Petition for Writ of Certiorari — Braniff Airways, Inc. v. Texas Aeronautics Commission

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’ SUPREME COURT, U.S. ee ees 15 1st)

es ae ROBE ER Ay ERK

-_ sis ___ [LE Rooenr seaved, CLERK

_ "In the

‘Supreme Court of the United States. |

OCTOBER TERM 1970 .

‘No. G93 *

‘BRANIFF Airways, INC., et al., ie

Bk dene tin Petitioners, ‘*.°

The TEXAS ABRONAUTICS ‘CoMMissION; et al., S

| Respondents. 9

uence FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF TEXAS oy a

N - ‘ = set .

ee selec = = : a

Of Counsel: ’ | - W.B. West TI, | : ee

. - CxarK, West, KELLER, ° Epwarp A>CLaRrK, i Se a

SANDERS, AND + San - ‘GEORGE ALLEN BUTLER,- |

2424 First National Bank Counsel for Petitioners.¢

Building, .-. - ms °

Dallas, Texas 75202, ; oe

CLARK, THOMAS, HARRIS, . ;

. Dentus AND WINTERS, | Eas el yin iataiattinie eae rence

a ~~ Mary Joe CARROLL; .

- Pp, O. Box 1148, — . . . ‘

Austin, Texas 78767, a RSE dg?

: McGinnis, LOCKRIDGE, |

© Kiicore,; BYFIELD, :

HUNTER AND WILSON,

‘900 Congress Avenue,

Austin, Texas.

senashhninaetindiaieiiaedl

THE WARLICK PRESS DIVISION, STECK-WARLICK CO.

P. O. BOX 10543 — 1455 ROUND TABLE DRIVE — DALLAS — 6%1- *3130

Yhe Civil “Aeronautics Board, which would be |

upset if the Texas Commission! s order were vA

to stand. , 7 Ae

_ B. The ely ies of the CAB. for otal: wr 4 ;

_ ice carriers would be thwarted by. the a¢tion

of the Texas Aeronautics, Commission ih thie

ee Ree eaeaty a iuurs A Ae near ene Aa ns. 46

C. The Texas Aeronautics Commission souptit to

impose its“local views. of an appropriate rate.

_

structure in dist regard of national ‘policy. ae |. Say

Page

Opinion vemoa Pe omg PON cay rere ger nr Rm ieontr Toe oS, Bays ences 2

_ Jurisdiction ° ne obra pty NR RIO SS MEIN 8 oA T OCR ade 2

. Questions ‘Presented * - Stari A ate AUD MNS Es

Statement meee REN He cok Sneek J

Reasons for. Granting the Writ Sate ae oe Ce wae

I. State regulation of Civil Aviation has\o- major

¢ potential for disrupting the — transport |

_ System. Re teen mond 7

+A. This case. presents the canes breakdown

of the distinction between interstate ma in-

trastate air transportation. ee 7 aes)

B.. No inference should be drawn from the failure . —

by the CAB to participate in this —*

_ at the state commission level. ___. 10

TI. The present case illustrates the consequences. of

disregard by state agencies of national. Siu ¥

ee a Meee » fen

A. ‘The routes considered in the 1 Texas Aeronau:

' tics Commission proceeding were important

components .of presently effective decisions. of of

ii .§ -4NDEX — (Continued) =

| Page °

TUL. The certification: “of an. intrastate air carrier to.

_ serve major air terminals in direct competition

with federally-certificated carriers burdens in-

ab

” terstate commerce..

— Conclusion 2B

Appendix A_ Al

~ Appendix B ; B-1

Appendix: C i | -C-1

Appendix ‘D D-1

Appendix E - El

Appendix F F-1

Appendix G G-1

Appendix H Re : Hel

a ‘ =

was

6.

Q

: INDEX TO AUTHORITIES See. ak

- ee. Page ;

-. Civil Aeronautics as: v. Friedkin Aeronautics ea

246 F. 2d 173 (9th Cir., 1957) 2 pe

' Colorado v. United: States, 271 U.S. 153 3 (1998) re. ae

Cooley v. Board of Wardens, 6 53 U. S. (12 — re ae |

* 299 (1851). - | ee a ee

Raatern Airlines v. C. A.B. 994 F. 2d 235° ¥ “.

5 OO Bie MAES Wes a ae

Domestic Prencrigie # Fare © Investigation, ie aa

Docket No. 21866 (1970) . oa ae ae

' General Passenger-Fare Investigation . 1

32 C.A.B. 291 (1960) . SEARLE GN oecmte erm aerns <i

‘Gibbons v. vee, 9°Wheat. 1 (1824) Rn ee

Gulf States-Midwest Points Service Investigation,

Docket No. 17726, (1968)... ike BB, 18

Northwest Airlines v. Minnesota, 322 U. S. 292 (1943) 21

Public Utilities Commission v. United Airlines,

346 US. 402 (1953). - eee Stipe * |

' Service to Albuquerque Case, Docket No. 18586 a,

. (duly 24, 1968) ss ma 15, 16, 19 .

Southern Pacific Company v Vv. Arizona, Lees

325 U. S. 761 (1945) A ares ; . 21 x

Southwest-Northeast Service on 29 C.A. B. 52 (1955).

Southwestern Area Local Service Case, |

37 C.A.B. 469 (1963) © ! er é 14,15°4

Texas Aeronautics Commission, et al.-v. Broniff i.

_* “Airways, Inc., et al., 454 S.W. 2d 199 (1970). 2

- Texas Aeronautics Commission, et .al. v. Braniff —

Airways, Inc., et. al., 439°S.W. 2d 699 (1969)

Texas International Aiitines, Inc., Subpart M,

(San Antonio: Dallas) Nok cet No. 20066,

etal. (November 21, aoe ca te is

i)

a

ne ee m >

‘iy INDEX TO “AUFHORITIES — (Continued)

\

jf ‘ Str Page _

United Airlines v. California Public Utilities __ a

Commission, 109 F. Supp. 13 (1952) ahi eo 23

Western Airlines v. People, 268 P. 2d 723 (1954) 23

‘ Western Airlines, v. People, 348 U.S. 859 (1954) . a - 23.

U. Ss. Statutes petcd .

Civil ‘Aepopantics Act of 1938; 52: Stat. 973. we : 7

F eder al Avfation’ Act of 1958 (49 U.S: Code § 1301,.et seq)

Section 102 (49 USC. § $ 1302) pas me Ay Soe

Section 204(b). (49 U.S.C: § 1524(b)) Ne! oe

‘ Section 416- (49 U.S.C. § 1386). g td abana 10

- Section '1002(e) (49 U.S.C. $1482) 7 os, 18!

. Texas: Seamahin s

nots 1961, 57th Leg. RS: Ch. 379, p: 850

| (Article 46c-6 Vernon's Annotated Civil Stecates) *10- |

‘Miscellaneous

Hall, The Civil Aeronautics. Board Policy Fivoting

Subsidy Reduction to Local Service a, ea

35 J. Air L & Commerce, 59 (1969). < CMG: | ES

Letter, Charles S. Murphy to the Chairman,

House Committée on Interstate and Foreign.

Commerce, Congressional Record, , ae

July 11, 1967, p. a, Be :.:.....5.. LER AO

Robert ft Murphy, Speech before the Governor’s

Transportation Conference, August 25, 1970, é

C.A.B. vies Release, August .26, 1970. -: eet ER

In the —

” Supreme Court of the United States

eae OCTOBER TERM 1970 ea.

- Branirr Arrwiys, Inc., et al.;

: ie en

THe Texas AERONAUTICS (caneniatas el al.,

bs ey a Respondents.

PETITION FOR WRIT OF’ CERTIOR. ARI,

TO = SePREME cou RT OF TEXAS :

“a

Petitioners are three airlines holding certificates from the

United States Civil Aeronautics Board, Braniff Airw ays,

‘Incorporated, Continental Airlines, Inc., and’ Trans- Texas

. Airways, Inc. Respondents are the Texas Aeronautics Com--

Petitioners,

inission, a regulatory agency created by statute of the State en

of Texas, and Air Southwest Co., a corporation, organized

‘for. the purpose of obtaining the cer tificate at issue in this |

case, Petitioners pray that a writ of certiorari be issued to:

review . > judgment of the Supreme ‘Court: of Texas entered

on "May 13, 1970, and made final June 17, 1970, reversing’.

the decision of the lower cotirts of Texas and reinstating and

affirming an order of the: Texas’ Aeronautics Commission

oe ‘.

f ; “

A f° . -

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Se granting a . certificate to Air ud vest in direct eter

with. petitioners over routey-granted to petitioners by the

‘Civil Aeronautics Board. ae .

OPINIONS: BE Low

H

The Texas Supreme Court Sonus in this cases. Texas Zi,

Aeronautics Commission, et al. . Braniff Airways, Inc.,

et al., is reported, 454 S.W. od 190 (Appendix F). That

decisign reversed the judgment of the Court of Civil Appeals

~ .for the Third Supreme J udicial District of Texas, ‘reported

at 439 S.W. 2d 699 (Appendix E), and .the judgment of the .

