Amicus Curiae Brief — Delta Air Lines, Inc. v. Port Authority

: | penne Qeurt, U.S,

»\ BILLED

i

7

No. 87-333 | gBy 15) 987

JOSEPH F.SPARNIOL, JR.

IN THE CLERK

Supreme Court of the Gnited States

OCTOBER TERM, 1987

DELTA AIR LINES, INC.,

Petitioner

v.

Port AUTHORITY OF NEW YORK AND NEW JERSEY,

Respondent

BRIEF AMICUS CURIAE OF THE

AIR TRANSPORT ASSOCIATION OF AMERICA

IN SUPPORT OF THE PETITION FOR A

WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

JAMES E. LANDRY

(Counsel of Record)

GEORGE S. LAPHAM

Davip A. BERG

AIR TRANSPORT ASSOCIATION

OF AMERICA

1709 New York Avenue, N.W.

Washington, D.C. 20006

(202) 626-4156

Counsel for Amicus Curiae

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

Aattiate

QUESTIONS PRESENTED

1. May a local governmental agency limit the dis-

tance of non-stop airline flights, in view of section

105(aX1) of the Airline Deregulation Act of 1978, 49

U.S.C. app. § 1305(aX(1), which prohibits states and

interstate agencies from regulating the “rates, routes,

or services of any air carrier’?

2. Do the “‘proprietary powers”’ of airport operators

preserved by section 105(bX1) of the Airline Dere-

gulation Act, 49 U.S.C. app. § 1305(b\X1), include the

power to impose an extraterritorial restriction upon

the distance of non-stop flights?

8. Does a local governmental agency operating air-

ports have any jurisdiction over the use made by air-

lines of airport ‘landing slots” granted by the FAA

under 14 C.F.R. §§ 93.121-93.133?

TABLE OF CONTENTS

QUESTIONS PRESENTED .........ccccccssssssseeees SEIT NS

TE Ce TIE sncsechccscctsesessensasicsieeennssannesasinns

EAE OP DTT oiissenccccccscseccesescciccocinccscecesece

INTEREST OF AMicusS CUride ........sssseeeeeeeeeees Pas

STATEMENT OF THE CABE \..ccccvccccccsccccssccsscssccceccceses

REASONS FOR GRANTING THE WRIT ......cccccssssseeeeees

I.

II.

Il.

An Authoritative Construction Of Section 105

Of The Federal Aviation Act Is Essential To

The Effective Operation Of Deregulation ...

The Statutory Construction Given Section

105 By The Court Below Frustrates The Un-

derlying Congressional Intent ..............::0++

A. Section 105 Explicitly a inguishes Be-

tween Governmental Actions By A State

ncy And Proprietary Actions By Lo-

BITE OTTIGD .ncecccccncscesctsceqsesesencccnscceces

B. Contemporaneous Constructions Of Sec-

tion 105 By The Civil Aeronautics Board

Support the Distinction Between Govern-

. mental and Proprietary Powers Of State

And Local Authorities ..................0c000008

The Decision Below Creates The Potential

for Significant Disruption Of The National

Air Space System And Interference With In-

ES Sere

COCR TIN ccisitatiittinsistitciestiiiintle ica ornate teeiatisiniaineis

APPENDIX A: February 13, 1979 Letter Of C.A.B.

General Counsel Philip J. Bakes, Jr.

To Richard R. H , Director of

SESS ESET E SESH EHH EHH EE Ee

APPENDIX B: Tables Showing Effect Of Perim-

eter Rules If ) Proms At Certain

eee

10

12

14

la

TABLE OF AUTHORITIES

CASES: Page

Austin/San Antonio-Atlanta Service Investigation,

Be IN, ME I icin nnssncskssévadssascecncrnceesace’ 10,11

City of Long Beach v. AirCal, Inc., No. 86-2002,

certiorari denied, October 5, 1987 ...........0... 13

Western Air Lines Inc. v: Port Authority of New

York and New Jersey, 658 F.Supp. 952, 956

EERE TRI re a 7

STATUTES:

Airline Deregulation Act of 1978, Pub. L. No. 95-

I ORD sss esiessicSusoohopseiskedsoovenness passim

Federal Aviation Act, Section 105, 49 U.S.C. app.

Pe hibiiibbiecsbansih viksesesessecssens saiiieeaana igenliibenuaiiaiaten passim

Texas Ann. Civ. St. art. 46c-6, subd. 3, as amended

i setnieonenenies 8

N.Y. Unconsol. Laws § 6407, §§ 6631, et seg.

