of the 1962 supplemental legislation limited the supplementals to individually ticketed services under Section 417 alone. In- deed, as the House Report itself pointed out as to the new Section 417: ‘*It would be under this provision of the committee substitute that supplemental air carriers could be au- thorized to engage in individually ticketed and indi- vidually waybilled operations.’’ ™ *° House Report No. 1177, 87th Cong., Ist. Sess., at 12 (1961). ** House Report, supra, at 18-19. 43a b. Postenactment History (1) The Determination of the Courts of Appeals In 1966, the Court of Appeals for the District of Co- lumbia Circuit reviewed the Board’s award of domestic inclusive-tour authority to the supplemental carriers and determined that the Act permitted the Board to authorize supplemental air carriers to provide inclusive-tour char- ters. American Airlines, Inc. v. CAB., 365 F.2d 939 (D.C. Cir. 1966). The court reached its result after conducting an extensive review of the legislative history of the 1962 supplemental legislation. On the basis of that review, the Court stated: ‘*An overall reading of the legislative history indi- cates that the three primary purposes of the 1962 leg- islation were: to eliminate irresponsible supplemen- tals, especially those violating safety regulations; to stabilize the operating authority of the supplementals under certificates, including authority to authorize ‘charter trips’ on a broad enough basis so that through performance of civilian and military charter operations the supplementals might remain viable eco- nomic organizations capable of meeting supplemental transportation needs and able to comply fully with safety requirements; to maintain the regulatory scheme of the Federal Aviation Act and the protection of the certificated carriers such as the petitioners by eliminating unregulated individually ticketed point-to- point competition from the supplementals.’’ ” Thereafter, the Board, with the approval of the Presi- dent, granted international inclusive-tour authority and the award of that authority was reviewed by the Second Circuit Court of Appeals. That court, reviewing the same 12 American Airlines v. C.A.B., supra at 944-5, Footnote omitted, emphasis added. ; j ‘ 7 ; B : ae Pe ee. ek ee ae Ce Se Te |) a es 44a legislative history, concluded that the term ‘‘charter trips’’ was not intended to embrace inclusive-tour charters. In reaching that conclusion, the court stated: ‘‘The conflicting House and Senate bills were sub- mitted to a Conference Committee which reported out a substitute bill which was ultimately enacted as Pub- lic Law 87-528. The substitute followed the House ver- sion, eliminating the definition of the term ‘charter’ found in the Senate bill. It is clear from the confer- ence report that one purpose of the committee in adopting the provisions of the House bill was to pro- hibit individually ticketed and waybilled services on a permanent basis. .. .’’ Pan American World Airways v. CAB, 380 F.2d 770, 779, (2d Cir. 1967). The Supreme Court affirmed the Second Cireuit’s decision by a divided vote. World Airways v. Pan American, 391 U.S. 461 (1968). The difference in judicial interpretation turned on whether or not inclusive-tour charters were ‘‘charter trips’’ within the meaning of the Federal Aviation Act. Implicit in both opinions, however, is the more fundamental notion that supplemental air carriers are limited to providing “charter trips’? and may not offer individually ticketed services. (2) The 1968 Amendment to the Federal Aviation Act In 1968, Cong.ess amended the Act in order to make it clear that supplemental air carriers were authorized to conduct inclusive-tour charters. The House and Senate bills were similar in major respects. Importantly, inclu- sive-tour charters were codified as a recognized form of charter rather than as an exception to the authorization of ‘charter trips.’’ See Section 101(34). In the words of the House Report accompanying H.R. 17685: 45a ‘*The last sentence of the revised definition of ‘supple- mental air transportation’ was added by the commit- tee to assure that supplemental air carriers could not directly sell or offer for sale tickets for an inclusive tour to individual members of the general public. Jn other words, ut keeps such carriers out of the business of offering individually ticketed services in competi- tion with the scheduled carriers. It also prohibits such carriers from making such sales indirectly through a tour operator authorized by the Board to organize and sell an inclusive tour if such tour operator has any interlocking relationship with the carrier or if both the carrier and the tour operator are under common control by any other person. In short, no supplemental air carrier will be permitted to do indirectly what wt is prohibited from doing dircctly.’’* Congress approved the House version of the 1968 sup- plemental legislation. Summary In the previous sections of this opinion we have ex- plained that our inquiry into pertinent statutory provi- sions, Board policy and precedent, legislative history, and postenactment history discloses that Congress did not in- tend to vest in the Board the power to authorize supple- mental air carriers to hold certificates for regular route and supplemental air transportation. In these circum- stances, we find that it is necessary to depart from the literal language of Section 401(d)(3) in order to effectuate legislative intent. Therefore, in consonance with our order inviting comments on the legal issues, we shall dismiss World’s application in this docket. Several matters relat- ing to that dismissal warrant comment. 18 House Report No. 1639, 90th Cong. 2d Sess. (1968). Emphasis added. Pe EEE a eee. eae aS ee 46a First, World, and those supporting its position, argue that the purpose of the route certification provision of the Act (Sections 401(d)(1) and (2)) is ‘‘to open the door to all potential applicants” for air transportation authority, and therefore, that a decision by the Board precluding World from acquiring route authority would be inconsis- tent with that purpose. World cites Civil Aeronautics Board v. State Airlines, Inc., 338 U.S. 572, 578 (1950) in support of its interpretation of Sections 401(d)(1) and (2). The short answer to World’s contention is that what- ever the merits of its views of the route certification provi- sions in other contexts, Congress has, in our judgment, determined that supplemental air carriers shall not, pur- suant to Section 401, engage in regularly scheduled air transportation and it is our duty to obey that injunction. It is significant that the court case cited by World was decided prior to the 1962 supplemental legislation, and, of course, does not purport to address the statutory limitation that we have found to exist in this case. Second, one of the parties to this