98th Judicial District Court of Travis Couity, ‘Texas (Ap-

pendix D). 4

‘

J URISDICKION [

The judgment of the Supreme Court of Tver was made |

final by denial of motion for rehearing on June’ , 1970

(Appendix G), subject toa stay of 120 days. pending appli- .

, cation for relief to this Court. The jurisdiction of this Court

_ is invoked under 28 U.S.C. ae (| oe

4 .

QUESTIONS PRESENTED . ey

The opimions - below deal with a variety of icineuincis of

: adipinistrative law and evidence’ under the law of Texas

that need not concern this Court. ot: ; fi |

” The principal question raibod i in this petition is tele a

state regulatory commission may grant permission, to an*

air carrier fot holding a Federal certificate to operate over

routes forming an integral part. of the ‘national ——.

a

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3

4

- system, without any consideration of the ‘effects of such .

action on the national airways system.

“A related - ‘question is whether- spebtouien of an intra- *

| state” ifline by the Texas’ Aeronautics Commission to serve

the four major Texas cities of Dallas, Fort Worth, Houston

ad - San Antonio. is an. unconstitutional burden on inter-

‘state commerce in that it adversely affects carriers licensed

to conduct interstate. service.

STATEM ENT

Tn all but one respect, this i is a. routine case arising before

a state regulatory commission. A new player wants to enter -

‘the game, and the established players seek to keep him

out. In this case the newcomer, Air South est, applied for

permission to operate over the routes Houston-Dallas /Fert

Worth, San Antonio-Dallas /Fort Worth, and San Antonio-

, Sak petitioners opposed the application. What makes

_ this an important federal case with. Constitutional overtones

is that. the application, the challenges, the hearings, deci-

gions and appeals all took place before a state commission

and state courts, cand - ‘under state criteria, although the

_ routes in’ question all form part of the federal system and

the airlines opposing the application as well as other air

carriers (flyintg over, these routes) hold federal certificates to

serve them. The state Commission in interpreting the rele-

“vant Texas statute (Appendix A). refused to consider the

_ impact of its action on the national regulatory system, and

ruled only on the public convenience and necessity to ae :

of ¥ :

~

4

"The Sadie of the Texas Ribieiniiie Commission in this

case was issued without opinion after hearing. in which the

petitioners participated. The absence of findings ‘of fact to

‘support the order was one of the reasons that the- District

Court set aside the Commission's order (Appendix D).'

The details of the ‘application by Air Southwest and the

competing oper atigns of petitioners will be spelled out in

the main brief if this petition is granted. For present pur-

poses, it is sufficient to note that Air Southw est applied ex-

¢lusively to fly routes connecting the three principal airports

in Texas, and to dyplicate routes served by petitioners and

others pursuant to CAB certificates. At the time of the hear-

ing before the Texas Aeronautics Commission Braniff and

}

Trans-Texas were offering 50 or more nonstop’ flights. daily

between Dallas and Houston; petittoners and. other CAB ;

certificated carriers were offering 22‘nonstop flights daily

_ between. Dallas/Fort Worth and San Antonio; and _peti-

tioners and other carriers were offering 37 nonstop flights

daily between San Antonio and Houston. In addition, ten

daily international flights operated by Braniff and many

more flights té other parts of the United States touch on

more than one of the.points covered by the Air Southwest

| application. Thus, inauguration of service by Air Southwest

in accordance with its application could make substantial

inroads into petitioners’ operations pursuant to their fed-

eral’ authority. Traris-Texas, whose subsidy has béen gradu-—

ally reduced, could weil require increased subsidy or be

forced to curtail its current operations. Braniff, one-of the.

- The other reasons related to the issue of substantial evidence

‘to support the statutory findings. xe

eh cobta

5 :

sitaiiler trunk carriers whose routes have ais strengthened

by the CAB in a. carefully planned effort to achieve more

balance nd competition with the major trunk, carriers,

. would well experience a reversal of this trend. ‘Sone of these -

points were, however, considered by the state agency or

Texas Supreme Court - -although petitioners consistently

raised them. The agency qualified ' .to assess the impact

of Air Southwest’s entry into these markets and charged by

the Congress with establighing a sound national air trans-

' port system had ho part in the decision of this case. Indeed,

its prior and: contemporaneous decisions affecting: the very °

‘area covered by the application were completely ignored. -

By the simple expedient of waiving the right to carry

mail, respondent Air Southwest avoided--consideration—ot-. z

the important national issues tahedbat in its application.. cE

The Texas Aeronautics Commission; and the Supreme Court

of Texas in affirming the' Commission, decided that these

issues were of no consequence, and that this was a-case by

and for the’State of Texas exclus vely, on the basis of “what

air service is best for Texas.” The\Texas Aeronautics Com-

mission contended before the State Supreme Court that:

“The Texas Aeronauti¢s Commission can only add com-.

petitive, intrastate service at lower fares to a monop-

olistic environment, which will cause the existing car-

riers to either improve their service and or reduce their’

fares. There is substantial evidence to justify the Com-

mission’s policy conclusion that authorization of Air |.

Southwest’s improved service at: lower cost to the

public is the-only road it can take to benefit Texas’

air travelers, i ve of whether part of the exi ting

f

4

a

.§

2S

service is ‘going begging’.” (Application toe Writ of

Error, p..41; emphasis in the. original.) _

The issue is thus raised as ‘to whether a ‘state regulatory

commission, may.take such a view on the basis of geograph-

ical accident, when sound analysis makes it clear that its

actions may have profound effect on the national air trans-

portation system.

The federal questions sought to be reviewed were raised

by petitioners herein in their Original Petition to the 98th —

Judicial District Court of Travis County,’ Texas; alleging.

that the Commission’s order violated the’Commerce Clause

of the United States Constitution ‘and conflicted with. the

Federal Aviation Agt of 1958 (Tr. 27).

_’ The trial court set adie the Consminatorsie’ S s order on state:

~~ grounds “without deciding the federal questions raised by

petitioners (Tr. 39-40;. Appendix D).

¢

The federal questions were preserved i in the Court of Civil’

Appeals’ and ‘the Fexas Supreme Court by cross-points as-

-serting that the order violated the Commerce Clause and

‘interfered with the regulatory system established in the

_ Federal Aviation Act (Appellees’ General Brief in the Court

of Civil Appeals, pp. 177-181; Respondent’s General Reply i in

the Texas Supreme Court, pp. 219-228).

Both the Court of Civil Appeals and the Texas Supreme

Court decided the case on state grounds. By reversing the |

lower courts and reinstating the order of the Texas Aero-

nauti¢s Commission and by refusing to change that decision

‘

in response to motions’ for rehearing which, were devoted .

—a™

on

ee te rare .*

a eo

almost ential to federal issues, the Statq Supreme Court

necessarily ruled adversely to petitioners. on the issues now

presented to this Court. |

REASONS FOR GRANTING THE WRIT A

This .case presents important questions“*of federal law

‘which have not been, but should be, settled by this Court.

I. STATE REGULATION OF CIVIL AVIATION HAS A :

MAJOR POTENTIAL FOR DISRUPTING THE

NATIONAL AIR TRANSPORT SYSTEM.

A. This case presents the predictable breakdown of the

distinction between interstate rand intr asfate air trans-g ,

- portation.

_ . . .

ae |

__—— ‘When the Civil ia het was aad in 1938, 52

Stat. 973 operations by intrastate carriers were limited. By ;

and large, short-hauls Were the domain of the railroads, and

principal long-hauls routes extended across state lines. No

state made an effort to ) deny permission to interstate carriers |

to operate over intrastate routes, such as New York-Buffalo, ~

- Philadelphia- Pittsburgh, San Francisco-Los Angeles or Dal

las- Houston. As railroads declined in importance for passen-

‘ ger operations and vielen | became more and more efficient,

transportation /by air between points within the same state

has become /increasingly important. This segment of the

~ transportation industry had two aspects: (1) to connect the

smaller points not served by the major airlines — for exam-

ple, Utica- Syracuse, Harr isburg-Wilkes-Barre, Gladewater-

Lufkin; and (2) to tie the smaller cities in to the major trunk

routes — for example points in Pennsylvania ‘to Philadel-

phia, in Illinois to Chicago, in Texas to Dallas and Houston. :

8

At first intrastate operations were entirely teee from eco-

‘nomic régulation (as contrasted with safety and technical

regulations which at all times were vested in federal agen-

cies). Gradually, | state agencies began to be established. and

to take contol over, the growing lécal air traffic. Only re-

cently did such- tocal traffic’ affect major routes _on the

“national airways Systems and thus come into potential

conflict with the national regulatory system. In 1967,

- the Chairman. of the-Civil Aeronautics Board; Mr. Charles S.

Murphy, wrote to the Chairman of the Committee on

Interstate and Foreign Commerce of the House of Repre-.

sentatives: |

“The lack of federal control over intrastate carrier

- operations by air did ‘not present substantial economic _

problems until recent years. When the Civil Aeronautics

Act was enacted in’ 1938, ‘and for many years there-

‘after, operations .by intrastate carriers were not ex- .

tensive; and no State denied. interstate carriers

permission to operate over intrastate segments. Fur-

thermore, there was little regulatory action by the

States. By 1961, however, 18 States had begun to issue

_cértificates of public convenience and necessity _ for

‘ intrastate common carriage by air.” Cong. Rec., July M1,

1967, page 18,299.