(McKinney 1979 and Supp. 1987) ............0... 9

REGULATIONS:

Implementation of Preemption Proviswns of the Air-

line Deregulation Act of 1978, PS-83, amending

14 C.F.R. §§ 339.110 and 399.111 (1979), 44

Fed.Reg. 9948 (Feb., 1979) ............ccccccccsscsseese 6,7,10

iv

Table of Authorities Continued

- Page

LEGISLATIVE MATERIALS:

H.R. Rep. No. 1211, 95th Cong., 2d Sess. (1978)

reprinted in 1978 U.S. Code Cong. & Admin.

PN Ie 5 iiccdinenseiaitncesinctibenindciiniatieancaians | 5

S.Rep. No. 631, 95th Cong., 2d Sess. (1978) ...... 5

123 Cong. Rec. (daily ed., N.149) Sept. 23, 1977,

8 BRR AEN Ee ON entry EEA 6

MISCELLANEOUS:

Ellett, Airport Access Issues, the Air and Space

Lryer, Dae TG Deh. scecccsssinsisnscvciecenecsese 2,3,7

Letter from Philip J. Bakes, Jr., C.A.B. General

Counsel, to Richard R. Heath, Director of Air-

ports, City and County of San Francisco, (Feb-

ee aeons, Se emaee 11,12

Airport Noise Control Strategies, FAA Report No.

FAA-EE-86-02 (May 1986) ..........c.eeeeeeseeeeeees 13

| IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1987

No. 87-333

DELTA AIR LINES, INC.,

Petitioner,

Vv.

Port AUTHORITY OF NEW YORK AND NEW JERSEY,

Respondent.

BRIEF AMICUS CURIAE OF THE

AIR TRANSPORT ASSOCIATION OF AMERICA

IN SUPPORT OF THE PETITION FOR A

WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

This brief of t8e Air Transport Association of Amer-

ica is filed with the consent of the parties. Letters

of consent from the parties have been filed with the

Clerk of the Court.

STATEMENT OF INTEREST OF AMICUS CURIAE

The Air Transport Association of America (here-

inafter ‘“‘ATA’’) is an unincorporated, non-profit trade

and service organization headquartered in Washing-

ton, D.C., representing the interests of the scheduled

| |

airline industry. ATA’s twenty-one U.S. members! ac-

count for more than 97% of the revenue passenger

miles and freight ton miles produced by U.S. sched-

uled passenger and cargo airlines. The combined do-

mestic and international passenger count in 1986 for

U.S. scheduled airlines was 418 million passengers.

The correct construction and application of the fed-

eral aviation laws is of critical importance to ATA

and its members. Of particular concern is the sta-

tutory provision at issue in this case as it functions

to protect the right of air carriers to have access to

the nation’s airports.

The issue of airport access is fast becoming the

most important economic issue facing the airline in-

dustry. It has been characterized by the Chief Counsel

of the FAA as “the most important issue facing avia-

tion in this country and [it] will remain so for at least

twenty years.’ Because of the natural tension be-

tween the goals of the Airline Deregulation Act of

1978? (hereinafter the “‘Deregulation Act’’) and locally

imposed restrictions, the scope given by the courts

‘ATA operator member airlines are: Alaska Airlines, Inc., Aloha

Airlines, Inc., American Airlines, Inc., Braniff, Inc., Continental Air-

lines, Inc., Delta Air Lines, Inc., Eastern Air Lines, Inc., Evergreen

International Airlines, Inc., Federal Express Corporation, The Flying

Tiger Line, Inc., Hawaiian Airlines, Inc., Midway Airlines, Inc., North-

west Airlines, Inc., Pan American World Airways, Inc., Piedmont Avia-

tion, Inc., Pacific Southwest Airlines, Southwest Airlines Co., Trans

World Airlines, Inc., United Airlines, Inc., United Parcel Service, and

USAir, Inc. Associate members are: Air Canada and Canadian Airlines

International.

? Ellett, Airport Access Isswes, The Air & Space Lawyer, Summer

1987, at 1, from a speech delivered to the ABA Forum Committee on

Air & Space Law, Fourth Annual Forum, October 1986.

* Pub. L. No. 95-504, 92 Stat. 1705 (1978).

to the express preemption provision of the Deregu-

lation Act has far reaching economic implications for

the nation’s air carriers.

In the past few years, local airport authorities have

formulated and imposed numerous types of access-

related regulations without the institutional concern

for the nation’s air transportation system that only

the FAA can provide. These regulations have led to

| numerous disputes and threaten to undermine the

goals and purposes of the Deregulation Act, disruvt

the smooth and efficient operation of the National

Air Space System, and interfere with the free flow

of the commerce of the United States. Unless clear

guidelines are. established defining the extent of local

authority, local regulations will proliferate even fur-

ther.