proceeding opposing World’s applications on legal grounds states that even if the Board concludes that it does not have the authority to permit World to acquire a route certificate, it should nev- ertheless go forward with a full evidentiary hearing on the merits of World’s application and reserve decision on the legal issues herein until completion of that hearing. We have rejected that course of action. The proper adminis- tration of the Board’s business and fundamental stand- ards of fairness in administrative proceedings require that the Board decide the legal issue it has before it now, and in a manner that avoids wasteful expenditures of time, effort and other resources and permits any party to this proceeding to seek timely judicial review of the Board’s decision, if so desired. This Board has afforded, and will continue to afford, careful consideration to new service proposals that inure to the benefit of the traveling public 47a and this nation’s air transportation system when such proposals are in accord with statutory requirements. We need not conduct a special proceeding for the purpose of demonstrating our interest in such matters. Finally, we would emphasize that today’s decision ad- dresses only the question of the extent of the legal author- ity that Congress has vested in the Board under present law. Insofar as it may be argued that the public interest now requires a change in that authority, so as to permit the Board to grant or deny applications such as World’s on their individual economic merits, such arguments must of necessity be addressed to the Congress. Accordingly, in view of the foregoing, we find that: 1. World’s application in Docket 27693 should be dis- missed. 2. Except to the extent granted or dismissed herein, all motions and requests should be denied and the proceeding in Docket 27693 should be terminated. An appropriate order will be entered. Rosson, Chairman, O’Meuia, Vice Chairman, Mrvertt, Trimm and West, Members, concurred in the above opinion. 48a Order 76-1-88 Unrrep States or AMERICA Civm AgRonauTics Boarp Wasuinerton, D. C. Adopted by the Civil Aeronautics Board at its office in Washington, D.C., on the 23rd day of January, 1976 Docket 27693 Application of Worvp Arrways, Inc. for a certificate of public convenience and necessity. ORDER Oral argument having been held on certain legal ques- tions arising from the application of World Airways in the above-entitled proceeding, and the Civil Aeronautics Board, upon consideration of the arguments of the parties, having issued its opinion containing its findings and con- clusions and decision which is attached hereto and made a part hereof, Ir Is OnperRED Tat: 1. World’s application in Docket 27693 be and it hereby is dismissed; and 2. Except to the extent granted or dismissed herein, all motions and requests be and they hereby are denied, and this proceeding be and it hereby is terminated. By the Civil Aeronautics Board: Epwin Z. Hotianp Secretary (SEAL) 49a Crvoi Agronavtics Boarp Wasuineton, D.C. 20428 For Release: On or After Contact: Ron Aaron Eisenberg Friday 202/382-6031 (Office) January 23, 1976 202/686-0077 (Home) CAB 76-8 CAB Dentes Appiication ror Low-Cost Coast-To-Coast SERVICE Wasuinoeton, D. C. (January 23, 1976)—The Civil Aero- nautics Board today dismissed an application by World Airways to offer scheduled transcontinental air service be- tween Newark, New Jersey and Baltimore, Maryland on the one hand, and Oakland and Ontario, California on the other, for a one-way fare of $89.00 per passenger. The CAB, in dismissing World’s application, said it does not have the authority under the Federal Aviation Act to issue to a supplemental air carrier a certificate to engage in regularly scheduled air transportation as long as the carrier continues to hold its supplemental certificates. In making this decision, the Board issued the following statement: (Attached)) Order 76-1-88 ee es ees Se ee a ee re ae ee Se et Tt Tete | 50a Crvim Agronautics Boarp SupPLEMENTAL STATEMENT to Order 76-1-88 January 23, 1976 The Board has today issued Order No. 76-1-88 dismiss- ing World Airways’ application to engage in low-fare transcontinental scheduled air service. That order holds that under existing provisions of the Federal Aviation Act the Board cannot grant World Airways a certificate to perform regular scheduled route operations while World continues to hold its existing certificates for supplemental air transportation. From our study of the Act and the legislative history, the Board has determined that no other legal conclusion as to the scope of its authority is possible. This statutory limitation on the Board’s authority, which precludes action on the substantive merits of World’s application, or of other similar applications rais- ing the same issue, is a matter which deserves Congres- sional review. Significant changes have taken place since 1962, when the provisions which today preclude the same carrier from holding both supplemental and route certificates were adopted. Various regulatory factors may demand greater attention now than was the case at the time of the enact- ment of these provisions. Careful analysis would, of course, have to be given to the implications of. legislative change for the air transport s.stem. However, the consid- erations which led Congress to inandate a distinct class of, supplemental carriers, and in all cases preclude the same carrier from holding both kinds of certificates, may no longer be as persuasive. On a different point, it would seem that the creation of an economic regulatory agency rests on the determination 5la that a specialized body with expertise and the necessary regulatory powers will, over time, be best equipped to deal with the complexities and changing economic conditions affecting the subject matter of its jurisdiction. The ques- tion here becomes, as a matter of legislative and public policy, how broad a range of matters a regulatory agency should be empowered to determine on their economic and regulatory merits. These considerations raise the questions whether the existing statutory limitation should not be examined to assess whether it continues to serve important and useful regulatory and public purposes. Accordingly, without implying a view on the merits of any particular legislative proposal or on any application to provide air service, we believe that an examination by the appropriate Congressional Committees of the need to perpetuate in the present form or alter this limitation would be timely. Without at this time attempting to discuss the various issues, the Board would expect to offer its views on this matter at Congressional hearings which we anticipate will be held later this year on various aspects of the Fed- eral Aviation Act. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_1360%3A1. Public record. Not legal advice.