At ie agencies in at least 29 states’ have been given —

- authority to approve intrastate air carrier applications. In

many cases these applications deal with local-service, small-: ~

craft and minor-city operations. But first in California, and.

now in Texas and elsewhere, the state regulatory commis-

2? Alabama, Alaska; Arizona, Arkansas, California, Colorado,

Hawaii, Idaho, Illinois, Kentucky, Montana, Nebraska, Nevada,

. New Hampshire, New Mexico, North Dakota, Pennsylvania, Rhode —

' Island, South’ Carelina, Tennessee, Utah, Vermont, West Virginia, -

Wyoming, ” Texas, New Jersey, ‘Washington, South Dakota.

9 —

sions appear to be treading on ground occupied ae the Civil

Aeronautics Board. The Chairman of the Civil. Aeronautics

Board clearly anticipated this eee in. the letter quoted.

‘above: |

“TI]t seems : to us that * * * in most cases s [the role of

‘ - intrastate carriers] will, not impinge unduly upon the

federally regulated systems; * * * that we should not

interfere with intrastate operations ‘merely for the pur-

pose of asserting or extending Federal jurisdiction;.

fbut] that we should be alert to prevent intrastate

air Carrier operations from impinging — upon the

Bins regulated. system dg pe

ough Congress distinguished between the jitiolition

ot the Federal Aviation Administration over safety and tech-

“nical aspects— covering all of the, air space of the United

States — and the jurisdiction of the Civil Aeronautics Board .° .

over interstate air transportation, it recognized that the

distinction. might be difficult. to maintain within a rational

framework. accordingly, section 204 (b) of the Federal Avia-

tion Act, 49-U.S.C. § 1324 (b), states:

“The Board is empowered to confer with or to hold -

joint hearings. with any State aeronautical agency, or

other State agency, in connection with any matter aris-

po under this Act within its jurisdiction, and to |

il itself of the cooperation, services, records, and

facilities of such: State agencies as fully as may be prac-’

ticable in the administration and enforcement of this

Act.” . 4:

So far as petitioners. are aware, no utilization has ‘been

made of that section in this or. other contparable proceedings. —

In part, apparently, the reason is that a federal agency is

“_-_---—__,

. Sp

' the rate structure, the competitive route position, and the |

~

10 - ¥ % i

reluctant to cihaadiaake its views to a state body; and state

bodies are reluctant td yield any portion of their = nar

~*,

/Congress also provided the Board with authority to das:

fe air Faas rriers and exempt them from the requirembpts of

the Act if, in its judgment, the carriers’ operations were too .

insubstantial to. require federal supervision. Federal Avia-

“tion Act § 416, 49 U;S.C. § 1386. This | provision ‘also suggests ~

that the lack of clarity ‘awa ‘interstate” and “intra-

state” operations could ‘be troublesome, and. fhat the federal .

agency should be the one to determine the effect of an air °

‘carrier’s operations on the development’ of a national air

-. transport system.

The draftsmen of the Texas statute here in question:

‘sought to avoid. the problem by precluding the commission .

from asserting jurisdiction over. carriers -holding federal cer-

tificates. (Article. A6¢c- 6, Subd. 3, VAC. S., Appendix. A,

pp. Al- 3). This case, -however,. shows, as spelled out in

Part II below, that it is possible under Texas law for the

commission. to do indirectly just what the Texas statute

and the federal Act proscribe — to affect by state action

\

B) No In jerenve Should Be Drawn from the Failure. by

the CAB to Participate in This Proceeding at the State

Commission Level.

The Texas statuté (ariel A, bietudiisinin 3 of Article

46c-6, V. A.C. S.) requires all applications for certificates to ,

operate within Texas to be served on the Civil Aeronautics

overall economic operations of federally certificated carriers. "

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Board. Such service was made in the present case; the CAB

'. made no response. Respondents: sought to infer. ieoak the

rhe lack of response by the CAB a lack of interest on its part -

‘in. this proceeding, or, .to- put it another way, that the ©

, CAB considered Houston- Dallas. or San Antonio- Dallas to

be gomparable—with~ Gladewater-Lufkin. Apparently, the

Supreme Court of Texas accepted this argument, since it.

stated, in its only reference to. the federal agency: -

“A copy of the Air-Southwest application was served :

upon the CAB * * * but the CAB has taken. no part

- in the matter.” . |

_ The inference is erroneous. That was made clear Wy: the

_ most recent past Chairman of the CAB, Mr. John H.

re

~

Crooker, Jr., who was in office. during most of the time cov- .

ered by this‘ proceeding. Mr. Crooker was so disturbed: by

the sentence quoted above that he filed, on his own, an

amicus’ curiae brief with the Supreme Court of Texas (Ap-

pendix H). Chairman Crooker wrote:

“TT he attentior of the Court’ is invited to the. rather

‘-unhappy dilemma facing the CAB in deciding whether |

to participate in or ignore a. proceeding before any

- state agency such as the TAC. Aside from the budgetary

problems, and manpower problems’ facing the CAB in

its consideration of whether or not to participate in any

State proceeding, certain other procedural problems are

connected with such decision. If the CAB appears be-

fore a state agency and presents its. views to the agency, .

this makes the state agency the judicial tribunal and’

the CAB a party or a witness or both. The CAB is

thus present before the state agency, and the decision of ©

- that agency becomes even more difficult to overturn on

review, even if a Court. wouldhave reached a different

conclusion had the matter been considered de novo.

ae 12. Ay |

taying out of a Sishedeccenting, as was done in this _

‘has the obvious drawback of leaving the impression

wit a Court that the CAB is not cpncerned about the

‘possibility that too. much competition may adversely

_affect the financial viability of a-certificated carrier (es- >

pecially a subsidized one). Such matters, of course, might - |,

- have some adverse effect on the development of. the

Nation’s air transportation Sy yatenn.

% * Es # %

“It is respectfully urged that if any Motion fer Re-

hearing i is filed, the Court. indicate its awareness of fhe

dilemma which confronts the. CAB in matters of this

‘sort and’ further indicate that-no inference should, be »

drawn from the failure of thé CAB to: intervene or

participate m any proceeding before the is Agerity.”

Petitioners’ do ad contend that hee agencies © should

be prohibited from authorizing intrastate air carrier opera-

‘tions. They do contend that such power must be exercised '

within the confines of the federal regulatory system and:

".. may-not proceed in disregard of that system.

Il. THE PRESENT CASE ILLUSTRATES. THE CONSE-

QUENCES, OF DISREGARD BY. STATE AGENCIES

OF NATIONAL REGULATORY C RITERIA -

A. The Roiites Considered in the Texas Aeronaiitics

‘Commission Proceeding Were Important- Components’ of ©

Presently’ Effective Decisions of the Civil : Aeronautics

" Board. Which Wauld Be Upset a the e Texas Commission’: s

Order Were to Stand. P

i?

Séction 102. of the bedecel Aviation Aét of 1958, as.

amended, a 49 U.S.C. § § 1302) sets forth the criteria for regu-.,

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lation of civil aviation arid the factors to be considered | in

determining the right to federal certification® ‘as follows:

“(a) The encouragement and devélopment of an air-

.’

transportation system properly adapted to the present |

and future needs of the foreign and domestic commerce -

of the United States, of the Postal Sérviee, and of the

national defense;

ms b). The regulation of air Bicone se in such man-

ner as to recognize and preserve the inhererit advan-

tages of, assure the highest degree of safety in, an?

foster sound: economic conditions in, such transporta-

tion and to improve the relations between, and coordi-

" nate’ transportation by, air carriers;

“(c) The promotion of ' ‘adequate, economical, ‘cal effi-

cient ‘service. by .air carriers at. reasonablé . charges,

without unjust discriminations, undue preferences, or

= or unfair’. or destructive ere prac- °

tices; -

*«(d) Cobispaiiiinns to the extent’ necessary to assu>st*

_ sound development of ‘an air-transportation sy Pat

properly adapted. to the needs of the foreign and - -do-

mestic commerce of the United States, of the: Postal

Service, and.of the national defense;

_“(e), The promotion of safety in air commerce; arid a

“(f) The promotion, encouragement, and develop- .

-. ment of eivil aeronautics.”

. ‘These criteria have been given specific meaning [ec the

. ( . ; ‘CAB ina series of decisions establishing the route pattern

_ and

competitive position ef various air casriers. A com-

_ plete discussion of these criteria would .go bey ond the scope ,

l of the jyesent petition. It is noteworthy, however, that a .

nn eee »

number of CAB proceedings in recent. years have dealt

expressly with the i issues relevant to this case. For example,

‘

wn

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14.

in the Southwest-Northeast Service Case, 22 C.A.B. 52

(1955), involving applications by Braniff, Delta and others

Gest from: Texas points to major centers in the North-

“east, the’ CAB demonstrated it$ concern for awarding routes

in such .a manner as to strengthen smaller trunk carriers —

to insure that they would. be able to. operate without. sub- .

sidy: during periods of. -economic adversity. In support of

this policy, the Board rejected the ‘hearing examiner’s rec-

ommendation that Eastern be awarded parallel route au--

thority, with American betweén Dallas/Fort Worth and ~~

Washington: and New York, and instead awarded that route

_ to Braniff: Similarly, the Board rejected the hearing: examin-

er’s recommendation that American -be' awarded a parallel

route authority with Eastern between Houston and ‘Wash- -

. ington and New York, and awarded that route to Delta. The

Board made clear that it wished Delta and Braniff to grow

in parallel, with each to offer competition to a member of the .