As further noted by the FAA’s Chief Counsel:

We in the FAA are concerned about [the

Western Airlines] decision. We are not will-

ing to concede that the current law can be

reconciled with a holding that a perimeter

rule, which is essentially an airspace regu-

lation, even in the context of a multi-airport

system, 1s not preempted by the Federal Gov-

ernment. We cannot condone or accept re-

strictions which, even if reasonable and non-

discriminatory, go beyond proprietors’ lawful

rights and enter the clearly federal domain

of regulation of the airspace or regulate a

carrier’s routes, rates, or services.

Ellett, supra, n.2, at 19 (emphasis added).

A Proper resolution of the issues presented by this

case is necessary to ensure the integrity of the Der-

AAA NOT bade ata ts!

*

.

iaieeneenteaaeneemmaneal

egulation Act and to prevent the National Air Space

System from crumbling under the stress of restrictive

economic regulations, imposed by diverse local airport

authorities, under the guise of exercising proprietary

powers.

STATEMENT OF THE CASE

The underlying facts and procedural history of this

case are set forth in the petition filed herein and will

not be repeated here.

REASONS FOR GRANTING THE PETITION

I.

An Authoritative “‘onstruction of Section 105 of the

Federal Aviation .t Is Essential to the Effective Op-

eration of Deregulation

This case is important because proper construction

of Section 105 of the Federal Aviation Act (49 U.S.C.

App. 1305) is necessary to carry out the policy of

Congress in enacting the Deregulation Act. The rel-

evant portion of that section reads as follows (em-

phasis added):

Sec. 105.(aX1) Except as provided in par-

agraph (2) of this subsection, no State or

political subdivision thereof and no interstate

agency or other political agency of two or

more States shall enact or enforce any law,

rule, regulation, standard, or other provision

having the force and effect of law relating

to rates, routes, or services of any air carrier

having authority under title IV of this Act

to provide air transportation.

(bX1) Nothing in subsection (a) of this sec-

tion shall be construed to limit the authority

of any State or political subdivision thereof

or any interstate agency or other political

agency of two or more States as the owner

or operator of an airport served by any air

carrier certificated by the Board to exercise

| its proprietary powers and rights.

When Congress incorporated this provision in the

Deregulation Act, it was well aware of the threat to

deregulation posed by state and local authorities. The

legislative history of Section 4 of the Deregulation

Act, which added Section 105 to the Federal Aviation

Act, is replete with references to the confusion and

conflicts caused by state forays into the field of eco-

nomic regulation of air carriers.‘ To clarify the Fed-

eral Government’s assertion of jurisdiction over all

economic aspects of the domestic operations of fed-

erally certificated airlines, and thereby remedy the

“lack of specific provisions,’ Section 105 was included

in the Act as an express federal preemption provision

designed to shield the airline industry from locally

‘ Examples are:

“The lack of specific provisions [on the jurisdiction of the States

and the Federal Government over airlines] has created uncertainties

and conflicts ...” H.R. Rep. No. 1211, 95th Cong., 2d Sess. 16-17

(1978), reprinted in 1978 U.S. Code Cong. & Admin. News 3737,

3751; “Section 423 is a new section to the Federal Aviation Act

which the Committee has adopted to rationalize a confusing system

of dual regulation of federally certificated air carriers that has

evolved in some states.” S. Rep. No. 631, 95th Cong., 2d Sess.,

p. 98 (1978), accompanying S. 2493.

|

imposed economic regulations. The goal, therefore,

was not merely to end the confusion of dual regu-

lation; more importantly, for the long term, Congress

intended to assure that state and local authorities

would not move to fill the vacuum left by the ces-

sation of federal economic regulation of the national

air transportation system.® :

Congress did not enumerate the “proprietary pow-

ers and rights” addressed in paragraph (b) of Section

105, leaving it to the Civil Aeronautics Board (the

“Board”’), its successor the Department of Transpor-

tation, and the courts, to determine legitimate “pro-

prietary powers and rights” which would not impinge

upon the broad preemption of actions relating to rates,

routes and services.

Although the Board quickly addressed the func-

tioning of Section 105 in a formal Policy Statement

adopted on February 7, 1979,* it declined the oppor-

tunity to fully flesh out the meaning of the operative

phrase, “proprietary powers and rights.” The Board

noted that “[tJhe full scope of those rights and powers

has yet to be developed,”’ and warned that “proprie-

tary rights must be exercised to accomplish legitimate

interests in a manner that does not conflict with the

*“{I]t is possible that some states will enact their own regulatory

ligislation, imposing, utility type regulation on interstate airline service

and fares. The [Act] includes a specific statutory provision precluding

state interference with interstate service and fares.” 124 Cong. Rec.