Big Four (United, TWA, American and Eastern) , in the

one case American, in the other case Eastqrn. The conse- -

quence of the Texas Aetonautics eee decision in

the present case would be to upset that policy substantially:

Braniff would be weakened in its ability. to compete with

American; and the rough equality between Braniff and Delta

as smaller pears oo with each other and

be . Sees

with the Big Four would pset

\V' &

In the Southwestern Area Local-Service Coxe, 37 CAB...

469 (1963), a number of carriers, large and small, local and

national, applied for nonstop service between Houston and

‘h

15 3

Dallas in competition. with petitifner Braniff. The CAB

awarded that route to petitioner-Trans-Texas on. the grounds

that it hada greater stake in the market than any of the

other applicants, that its economic interests were centered

in the area, and that its selection would furnish Trans-Texas

with an opportunity of fulfilling at less cost the local service.

function for which:it was established. As the Board antici-

_pated,. Houston- Dallas has become Trans-Texas’ most profit- ah

able route. Clearly, if the Texas Aeronautics Commission

order in this case is upheld, the rationale of the CAB in the

‘Southwestern Area Local-Service Case, that award of the

Dallas- Houston route would enabie Trans- Texas to improve

_ its services between Dallas and points in south Texas, would

‘be destroyed. es -

es

Similarly, other components of Trans-Texas’ CAB autho-

tization could well be undercut as a result. of the Texas

Aeronautics Commission’s order here. For example, at the ©

vergatime the Air Southwest proceeding was going through |

the Texas courts, the-CAB awarded Trans-Texas a route

“between Dallas / Fort Worth and Albuquerque, in part on

the theory that this ‘would permit single plane service be- _

tween Houston and Albuquérque. Service to Albuquerque :

Case, Docket No. 18586 (July 24, 1969). Also, in Texas In-

4 ternational San Antonio- Dallas Subpart M Case, Docket

No. 20066 (November 21, 1969), the CAB removed Trans-

Texas’ intermediate: stop restriction between San Antonio

and Dallas-Fort Worth while at. the same time refusing to

_ expand ‘American’s authority’ in this market. Again, the °

‘

> ae wh

a - 16

reason was the Board's. désign to strengthen Trans-Texas

and reduce its dependence on subsidy. FinaHy, the Board

_acted to protect Trans-Texas’ competitive position in the:

"Dallas Fort Worth-Houston market by denying Delta au-

thority to serve that market as an: intermediate point be-

. tween Houston and ‘St. Louis. Gulf States Midwest Points

Service ——— eae No. ¥7726, (1968).

S

B. The Subsidy Policy of the CAB: for Lotal Service

- Carriers Would Be Thwarted by the Action of the Texas

Aeronautic s Commission in This Case.

During recent years the subsidy program of* the CAB

has (with one exccption) ‘been directed solely to providing

lecal service to- communities not large enough to support

major trunkline service. Increasingly, the CAB has taken

the view that local service carriers should be given some

access to major traffic points such as New York, Chicago,

Houston or Dallas to cross-subsidize service to the smaller

communities and to reduce their dependence on subsidy.

Hall, The Civil Aeronautics Board Policy Favoring Subsidy

Reduction. to Local Service Carriers, 35 J. Air L. & Comm.

59, 68- 70 (1969). Petitioner Trans-Texas is a local service

carrier presently on. subsidy. An important reason for the

awards made to Trans-Texas in-the cases cited i in the pre-

ceding section was to increase Trans-Texas’ revenue and

‘reduce ifs dependence on subsidy. For example, in the Serv-

ice to Albuquerque Case, Docket No. 18586 (1969), the

Boafd expressly said that an “equally important reason”

for the selection of Trans- Texas was that it‘would “enable

the carrier to achieve a aac y need reduction of approx-

J

™

fia

7: :

‘imately $2.4 million in the first year of operation.” It is

plain that action by the CAB to reduce Trans-Texas’ de- ;

pendence on subsidy would be frustrated by the: Texas

Aeronautics Commission’s: authorization of a new carrier on

‘ its most profitable route. ce | 4

The interplay between the development of ‘adequate air

transportation to smaller: com unities and the federal sub-

sidy~policy was recently stated in a speech ‘by Robert T.

Murphy, Member, Civil Aeronautics Board, before the Gov-

ernar’s Transportation Conference, ~Casper, ‘Wyoming, . gn.

August 25, 1970:

“Beginning about the middle sixties, the Board and the

industry for various reasons undertook a program aimed

at tapering down the annual subsidy payments of the

local carriers year by year. From a high of $70 million of

subsidy paid tothe local service carriérs in: 1963, we

4

_ had driven the amounts down until the Board’s sub- '

sidy request for the present fiscal year was below $30

million. We accompanied this by route proceedings in -

which we tried to strengthen the local service carriers

by awarding them authorizations to operate in larger

and longer traffic markets in the hope that the profits

.there would cross-subsidize service to smaller commun-

ities. We allowed them to overfly many smaller traffic

points and generally strengthened their route structures.

* * * By 1969 the nine.remaining local service carriers

had a subsidy need of nearly $76 million but. we paid

them only $36 million under the so-called class rate

formulas then in effect. This, of course, left them far

short of their revenue requirements and resulted in sub- |

stantial losses in recent periods. Unfortunately, the

~ brunt of these losses has fallen on the small, low traffic

points as: the carriers have sought to stem the flow

by curtailing or eliminating service, to these low traffic

and frequently isolated points.” ‘

>

omy

it is, of course, possible that the most efficient. allocation

of resources would be for reduction. in seryices of the sub-

sidized carrier, TranS-Texas, and inauguration of service by

the unsubsidized carrier, Air Southwest. That judgment,

based on traffic, projections and detailed analysis of com-—

‘parative efficiencies would have to be made on remand of

this case. For present purposes, however, the point is that |

the questions have not been considered. | |

In short, the current policy of the CAB with nes to the

area covered by the present case is to strengthen the local

service carrier Trans-Texas, and to build up-the growth

of Braniff in parallel with the growth of Delta as a major

source of competition to the Big Four. Right or wrong, this

policy has been decided on by the federal agency given the

‘assignment of establishing a nationwide air transport | sys-—.

~ tem. The Texas Aeronautics Commission. has acted in com-

plete disregard of that design at the same time the federal .

policy was being fashioned. Gulf-States-Midwest “Points —

Service Investigation, Docket No. 17726 (1968); Service. to

Albuquerque Case, Docket No. 18586 (1969); Texas Inter-

national Airlines, Inc.., San Antonio-Dallas Subpart M Case, .

Docket No. 20066 (1969). If comparable action were per-

mitted. by other state regulatory bodies, the national air

transport system would soon be riddled beyond recognition.

c The Texas Mdiadiing Commission Sougive to Im-

pose Its Local Views of an Appropriate Rate Structure in

- Disregard of National Policy. ‘

In its application for writ of. error és the Supreme Court

of Texas, the Texas Aeronautics Commission made it clear —

Hy

‘

19

a

that a major purpose of the state agency in. approving. yarn ee

* Southwest’s application was to provide. service ht lower |

fares i in the expectation of forcing the federally certificated | |

. carriers to reduce their fares. Evidently the rate aspect was

a primary consideration in the decision of the Supreme

Court of Texas as well (Appendix F, p. F9-10). Lower rates

sound to the layman like:an attractive propogition. The

Federal Aviation Act, however, in Section 1002 («) (49

U.S.C. § 1482) lists a numbey, of ceriteri ia: a

“(1) The effect of such rates upon the movement of

traffic; 7

“(2) The ou in the public interest of adequate and

efficient transportation of persons and property by air

é

carriers at the lowest cost congistent with the furnish-

.ing of such ‘services;

“(3) Such standards respecting the ences and qual-

ity of service to be rendered by air carriers as may be

prescribed by or purseant te law;

_“(4) The inherent advantages of transportation by air-

craft;. and .

““(5) The iad of rae air carrier for revenue sufficient

to enable such air carrier; under honest, economical,

and. efficient management, to provide. adequate and effi-

cient air carrier service.”

7 How these criteria are: to be applied is the subject of a

currently pending proceeding before the CAB in Domestic

Passeriger Fare Investigation, Docket No. 21866 (For an

earlier discussion, see General Passenger Fare Investigation,

32 C.A.B.:., .291 (1960), sustained sub nom Eastern Air

Lines v. C A B., 294 F. 2d 235, (D.C. Cir. 1961) ). Whether,

for example, fares ‘should be based on distance. traveled, on ~

t

{

1

a a

the number of landings, on relative profitability of different

_ routes; whether there should be a different fare structure

_ where one or more carriers operates under subsidy; whether

there should be a uniform definition of investment and a

uniform system of accoynting and depreciation: are all mat-

ters of great importance and great complexity. But neither

the Texas Aeronautics Commission nor the Texas Supreme 7

Court saw any. reason to inquire into any of these issues. _

The consequence can be- easily foreseen. Suppose, for

example, a_ service San Antonio-Dallas/Fort Worth-New

York (ég. Braniff Flight 6). If petitioner Braniff were

required to reduce its San Antonio-Dallas/Fort Worth fare © —

in order to competé with Air Southwest, should the Dallas-

NewYork segment pay a greater ‘burden of the total? Or

should some other service, say Chicago- Houston, bear an

increased burden i in order to enable Braniff to attain a rate

of return as prescribed by,the CAB? The variations on this

question could be multiplied ad infinitum. The point is that —

_ to disregard them is not only. irrational but is disruptive

of the regulatory system and a sound economic aviation

s-

industry. —

Hi. THE C ERTIFICATJON OF AN INTRASTATE AIR .

CARRIER TQ SERVE MAJOR AIR TERMINALS IN

DIRECT COMGETITION WITH. FEDERALLY-CER-

TIFICATED C ARRIERS BURDENS icecaiuean

COMMERC E.

Air transportation, by i its very aan demands applica-

tion of the -principle first announced by this Court in

Cooley v. Board of Wardens, 53 U.S.. (12 How.) 299 (1851),

21

that states have no power to act in those. areas of interstate -,

commerce which by their nature require uniformity of regu-

lation. This Court, not the Texas AeMnautics Commission, _

is the final arbiter of the national interest under the Com- |

merce Clause. Southern. Pacific Company v. Arizona, 325 _

U.S. 761 (1945). The state’s certification of an airline to

serve the important routes here in question, if permitted;

would potentially burden interstate commerce in much the

- Same way.as the burden condemned by J ustice: Brandeis

in Colorado v. United States, 271 U.S. 153, 162-163 (1926):

“Prejudice to interstate commerce may be effected in

-many ways. One way is by excessive expenditures from

the common fund in the local interest, thereby lessen-

ing the ability of the carrier properly to serve interstate.

. commerce, Expenditures in the local interest may be.

so large as to compel the carrier to raise reasonable.

interstate rates, or to abstain from making an appro-

priate reduction of rates,-or to curtail interstate service,

or to forego facilities needed in interstate commerce.

Likewise, excessive local expenditures may so weaken

the financial ‘condition of the carrier as to raise the

cost of secyri capital required for providing transpor-

tation facilitfés used in the service, and thus. com pel

an increase jn rates.”

Air Southwest is caught v up. in ‘an unending stream of

national commerte: it will take off and land at the airports

serving national and international flights; its safety stan-

dards are’ prescrib by the Federal Aviation Agency; its

‘chase tickets i in the same terminal facili-

‘passengers will

ties; the travel agents that write tickets for federally-cer-

tificated air carriers will write tickets for Air Southwest

flights; and Air Southwest claims that its passengers will

22

be drawn from primary and secondary markets having :

_ ‘combined population: in excess of 5,090,000 people (Air

‘Southwest Exhibit No.,23, p. 7). ~ )

“ ‘Over a century ago, in Gibbons v. Ogden, 9 Wheat. 1,

6 i Ed. 23 (1824),’ this Court established that control of

‘the navigable waters of the United States was vested in

the Congress and the federal government and.not the states.

As Justice J ackson has observed, there is no reason to sug- |

gest that the control of airways is any less a.matter of fed-

eral concern. In Northwest ‘Airlines v. Minnesota, 322 U.S. '

292, 303 (1943)-he wrote, concurring:

° “Students of cur. legal evolution know how this Court,

interpreted the commerce clause of the Constitution to

lift the navigable waters of the United States out of

local control and into the domain of federal control. Air ._

as an element:in which to navigate is even more inevi-

tably federalizedby the commerce clause than is navl-.

* * OF

gable. water. ;

“Congress has recognized the national responsibility for

regulating air commerce. Federal control is intensive

and ‘exclusive. Planes do not wander about.in the sky |

' like vagrant clouds. They move only by federal permis-

sion, subject to federal inspection, in the hands of fed-

‘erally certified personnel and under an intricate system

of federal commands. The moment a ship taxies onto -

a runway it is caught up in an elaborate and detailed

systém of controls. It takes off only by instruction by.

the control tower, it travels on prescribed beams, it may

be diverted from its intended. landing, and it obeys —

signals and orders. Its privileges, rights, and protection,

so far as transit is concerned, it owes to ‘the federal

government alone, and not to any state. govern-

oe ee 2

*

A

2)

»

The state hea. exceeded its’ sii bbeathcana aiathicwtiey wy +3

certificating Air Southwest to compete | with federally-certif-

icated carriers in major interstate markets. Only this Court

~may. prohibit this erosion to fedéral authority and = :

this srsiaiuas naomi into the federal domain.

CONCLUSION sf,

f-

No opinion in this Court deals specifically with the scope

of state regulatory authority over ‘commercial air transpor- |

* tation." The conflict between state and federal regulation

oft Civil air transportation i is steadily growing, and this. case

presents an ideal opportunity for the Court to establish the

appropriate guidelines. ‘The Court is not asked to ‘substitute

its judgment either \for that of the Texas Aeronautics Com-

mission or for that of the CAB. The Court is asked, rather,

to prescribe to the Texas Aeronautics Commission (and by

ee

implication to comparable agencies in 28 other states) the

limits of its decision making in relation to the federal air

transport system. Conversely, the Court is asked, hope-

~ fully” with the help of the Solicitor General i in consultation

: _ with the Civil. Aeronautics Board, to fashion a procedure ~

whereby state agencies and courts will not be left to. guess.

about the significance of silence on the. part of the CAB in -

a given case, but whereby both the state and federal inter- _

ests can be adequately presented and rationally judged.

e

* For cases in whtich the Supreme Court postponed consideration

- of this issue, see Public Utilities Commission v. United Air Lines,

346 U.S: 402 (1953), reversing United Air Lines v. California Pub-

lic Utilities Commission, 109 F. Supp. 13 (1952); Western Airlines

* v. People, 268 Pac. 2d 723) (1954), appeal dismissed, 348 U.S. 859

(1954). See also,.Civil Aeronautics Board v. Friedkin Aeronautics,

246 F. 2d ih (9th Cir., 1957). °

@

a

ao

For the reasons stated, petitioners. pray that this petition

for certiorari to the. Supreme Court of Texas be granted.

_ Respectfully submitted,

%

Vs

CLARK: WEstT, KELLER,

SANDERS AND GINSBERG, *

2424 First National Bank

Building,

Dallas, Texas 75202,

Of Counsel,

. CLARK, THOMAS; HARRIS,

-_DENIUS AND WINTERS, ‘

MARY Ale)? CARROLL, -

P. O.- Box 1148,

. Austin, Texas 78767,

Of Counsel,

wey

CLARK, WEST, KELLER, |.

SANDERS AND GINSBERG,

2424 First National Bank

Building,

Dallas, Téxas 75202,

Of Counsel,

“McGinnis, LOCKRIDGE,

KILGORE, .BYFIELD,

HUNTER AND WILSON,

900 Congress Avenue,

Austin, Texas,

Of Counsel.

\

r

W. B. West III

2424 First National Bank

Building, .

Dallas, Texas 75202,

Counsel for Petitioner

Braniff Airways, Inc.,/

\ \ Edward A. Clark

12th Floor Capitol National

_ Bank Building,

P. O. Box 1148, es

Austin, Texas 78767, :

, Counsel for Petitioner

Trans- pees Airways, Inc.,

oe we we ww oe ow oe a en eee nee reer

Geotge Allen Butler

2424 First National Bank

‘Building,

' Dallas, Texas 75202,

‘Counsel for Petitioner

Braniff Airways, Inc.,

a

James W. Wileon _

900 Congress Avenue,

Austin, Texas 78701,

Counsel for Petitioner

_ Continental Airlines, Inc.

=

Pere

)

APPENDIX: A

Kets 1961,.571p Leg. R.S, Ch. 379, p. 850

(Article 46ce—6, Vernon’s Anii. Rev. Civ. Stat. of Texas)

4,

: -t° & ;

Pile.

: ° .

~

.

A-1-.

Art. 46e-—6. Commission Powers and Duties °

Subdivision 1. General. The Commission, and its Direc--

tor, acting under its authority, is empowered and ‘directed to

' encourage, foster, and assist in the development of aero-.

nautics in this state and to encourage, aid and assist in the

establishment of airports and airstrips and air navigational

facilities in. this state, and, as to lands, or portions thereof,

or navigational aids or facilities-donated or given to the

state, or to the Texas Aeronautics Commission to be held

by it in trust forthe state, the Texas Aeronautics Com-

mission may control, administer, and-have jurisdiction there-

- over, and may lease the. same on the terms hereafter pro-

vided. The Commission and its Director may cooperate with

and assist the United States, municipalities or other gov-°

ernmental subdivisions of this state, or persons engaged in

aerondutics, or in the development of aeronautics, and may

endeavor to coordinate the aeronautical activities of such

others, and, municipalities and governmental subdivisions

- are authorized to cooperate ‘with the Commission in. the

development of aeronautics and aeronautical navigatjonal

facilities or aids in this state.