H10007-8 (daily ed. Sept. 23, 1977) (Sectional analysis of H.R. 8813,

the Air Service Improvement Act of 1977, an early version of Dere-

gulation Act).

* Implementation of Preemption Provisions of the Airline Deregulation

Act of 1978, PS-83, 44 Fed.Reg. 9948 (Feb., 1979), amending 14 C.F.R.

Part 399 (1979).

7

-

provisions and policies of the [Airline Deregulation

Act].’”

To date, as the district court below recognized, the

extent of airport proprietor rights and powers has

not been defined precisely. Western Air Lines Inc. v.

Port Authority of New York and New Jersey, 658

F.Supp. 952, 956 (S.D.N.Y. 1986). In the address,

already referred to, given last year by the Chief

Counsel of the FAA, it was noted that:

The U.S. Supreme Court in City of Burbank

v. Lockheed Air Terminal, Inc., pointed out

in the now famous footnote 14 that a state

or local government, as proprietor of an air-

port, does have some authority to set noise

limits at its own airport. The real holding of

the case, however, was that Congress,

through the Federal Aviation Act and the

Noise Control Act of 1972, had preempted

non-airport proprietor control over aircraft

noise. Nothing in this case even hints at an

extension of airport proprietors’ rights into

an area outside that of controlling aircraft

noise.

The extent of these airport proprietors’

rights has to this day not been clearly de-

fined.

Ellett, supra n.2, at 19 (footnote omitted; emphasis

added).

Thus, nearly ten years after the Deregulation Act

was passed, it is evident that what Congress meant

by Section 105(bX1), in terms of an airport owner

appropriately exercising proprietary powers in its own

7 PS-83, supra, n.6, at 9 (emphasis added).

8

behalf or on behalf of its residential neighbors, has

not been adequately clarified.

Because of thé pivotal importance of Section 105

to the continued benefits of economic deregulation

and, therefore, the integrity of the Act so carefully

crafted by Congress, this Court should grant the pres-

ent petition and abort an emerging, judicially created

conflict. between the provision’s two subsections.

II. The Statutory Construction Given Section 105 by the

Court Below Frustrates The Underlying Congres-

sional Intent.

A. Section 105 Explicitly Distinguishes Between Govern-

mental And Proprietary Actions By State or Local

Authorities. |

The key to the proper construction of Section 105

lies in harmonizing the provision allowing state and

local authorities to exercise “proprietary powers and

rights” with the explicit preemption of governmental

power relating to “rates, routes or services.’”’ When

the Deregulation Act was passed, several states had

created agencies to regulate airline operations within

their states. Such state agencies regulated economic

aspects of the operations as well as safety matters.

See Texas Ann. Civ. St. art. 46c-6, subd.3, as

amended (Vernon, Supp. 1987), establishing the Texas

Aeronautics Commission.

Also recognized by Congress was the fact that vir-

tually every public airport is owned and operated by

a local governmental authority. In contrast to the

powers exercised by state regulatory agencies prior

to 1978, airport-authorities, generally, are granted

only those limited powers, incidental to ownership,

which are necessary to ensure the proper functioning

of a public airport. Typically, such powers include the

9

control and maintenance of the terminal facilities and

roadways, the ability to purchase property and the

ability to enter into contracts.

Thus, it is absolutely consistent to say that an air-

port owner may not adopt a rule relating to routes

or services, but that it may exercise proprietary rights

and powers (that is, powers normally associated with

the ownership and operation of a public facility). Sub-

section 105(bX1) simply ensured that in prohibiting

state agencies from imposing economic regulations on

air carriers, the rights of airports to exercise powers

traditionally exercised were not also swept aside. It

was designed to do no more. To read Section 105(b\1)

as allowing airport owners to adopt rules relating to

routes and services in the name of proprietary rights

and powers is to render subsection 105(a\(1), and thus

all of Section 105, meaningless.

The distinction between the exercise of governmen-

tal rights by state or local agencies, whose limited

economic authority over airlines Congress sought to

eliminate (except for wholly intrastate service), and

the exercise of proprietary rights by state or local

authorities created to own and operate airport facil-

ities, but not having economic regulatory authority

over airlines,® is crucial to the effective operation of

the Deregulation Act and can only be clarified by a

decision of this Court.

* The Port Authority, for example, is not authorized to regulate airline

rates, routes and services. See N.Y. Unconsol. Laws § 6407, §§ 6631,

et seg. (McKinney 1979 and Supp. 1987).

10

B. Contemporaneous Constructions Of Section 105 By The

Civil Aeronautics Board Support the Distinction Be-

tween Governmental and Proprietary Powers Of State

And Local Authorities.

That Congress intended the powers of local

authorities to be narrowly limited finds support in

contemporaneous Board constructions of Section 105.