Subdivision 2. Authority to Contract. The Commission _

_ may enter into contracts which it-deems necessary,or advis- °-

- able in conformity with and in the execution of the powers

. granted it by this Act, as amended.’ However, except as to

moneys received by gift, the Commission shall have no

‘ power to enfer into any contract or agreement binding on

the State of Texas for the payment of any moneys which

have not been.authorized by appropriation of the Legis-

‘lature from’ the general revenues or from the Texas Aero-

nautics Commission Fund. All contracts entered into by the

Commission shall be submitted to the Attorney General

for the approval as to form. The Commissicn shall not enter —

into any contract binding the State of Texas in excess of

. the power granted in this Act. | 3 |

Subdivision 3. Scheduled Intrastate Carriers.’ For the

- public conyénience and necessity, the Commission is granted

the right,\ power and authority to exercise economic and

A;2

safety regulations -over, only scheduled intrastate carriers,

not hOlding certificates of convenience and necessity from

the Civil Aeronautics Board undér the Federal Aviation

Act of 1958, as now or hereafter amended.* In this connec-

tion the Commission shall promulgate both economic and

_ safety regulations pertaining to such carriers. As to the

economic regulations promulgated, the Commission shail

take into account the financial responsibility of the carrier,

the public convenience and nggessity for the proposed serv-

ice, routes, proposed rates or charges, the effect on existing

carriers, and any other factors bearing a_ relation thereto

and pertaining to the public interest and necessity. The

Commission shall be vested with a broad discretion in pro-

mulgating such regulations, and no intrastate air carrier

shall operate within the State of Texas unless and until it |

has - the standards prescribed, and has been issued a

certificate to do:so by the Commission, and such certifi-

cate ;shall remain in effect only for the period of time

prescribed. by the Commission, but: shall be. subject. to

‘revocation, or suspension, with notice, for violation of the

Commission’s rules or regulations, or the safety rules or:

regulations prescribed by “this .Act or by the Commission

or by the laws of the United States, or any regulation pre-

‘seribed by any agency of the United States pursuant to

existing laws of the United States, or those hereafter en-

acted. Such certificate so revoked or suspended may be rein-

stated upon order of the Texas Aeronautics Commission on.

its own motion, or. after a hearing: upon application of the

violator, and based on a determination by the Commission

that such reinstatement would be in the public/nterest. Any

- applicant for an intrastate certificate of publi¢_corivenience

ahd necessity shall file a signed, verified original ‘and six (6)

conformed copies of an application therefor and shail trans-

mit the same by certified mail to, the Commission’s head-

. quarters, Austin, Travis Gounty, Texas, addressed to the

Director.’ Such application shall set forth any pertinent

facts or cata required under this Act, or required by the

-rules, regulations and orders of the Commission. Copies

of such application shall be contemporaneously transmitted

ts”

— A-3

” to the Civil Aeronautics Board, the Federal Aviation

ag

we

»’

Agency, (or its’ or their successors), and to any air°car-". °

rier which is serving, or which has applied for permission —

to serye, the same, or substantially the same routes. After

receipt of such application--the Commission shall set a

‘date for hearing which may be conducted by the Com-

inission, or at iis direciion, by the Director, or any other

staff member of the Commission, but: the final detérmina-

tion shall be made by. the Conimission and shall -be evi-

denced by a final written order granting or denying such

certificate in whole:or in part. Any interested party, affec-

ted by the Commission’s final order. to the state courts

shall be entitled to a trial de novo on all facts and circum-

stances involved in such matter. Nothing in this Act shall”

apply to or be construed or held to apply?to, directly or

indirectly, any commercial airline, ;or, employees . thereof,

operating under the Federal Aviation Act of 1958, as now

or - hereafter amended,’ and under current certificates’ of

public convenience and necessity issued by the Civil Aero-

nautics Board of-the United: States’ of América, or any

other governmental agency successor thereto, pursuant to

the provisions of said Federal Aviation Act of 1958, as

now or hereafter amended. |

Subdivision 4. Cg-operation with. the United ‘States.-

The Commission shall work with the agencies of the United

States in enforcing the Statutes, directives; rules and regu-

“tations of the United States. It is authorized to report to

" the appropriate federaLagencies and agencies of other states

all proceedings instituted charging violations of this Act or

of Federal Statutes. It is authorized to receive reports of

penalties and other data from agencies:of the United States

and other states, and when necessary, to enter into agree-

_ments,: approved by the Attorney General of Texas as to

form,’ with the. United_-States and the agencies of other

| states governing the delivery, receipt, exchange and use of

reports and data. The Commission may make such reports,

with or without request therefor, to any officer ofthe state

or of a municipality-authorized by the Commission or by

‘the Utited States to enforce the aéronautics laws, but

\

* .

$

. sia

: : ee ’

A-4

such reports shall not constitute evidence offany violation

nor shall the same be received as evidence by any court.

. e *.

Subdivision © 5. - Aircraft) Operation. -Aircraft shall be

operated in and over the state in a safe manner. Operation -

- shall be deemed safe. it conducted in compiiance with ihe

United .States laws and regulations governing air traffic

and aeronautical operation, now in Jexistence or hereafter

enacted. he

Subdivision 6. Airports. and. Navigation: Aids, Gifts,

Leases. To develop aeronautics for the common good,

benefit and. safety of the citizens of Texas, and to provide

forgcatastrophe, disaster, or state or national emergency, |

the State, or the Texas Aeronautics Commission on behalf

of the state, is grated the right, under its police power,

* to accept gifts or donations cf.all or any ports of lends en

"adjacent to, or utilizable.as, airports or airstrips, or utiliz-

able as a navigational aid, in the judgment of the Texas.

Aeronautics’ Commission, from the United’ States or any

agency thereof: or from any governmental, municipal, or

Other political subdivision of, this stat; or from any other

person, firm, association, group, or corporation. The same

shall be administered by ‘the Texas Acronautics Commis--

sion and shall be and remain under its control and juris-

diction. The Texas Aeronautics. Commissian is hereby

granted the right to utilize such portion of the\ Texas Aero-

‘nauties ‘Commission Fund, or other moneys &ppyopriated

to it by the Legislature, to construct improvements, facili-

“ties or navigational aids thereon as the Commission shall

= advisable or necessary. The Commission is granted

the right to rent cr lease such lands and improvements to

any governmental or municipal agency or subdivision, or

to any other person, firm, association, group, or corpora-

tion, provided any such lease so executed by the Commis-

sion shall be for a term not to exceed twenty (20) years,

and provided further; the Texas Aeronautics Commission

shall determine, after investigation, and reduce its findings -

to writirig in a book or books to be maintained in the offices

of the Texas: Aeronautics Commission for that purpose:

(1) that’ the lease is: desirable or essential for the pur-

the Texas Aeronautics Commis

: : pie ase \

; ge ie ; ar et soe "se ¥ ; ‘

poses “above stated; (2) that th lessee is financially respon-

sible; and. (3) that the amount of monthly or periodic

rental payments shall be sufficient to amortize the amount

it has expended thereon for improvements within the term

of the lease. Any such lease, before the same shall become °

- effective, shall be submitted to, and approved hy. the

Attorney General of Texas as to form~ Any such lease

shall provide that the lessee shall maintain the land, prem-

ises and improvements placed thereon by the TexaseAero-

nautics Commission in accordance with the standards pre-

sertbed by the. Texas Aeronautics Commission and shall

contain a provision that the lease shall immediately ter-

minate and that the lessee shall surrender the premises to

ion without liability, and

without court action, in the e¥ent .of -violatibn, of any of

the provisions of the lease, or any rule, regulation or order

of the Texas Aeronautics Cémmission pertaining stherceto; |

and provided. further, the Texas Aeronautics Comamission

shall have the tight to utilize the.same, or any part thereof,

for itself or others, without liability or cost, in time of

national: or state disaster, emergency; or catastrophe, as

‘determined by either the Governor of Texas or the Texas

Aeronautics Commission. . :

Independently and additionally, the Commission ‘shall.

be authorized .to. accept any grant, payment, or gift of

moneys, funds or property made to it. by. any person, indi-.

vidual, firm, association, corporafion, municipality, county,

or other political subdivision of the state, or from’ the

United States, or any department or agency thereof, as to’

which the doner has prescribed a particular use fox one or.

more aeronautical purposes. The Comniission shall utilize

any such grant of property in accordance, with the terms of

‘the grant, and as to any such payment, or sift of funds

or moneys, the Commission shall (1) deposit the same in

any one or more state or national banks approyed by the

State Depository Bourd as a depository af the public funds

of Texas, and shall (2) ‘utilize such moneys for the purpose

or purposes prescribed by- the donor.’A record shall be main-

-

‘tained in the -Commission’s offices of such properties. and

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J. 2 + AS : :

; we , ; 5 205 .

funds. Such funds shall be expended only upon geeral. or

special -ordex of the Commission, and all checks shall be

signed by the Director and countersigned by the Chairman

of the Commission, or some other Commissigner designated

by a, majority of the Commission to so. cout aa ‘sign. Reports

‘of any such expenditures shall be made at the end-of, each

fiscal year to the Comptroller of. Publi Accounts of the

State of Texas.