As already noted, Policy Statement PS-83 states that

in exercising proprietary rights, airport owners may

not exercise those rights so as to “conflict with the

provisions and policies of the ADA.”

Even more specific is an opinion of the Board is-

sued only a month after the Policy Statement. In

Austin/San Antonio-Atlanta Service Investigation, 80

C.A.B. 242 (1979), the City of Austin argued, as the

Port Authority does here, that there was a “critical

shortage of airport terminal space” at Austin and that

multiple awards would have the effect of “congesting

airport facilities.” Id. at 249. The Board not only

rejected this argument, but warned:

it should be emphasized that, in refusing to

vmpose irrational restrictions on our liberal

entry policies, we are by no means conceding

that local authorities may lawfully circwm-

vent our policies by imposing the same types

of restrictions under the guise of exercising

so-called proprietary rights. Quite the con-

trary, we think it clear that, under the new

section 105(aX1) of the Act preempting State

and local authority over federally regulated

routes and rates, it is the Board’s actions

implementing the Deregulation Act which will

ultimately determine whether and in what

Pde: Aetna

11

manner new route authority shall be

awarded.

Austin/San Antonio-Atlanta Service Investigation, su-

pra, at 250 (emphasis added).

Thus, the Board made clear that it considered itself

the sole possessor of jurisdiction over routes, rates

and services, and further, that it would not condone

interference with that jurisdiction from local

authorities purportedly exercising proprietary rights.

Further support is found in a letter from then CAB

General Counsel Philip J. Bakes, Jr., to Richard R.

Heath, Director of Airports for the Airport Commis-

sion of the City and County of San Francisco, dated

February 13, 1979.° Mr. Bakes’ letter discusses the

legality. of a resolution adopted by the San Francisco

Airports Commission to restrict use of San Francisco

International Airport by new airlines not then serving

the Airport. The rationale given by the Commission

to support the resolution was a concern about in-

creased noise due to deregulation. Among other

things, the resolution required approval by the Com-

mission of proposed routes and scheduling.

In explaining why Section 105 preempted the res-

olution, Mr. Bakes stated:

Non-federal enactments relating to routes,

rates and schedules are clearly forbidden by

section105(aX1) of the Federal Aviation Act.

While I understand the desire of the Com-

mission that there should be ‘‘a convenient

level of air transportation service’’ available

to Bay Area residents, any effort by the

® Appendix A, p. la.

12

Commission to decide what that level of ser-

vice is and to achieve it through the regu-

lation of Bay Area airports is strictly

prohibited by section 105(aX1). The reason is

because the Congress decided that those

kinds of decisions should be made by trav-

elers and shippers directly through the free

play of market forces and that, to the extent

governmental decision-making should replace

competition and free consumer choice, the

CAB should be the sole judge regarding air-

lines conducting interstate air service. The

reason the Congress wants one decision-

maker is obvious when you consider the chaos

to interstate air service that would result if

hundreds of airports around the Nation were

conditioning landing and take-off rights on

decisions about where the airlines should be

flying to and coming from

Letter of Philip J. Bakes, Jr., Appendix A, p.

4a.

Thus, in yet another contemporaneous explanation

of Section 105, the Board clearly states that a. pro-

prietor’s rights and powers may not interfere with

the marketplace decisions of carriers concerning their

routes, rates and services.

III. The Decision Below Creates The Potential For Sig-

nificant Disruption Of The National Air Space Sys-

tem And Interference With Interstate Commerce

As air traffic continues to grow under deregulation,

local airport authorities, in increasing numbers, are

seeking ways to control or limit aircraft operations.

The Massachusetts Port Authority, for example, re-

cently announced a plan at Logan Airport to dis-

\

13

courage peak-hour traffic by means of a varying fee

schedule. The City of Long‘\Beach (California), as this

Court is aware,’ has sought to restrict access by

means of a slot rule similar to the FAA’s high density

rule.

Unless this Court provides an authoritative inter-

pretation of Section 105, more and more local airport

authorities are likely to impose increasingly strict reg-

ulations ‘“‘relating to rates, routes or services,’’ in the

name of reducing ground-side congestion. This is not

idle speculation. The ongoing spread of noise-based

rules among the nation’s airports" is dramatic evi-

dence of the facile ability of airport proprietors to

restrict airport access by means such as the perimeter

rule in this case. If the decision below stands, it would

have a serious practical effect on the National Air

Space System.

A few examples demonstrate the substantial num-

ber of airline passengers who would be affected if a

1,500 mile perimeter rule were to be adopted at other

major airports. Although these examples are hypo-

thetical, they clearly show the potential of the reg-

ulation involved here as an interference with the

preempted control over “rates, routes or services.”

If the nation’s busiest airport, Chicago O’Hare, were

to adopt a 1,500 mile perimeter rule, a total of 44

flights per day would be eliminated, affecting 5,406

° City of Long Beach v. AirCal, Inc., No. 86-2002, certiorari denied,

October 5, 1987.

1 In a 1986 study, the FAA identified 37 noise control strategies in

use at approximately 400 airports. Such strategies include number of

operations restrictions, aircraft type restrictions, noise level restrictions,

curfews, weight or thrust limitations, and noise use fees. Airport Noise

Control Strategies, FAA Report No. FAA-EE-86-02 (May 1986).

14

passengers.’* A similar perimeter rule at Los Angeles

International Airport would eliminate 74 flights a day,

affecting almost 11,000 passengers daily. If, in ad-

dition to these two airports, Atlanta, San Francisco

and St. Louis imposed perimeter rules, a combined

total of nearly 28,000 passengers per day, or more

than 10.1 million passengers per year, would be im-

pacted.'* Finally, if the other two Port Authority air-

ports were to adopt perimeter rules, an additional 59

flights per day would be eliminated, affecting more

than 9,000 people daily.

IV. CONCLUSION

This Court has never interpreted Section 105 of the

Federal Aviation Act. Absent such a dispositive inter-

pretation, inconsistent results will flow from increased

litigation over the issue of airport access. In view of

the importance of a smoothly functioning national air

transportation system and the widespread public in-

terest in safe, efficient, and economical airline service,

ATA believes that this case presents an ideal oppor-

tunity for this Court to provide the clarification

needed to resolve this important question of Federal

law.

2 Based on schedules published in the Official Airline Guide on Sep-

tember 1, 1987, and assuming an average load factor of 60%, which

is less than the industry average of 60.6% for 1986, and 62.5% for

the first six months of 1987.

8 Table 1, Appendix B, p. 8a.

“Table 2, Appendix B, P. 10a.

15

Respectfully submitted,

James E. Landry

(Counsel of Record)

George S. Lapham

David A. Berg

Air Transport Association

of America

1709 New York Avenue, N.W.

Washington, D.C. 20006

Dated: October 15, 1987

la

APPENDIX A

CIVIL AERONAUTICS BOARD

Washington, D.C. 20428

February 13, 1979

Mr. Richard R. Heath

Director of Airports

Airports Commission

City and County of San Francisco

San Francisco International Airport

San Francisco, California 94128

Dear Mr. Heath:

I have received your letter of January 18, 1979, and

have analyzed San Francisco Airports Commission Reso-

lution No.79-0003 (January 16, 1979). The Civil Aeronau-

tics Board shares your concern for the environment of the

area surrounding San Francisco International Airport. The

Board sees to it that the environmental implications of its

actions are considered at every stage of the decision-mak-

ing process. We are also eager to help airport proprietors,

such as the Commission, to take reasonable steps to pro-

tect their airport’s environment. It is in a spirit of co-

operation that I and the Board’s legal staff have reviewed-

Resolution No.79-0003.

The resolution severely restricts the use of San Fran-

cisco International Airport by new airlines not currently

serving that airport. The resolution reflects the Commis-

sion’s apparent belief that reduced federal economic reg-

ulation of air transportation may lead to an increase in

commercial jet aircraft operations at the airport, and in

turn to added noise levels in surrounding communities. The

resolution restricts new airlines in several specific ways.

It requires entering airlines to present to the Commission

substantial information about proposed operations. Airline

2a

arrangements involving San Francisco Airport concerning

routes, scheduling, aircraft to be used, and groundside ar-

_ Yangements, require approval of the Commission. In ad-

dition, the resolution puts the Commission in the position

of approving subleases and service arrangements involving

entering carriers and provides that landing fee agreements

will be made “only” with “those carriers [who] agree to

exclusively utilize aircraft which are certified as meeting

the noise requirements of Federal Aviation Regulation Part

36.” Finally, through the resolution the Commission as-

sumes responsibility to take “appropriate actions ... to

provide a convenient level of air transportation service to

all Bay Area residents.” i

I have fundamental legal reservations about the method

the Commission has chosen here to advance the obviously

important environmental goals which you and the Board

want to meet. The action of the Commission conflicts

sharply with federal policy as set forth in the Airline Der-

egulation Act of 1978 (P.L.95-504), which was enacted to

foster entry by air carriers into new interstate markets.

In addition, the resolution’s applicability to new but not

incumbent airlines appears to violate the Constitutional

prohibitions against discriminatory local regulations of in-

terstate commerce, see ¢.g., British Airways v. The Port

Authority of New York, 558 F.2d 75 (2d Cir. aot It

raises as well the possibility of conflict with grant assur-

ances under the Airport and Airway » hn Act (49

U.S.C. Sec. 1718) and thus may jeopardize your right to

receive federal grant money administered by the Depart-

ment of Transportation. The resolution may also violate

section 30&a) of the Federal Aviation Act (49 U.S.C.