Subdivision 7. Investigations, Hearings (General). The

Commission shall have the power to conduct and hold

investigations, inquiries, and hearings. concerning matters -

covered by the provisions of this Act and rules, regulations

and orders of the Commission, unless specific: lly” Porovided

otherwise herein. Hearings shall be open to the public. Each

member of the Commission, the Director and every officer

. or employ ee of the Commission designated by it to hold an

inquiry, investigation or hearing, shall have the power to

administer oaths, certify to all official acts, issue subpoenas,

and order the attendance and testimony of witnesses and

the production of papers, books and documents. Each sub-

poenaed witness who shall appear at-a designated place

outside the county of his residence shall receive ‘for his

attendance Five Dollars ($5) per day and six cents (6¢)

per mile traveled by the nearest practicable route in going

to and returning from the place so designated, which shall

be ordered. paid, on the presentation of proper vouchers,

sworn to by such witness‘and approved by the Commission

or Chairman thereof, provided, no- witness shall be entitled

to any witness fees or mileage wha, is directly or indirectly

interested or involved in the investigation or hearing on

account of which’ he is summoned.-Any witness entitled

to be paid shall be paid out-of any funds so appropriated

by the Legislature, or out of the Texas Aeronautics Com-

- mission Fund. In the case of the failure of any person to

comply with any subpoena or order issued under the author-

ity of this Section, the Commission shall notify the Attor-

ney General of Texas who may bring suit in the name of

the state in any district court of Travis County, Texas.

The court, if it determines such non-compliance was not

e

{oF

’ Legislature,

justified shall thereupon order such person to comply with

the requireménts of the subpoena er order, and failuré to

obey the order cf the court may be punished by the court

as a contempt thereof. ae ‘

Subdivision 8. Education, Publications. The Commis-

sion may organize and administer a program of acronautical

education in the schoals and colleges of ‘the- state and for - -

the ‘general public and may prepare and conduct flight

clinics for airmen. The Commission may issue such aeronau-

tical publications as may be required in the public interest.

Subdivision 9,-Technical Services. In the interest of public

safety and welfare, the Commission may, insofar as 1s: rea-

sonably - possible, make available its engineering and tech-

“nical services, with or without charge, to any municipality or

person desiring them in connection with the planning, ac-

_. quisition; construction, improvement, maintenance or opera-

tion of airports, air navigation facilities or other aeronautival

activities. 7 |

-

Subdivision 10. When in the discretion of the Commis-

sion the public interest will best be served, and the govern-

mental function of the State or its’ political subdivisions

relative to aeronautics will best be discharged, it may: grant

or- loan funds, appropriated to it for that purpese hy the

any incorporated city, town or village in

this State Aor the establishment,. construction, reconstruc-

ticn, enlafgement or repair of: airports; airstrips or air navi-

gationalfacilities. Provided that any such funds must be

_ expended by the city, town or villagé for the purpose pro-

vided herein and in conformity with the laws of this State

and with the.rules and regulations ‘which the Comrnission

is hereby authorized to promulgate.’ -

Prior to approving any loan or grant under this Act the

Commission shall hold a public hearing at which all in-

terested parties shall have an opportunity to be heard. No

‘such loan shall be made without a majority vote of the entire

Commission in favor thereof and no such grant shall be

made without a two-thirds vote’ of the entire Commission in

+, A8 woe ) Sasa

favor thereof. In determining viasthus or not a grant or + loan

shall be made, the Commission shall consider the following:

(1) The need-for an airport or facility or improvement of

existing facility in the locality in the light of existing airports

or facilities in the area and in light of me overall needs of

the State, and

(2) The financial needs of the community with eee

given to areas of greatest need.

(3) Loans shall made ‘in lieu of grants whenever

feasible.

Prior to approving any loan or grant the Commission shall :

require that:

(1) THe airport. or facili remdin in the control of the |

political subdivison or politcal subdivisions involved for at

least twenty (20) years, and

(2) The political subdivision disclose the source of all

funds for the project and ‘its ability to —— and operate

=a

the project, nee no

(3) All loank shall béar'. ee at the rate of at least.

three per cent (3%) per annum and have a term of not

longer than twenty (20) years, and

(4) At least fifty per cent (50%) of the total project cost: '

be provided from sources other than the State of Texas,

and : Pea : |

(5) The project be adequately planned. <

~ Acts 1945, 49th Leg., p. 580, ch. 344, § 6. Amended by Acts

1961, 57th Leg., Bon 350, ‘ch. 379, $ 4; Acts 1965, 59th Leg.,

p. 397, ch. 196, $11, eff. Aug. 30, 1965.

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APPENDIX B

Order of the Texas-Aeronautics Commission ‘

entered February 20, 1968,

In.the Matter of the Application of .

Air Southwest Co. for an Intrastate

Air Carrier Certificate of .

Public Convenience and Necessity

See

ATE OF TEXAS = — |

ONAUTICS COMMISSION .

STIN, TEXAS ©

IN THE MATTER O

E APPLICATION OF | |

_AIR-SOUTHWEST CO:

-FORANINTRASTATE: |

AIR CARRIER CERTIFICATE

» OF PUBLIC CONVENIENCE

AND NECESSITY |

I Oe 2 a

"This matter having been heard by the Honorable Charles

irector of the Texas Aeronautics Commission, °

A. Murphy, !

on January 15-18 and January 22-24, 1968 and the Texas

_Aeronautics Commission having thoroughly reviewed ‘and ~

-. considered the Application of Air’ Southwest Co., the Pe-

- titions of the’ Intervenors, the“evidence presented at the -

hearing and the briefs of the respective parties, and having: * .

heard the’ oral arguments of the respective parties, and hav- .

. ing found therefrom that Air Southwest Co. has satisfied all

of the statutory requirements ; and should be.granted a Cer- -

- tificate of Public Convenience and Necessity; vas

. It is, therefore, the unanimous ORDER OF THE TEXAS

_. AERONAUTICS COMMISSION that, pursuant to Article

-.. 46-1 et seq., Vernon’s Civil Statutes,- the Application, of Air

Southwest Co. for a> Certificate of Public: Convenience and

Necessity be, and it hereby is, granted, and the Difector of.

the Texas Aeronautics Commission is hereby directed

to prepare and deliver’ such Certificate of .Public Con-

venience and Necessity to Air Southwest Co., as evidence of

its. authority to operate, in the form attached ‘hereto as . .

Exhibit A.~ °, 7 3

Dated this 20th day of February, 1968. |

‘Harry P. Whitworth, Chairman

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Su STATE OF TEXAS

TEXAS AERONAUTICS COMMISSION

) AUSTIN, TEXAS |

CERTIFICATE OF: PUBLIC CONVENIENCE

oan AND NECESSITY |:

AIR SOUTHWEST CO., doing business as AIR SOUTH-

WEST is hereby authorized to operate as an intrastate com-"

mon carrier by air for the transportation of persons and

property, utilizing Federal Aviation Agency certficated air-

craft of any gross take-off weight aind subject to the’ condi-

tions héreinafter set forth, the laws of the State of Texas and

the requirements, rules and regulations of the Texas Aero-.

nautics Commission, issued pursuant thereto, as follows:

Between and among the. points Dallas/Fort Worth, Hou-

~ ston and San Antonio, Texas. | =

The service hereby authorized is subject to the following

conditions: a ? ere

The holder of this Certificate may begin or terminate, and

begin and terminate, service at any airports serving those

points, named herein. 3 ‘

This Certificate shall be effective as of February 20, 1968.

IN WITNESS WHEREOEF, The Texas Aeronautics Com-

‘Mission has caused this Certificate to be executed by the

Director of the Commission, and the seal of the Commission

to be affixed hereto, as of the 20th day of February, 1968.

Signed and Entered this the . _ day of BC ee

1968. - mele | a ;

- (SEAL)

~

D-1

No. 164,386

IN THE DISTRICT COURT

OF TRAVIS COUNTY, TEXAS

. 98TH JUDICIAL DISTRICT

: ~* BRANIFF’AIRWAYS, INC., ET AL,

v. ; ; ;

THE TEXAS AERONAUTICS COMMISSION, ET Aw.

2 JUDGMENT |

On the 25th day of March, 1968, came on to be heard the

above-entitled’ and numbered cause, wherein BRANIFF

. AIRWAYS, INC., CONTINENTAL AIRLINES, IN C., and

TRANS-TEXAS AIRWAYS, INC., are Plaintiffs, and THE

TEXAS AERONAUTICS COMMISSION and HARRY P.

WHITWORTH, its Chairman, in:his official capacity only,

and REX C. CAUBLE, HUGH A. FITZSIMONS, JR.,

WILLIAM N. ALLEN,. PAUL M. FULKS, SR., and A. G.