1349(a)), which provides in part:

“There shall be no exclusive right for the use of any

landing area or air navigation facility upon which Fed-

eral funds have been expended.”

3a

Finally, any attempt to dictate the type of aircraft to

be operated—even if applied even-handedly—may conflict

with a detailed federal noise policy developed by the De-

partment of Transportation. In light of these iegal short-

comings, the Commission may wish to consider rescinding

or substantially amending Resolution 79-0003 to conform

to federal law. As it stands now, it is vulnerable to legal

challenge. And, since it conflicts with the policy of the

Airline Deregulation Act which this agency is charged with

administering, if the resolution remains in effect, I must

consider recommending legal action by the federal gov-

ernment. On the other hand, should the Commission re-

place it with a non-discriminatory policy restricting use of

the airport, we, and I am sure the Department of Trans-

portation, would be more than happy to evaluate that pol-

icy independently.

There are three important factors in considering the

legality of a restrictive airport use decision. First, is the

restriction discriminatory? Second, if the restriction is not

discriminatory, is it nevertheless unduly burdensome to

interstate commerce? Finally, does the restriction relate

to the routes, rates or services of any airline in interstate

commerce under authority of the Civil Aeronautics Board?

The Commission’s action is discriminatory and thus un-

lawful because it places substantial and perhaps insur-

mountable burdens on entering airlines which incumbent

airlines do not bear, and puts new entrants at a significant

disadvantage in seeking to compete in San Francisco mar-

kets. While incumbent carriers are free to add to their

schedules at will, and thus may increase their flight fre-

quencies as they choose, the resolution makes scheduling

and other operating decisions of entering carriers the sub-

ject of a public proceeding, and allows those decisions to

stand only if the Commission approves them. In addition,

while incumbent carriers may serve the airport with air-

craft meeting current federal noise requirements, the res-

olution places a much stricter standard on the operations

4a

of new entrants and, in fact, forbids them to operate the

same type of aircraft that incumbents may operate.

The particular method the Commission chose to protect

against noise may conflict with an area that the federal

government has preempted and may also unduly burden

interstate commerce. The federal government has a com-

prehensive noise policy that phases out noisy: aircraft over

a four-year period and requires airlines tc begin flying

quieter aircraft in 1981 and to conform their entire fleets

by 1985. If the San Francisco Airport, as it purports to

do, or any other airport enforces more stringent equipment

requirements, there would be a conflict with an area of

regulation that the federal government may have

preempted and there would probably be a serious disrup-

tion in interstate air service because planes lawfully de-

parting from, say, Chicago, New York or Denver would

not be able to land in San Francisco.

Non-federal enactments relating to routes, rates and

schedules are clearly forbidden by section 105(aX1) of the

Federal Aviation Act. While I understand the desire of

the Commission that there should be ‘‘a convenient level

of air transportation service” available to Bay Area res-

idents, any effort by the Commission to decide what that

level of service is and to achieve it through the regulation

of Bay Area airports is strictly prohibited by section

105(aX1). The reason is because the Congress decided that

those kinds of decisions should be made by travelers and

shippers directly through the free play of market forces

and that, to the extent governmental decision-making

should replace competition and free consumer choice, the

CAB should be the sole judge regarding airlines conducting

interstate air service. The reason the Congress wants one

decision-maker is obvious when you consider the chaos to

interstate air service that would result if hundreds of air-

ports around the Nation were conditioning landing and

take-off rights on decisions about where airlines should be

flying to and coming from.

iy eS eee

5a

Although my legal analysis of the situation does not

support the Commission’s action, perhaps you may wish

to reconsider the policy, as well as legal, assumptions un-

derlying the resolution in light of the considerable body

of evidence that suggests that a competitive airline system

is more likely than a strictly regulated system to minimize

environmental damage. The Commission’s premise seems

to be that competition and new entry will cause an un-

acceptable increase in commercial jet operations at San

Francisco International Airport. This is not necessarily the

case. When airlines are forced to compete in markets,

actual competition and the threat of competition by other

airlines stimulate incumbent carriers to keep ticket prices

down and to operate planes nearly full rather than half

empty. Without adequate competition, the demonstrable

tendency is the reverse: air carriers tend to charge higher

ticket prices, but they compete away the extra revenues

in scheduling competition—by offering more flights and

thus more operations. This is a situation with which we

are thoroughly familiar at the CAB. For almost forty years

the CAB regulated the airlines in a way that discouraged

price competition. This produced extensive frequency com-

petition, with the result that many airports were subjected

to many more landings and takeoffs than were necessary

to carry the traffic. )

It is the number of aircraft operations rather than the

number of airline passengers or the identity of the airline

that determines how much noise people living near an

airport must suffer. While the lower ticket prices of recent

months have stimulated travel, the incentives of deregu-

lation—if price competition is allowed to develop without

restriction—are toward putting more passengers in the air-

planes before putting more planes in the air. When an

airline has to compete in price and keep its costs low, it

will tend to hold actual aircraft operations to a minimum.

And our experience shows that easy entry by non-incum-

bent carriers is the single most powerful force to stimulate

6a

price competition. If air carriers not currently serving an

airport can arrange to use it without undue difficulty, the

mere threat of new entry will encourage incumbent car-

riers to keep ticket prices as low as possible, and to fill

their planes rather than operate half-empty flights, so as

to avoid expenses which might make low fare operations

unprofitable. So, discriminating against new airlines, and

giving significant advantages to existing airlines not only

conflicts with federal law but may well conflict with a

sound environmental policy also.

The increased competition from new airlines and higher

load factors also results in improved energy efficiency. A

recent Air Transport Association study shows that sched-

uled airlines used 50 million gallons less fuel in 1978 than

1973 while carrying 78 million more passengers. Compe-

tition and the resulting higher load factors also explain

why there were less than two percent more systemwide

airline departures in fiscal year 1978 than in the preceding

year while passenger enplanements rose nearly 12 percent.

At some airperts—and our fiscal year 1978 figures show

San Francisco to be one of them—the actual number of

departures decreased slightly while the number of passen-

ger emplanements rose significantly. Figures for the first

quarter of fiscal year 1979 show that although San Fran-

cisco International departures have increased modestly over

the same quarter of the previous year, actual emplane-

ments increased over 18 percent. Since we are still in a

period of adjustment and transition, I would caution any-

one, including myself, against using recent statistics to

make firm predictions about the future. But, the indica-

tions are that increased airline competition and a better

environment are not at all incompatible.

I would therefore urge you not only to reconsider the

resolution but to consider carefully as well what impact

new authority will have on San Francisco International

Airport’s environment before you make any decisions re-

garding restrictions which might be proposed to protect

7a

the community’s environment. If you determine that re-

strictions are required in spite of the favorable environ-

mental consequences which may result from increased

competition, I urge you to make them consistent with the

important legal requirements I have outlined.

Let me repeat again this agency’s sincere willingness

to be of help. I have been in contact with Clark Onstad,

Chief Counsel of the Federal Aviation Administration, and

am confident of his and the Department of Transporta-

tion’s willingness to also assist you in the discharge of y

our legitimate and difficult proprietary duties. Both the

CAB and the DOT will do all we possibly can to help you

implement a plan which meets important legal and envi-

ronmental requirements.

Sincerely yours, —

Philip J. Bakes, Jr.

General Counsel

ee: Clark Onstad

Chief Counsel, FAA

8a

APPENDIX B

Table 1

Origin Destination Flights/Day Passengers

Affected

Daily

=—oo—S>I~—SSSSSSSSSSS=S=S==an@CsoEOUl"l""""El™O™O™OOOOOOO™SS SS

ORD SFO 19 2,237

LAX 25 3,169

Total 44 5,406

EWR 7 1,175

JFK é 23 4,080

LAX ORD 26 3,169

ATL 10 1,484

STL 8 1,006

Total 74 10,914

ATL LAX 9 1,319

SFO 7 966

Total 16. 2,285

EWR 4 624

JFK 14 2,383

SFO ORD 20 2,445

ATL 6 907

IAH 6 484

STL 4 520

Total 54 7,363

STL SFO 5 742

LAX 8 1,044

9a

Table 1 (Continued)

Passengers

Affected

Flights/Day Daily

———————— eee. ee

Combined Total 201 27,754/day

3 -10,130,210/yr.

ooo

ORD—Chicago O’Hare

LAX—Los Angeles Int'l.

ATL—Hartsfield Atlanta Int’l.

SFO—San Francisco Int’l.

STL—St. Louis, Int’l.

EWR—Newark Int’l.

JFK—Kennedy Int'l.

1AH—Houston Int’l.

10a

Table 2

Origin Destination Flights/Day Passengers

Affected

Daily

SFO 4 160

EWR LAX 7 1,131

DEN 11 1,356

Total 22 2,647

SFO 13 2,262

JFK LAX 22 4,026

DEN 2 243

Total 37 6,541

Combined Total JFK/EWR 59 9,188/day

3,358,620/yr.

DEN—Denver Stapleton Int’l.