THOMPSON, its Members, in their official capacities only,

and CHARLES MURPHY, its Director, in his official capac-

ity only, are Defendants, and ini which AIR SOUTHWEST |

CO. is Intervenor-Defendant, and came: the parties and

announced ready for. trial, by agreement, on the issue ‘of

whether or not the permanent injunction should be granted;

and the Court, having considered -the verified Petition of

the Plaintiffs, the evidence, and the argument of counsel,

and it. appearing to the Court that the evidence and the law

‘are with the Plaintiffs; that Plaintiffs are entitled to the

relief sought;.that there is no evidence and no substantial

evidence that AIR ‘SOUTHWEST CO. complied with the |

statutory requisites for securing a Certificate of Public Con.

_ venience and Necessity in that there is no evidence and no -

_ substantial evidence that there tis a public necessity for the

proposed service, no evidence and no substantial evidence

that the proposed service would be in the interest of publié

convenience, no evidence and no substantial evidence that -

AIR SOUTHWEST CO. possesses such ‘financial-. respon-

sibility, fitness: and ability as would warrant the issuance, |

-to it of a Certificate of Public Convenience and Necessity,

-

‘'. s 1

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no evidence and no substantial evidence that the proposed

rates or charges would be adequate for the operation of the

proposed service over the proposed routes, no evidence and

no substantial evidence that a Certificate of Public. Con-

venience and Necessity could be issued to AIR SOUTH-.

‘WEST CO. without undue harm to existing carriers, and no

evidence and no substantial evidence .that- AIR SOUTH-

WEST CO. has complied with the standards for operation

which the Commission is required to prescribe; that there

is no evidence and no substantial evidence to support the

Order of February 20, 1968, by, which Defendant, THE

TEXAS AERONAUTICS COMMISSION, purported _ to:

authorize the issuance of a Certificate of Public Conve-

nience and Necessity to AIR SOUTHWEST CO.; that the

February 20, 1968 Order of THE TEXAS AERONAUTICS

COMMISSION is void because’ of the absence of any ftate-

ment therein of findings basic to such Order; that the Order

is void in that it was issued without compliance with the

basic requirement of due process that such an order state

on its face findings of the facts essential to the exercise of

such administrative autherity; that the issuance of the Cer- ;

tificate and the exercise of the purported rights granted

therein would irreparably harm, injure ahd damage Plaintiffs

through losses of passengers and passenger revenues, and

freight and freight revenues, for which losses they have no

adequate remedy at law; and that the Temporary Restrain-

ing Order heretofore granted herein should be, and the same

is hereby perpetuated,’ and it is accordingly,

ORDERED, ADJUDGED. AND .DECREED that. the

February 20, 1968, Order of THE TEXAS AERONAUTICS

COMMISSION authorizing the issuance of a, Certificate of .

Public Convenience and Necessity *to AIR SOUTHWEST -

CO. be, and the same is hereby, set aside and held for

- naught, and that the Defendant, THE TEXAS AERONAU-

TICS COMMISSION, and the individual Defendants, in

their official capacities only, be, and the same are hereby,

permanently enjoined from, and that they shall desist-from,

issuing to AIR.SOUTHWEST CO. a Certificate of Public

Convenience’ and Necessity upon the basis of THE TEXAS

D-3

| AERONAUTICS COMMISSION’S Order of F ebruary 20,

1968, hereinabove held.to be invalid; set aside, and held for

naught. | : eh

To all of which Judgment as recited above, the Defend.

. ants and Defendant-Intervenor, AIR SOUTHWEST CO.,, °

in open court excepted and gave notice of appeal.

SIGNED, AND ORDERED ENTERED OF RECORD,

at Austin, Texas, this the 6th day -of August, 1968.

E-1

The TEXAS AERONAUTICS COMMISSION

~ et al., Appellants,

; V. j ‘-

BRANIFF AIRWAYS, INC., et ‘al., Appellees.

No. 11655.

® Court of Civil Appeals of Texas. ‘ os. |

_ Austin. :

March 12, 1969.

“Rehearing Denied April 16, 1969,

PHILLIPS, Chief Justice. :

In November, 1967, Air Southwest Co. applied to the °

Texas Aeronautics Commission for a Certificate of Public

Convenience and. Necéssity. authorizing Air Southwest to

provide scheduled commuter air service between the Texas

cities of Dallas/Fort Worth, Houston and San ‘Antonio.

Thereafter, Air Southwest filed two amendments to its ap-

plicatjon setting forth the namés of additional directors and .

shareholders of the Company.

The Commission permitted Braniff Airways, Inc., Conti-

nental Airlines and Trans-Texas Airways, Inc., to intervene

in opposition to the granting of Air Southwest’s application.

A seven day hearing, beginning January -15, 1968, was then —

held before the Director of the Texas Aeronautics Com-

. mission. Upon motion ‘of Braniff, Continental and: Trans-

Texas made orally~at the conclusion of the ‘hearing and

subsequently submitted in writing, the Commission granted

the parties leave to file briefs with the Commission and to.

_ argue the case orally before its members.

Each of the parties submitted a brief to the Commission,

and, on February 20, 1968, oral argument took place before

the Commission-members sitting en‘banc in Austin. —

The Chairman of the Commission thereafter announced

that the six members of the Commission had unanimously

determined to’ award a Certificate of Public Convenience

and Necessity to Air Southwest in the form prayed for and

requested that an appropriate order and certificate be pre- -

( eee.

E-2

pared. Before this could be achieved, however, Braniff, Con-

tinental and Trans-Texas filed suit against the Commission;

_ its members and Director in the District Court of Travis

County, Texas, praying that the order.of-the Texas Aero-

nautics Commission be set aside and seeking the issuance

of, respectively, ‘a temporary restraining order, temporary

injunction and permanent injunction prohibiting the Com-

mission, its members and Director from issuing a Certificate —

of Public Convenience ‘and Necessity to Air Southwest. The

trial court granted the temporary restraining order. :

Subsequently, with the Court’s permission, the Commis-

sion entéred its order with a form of Certificate annexed

thereto, but did not actually issue the Certificate. Air South-

. west intervened in the appeal as a defendant, and the

. temporary restraining order was continued in effect by agree-

ment of the parties and upon thé condition that the hearing ;

on appeal would. commence at an early date.

The: hearing began on March 25, 1968 and .continued '

through May 10, 1968. At its conclusion, the court announced

its decision to vacate the order of the Commission and to-

grant a permanent injunction restraining the Commission,

its members and Director from issuing a Certificate of Public

Convenience and Necessity to Air Southgest. -

J udgment i in.the cause was entered on Aggust 6, 1968, and

this appeal by the State of Texas and Air ‘Southwest 'i is from .

that | judgment. ”

We affirm this judgment: |

*> OS I. .

Appellants are before this Court with seven points of

error, however, as we sustain, Appellees’ first counterpoint,

_we néed not notice these points of error’ with the exception

aay ‘Point of iad I: ieee is substantial evidence’ that there is a

public necessity for the ‘service proposed by Air Southwest and

that the inauguration of such Service would be in the interest of

the public convenience.

. Point of Error II:- ‘There is substantial evidence that Air South-

west possesses the financial responsibility ,é fitness and ability to

‘

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-

of points VI and VII which complain, respectively, of eyi-

dence excluded and evidence admjtted. > ae

Appellees’ first counterpoint is-that the trial court cor-

recty set aside the order of the Commission? because

of the ‘tpg of substantial evidence that there is a. public

necessity forthe service proposed by Air Southwest and

that the inauguration of such service would be in the public

interest. ;

warrant the issuance to it of a‘ Certificate of Public Convenience

‘ and Necessity and that its proposed rates and charges will be

adequate for the. operation of ‘its proposed service over its proposed

* routes.

Point of Error‘IIi: There is substantial evidence that a Certificate

of Public Convenience and Necessity can be issued to Air South-

west without undue harm to existing air carriers and that the

issuance of such certificate and’ the exercise of rights thereunder

by. Air Southwest will not irreparably harm the appellees. *

Point of Error-IV-“fhere is substantial evidence that Air South-

west has complied and will comply, with the standards of operation

“of the Texas Aeronautics Commission, and: there is substantial -

- evidence to support the:issuance of the Commission’s Order grant-

ing a Certificate of Public Convenid&ice and Necéssity.

Point of Error V: The Order of the Texas Aeronautics Commis-

sion is not void for failure to state findings of fact. .

. Point of, Error VI: The “District Court erred by ‘incorrectly ex-

cluding admissible evidence ‘during the trial of this cause.

Point of Error VII: The trial court erred in permitting inadmissible

evidence to be introduced.” = ©

“A ‘portion of the judgment of the trial court. reads as follows:-

“that there is no evidence ‘and. no substantial evidence that AIR.

SOUTHWEST CO. complied with the statutory requisites’ for se-.

curing a Certificate of Public Convenience and ‘Necessity in that

there -is no evidence and no. substantial evidence that there is a

public necessity for the proposed service, no evidence and no sub-

stantial evidence that the proposed sérvice would be in the interest

-of public/ convenience, no evidence and no substantial evidence

_ that AIR|' SOUTHWEST CO. possesses such financial responsibility,

fitness and ability as would warrant the issuance to it of a Cer-

tificate of\ Public Convenience and Necessity, no evidence and no —

substantial evidence that the. proposed rates or charges would be

adequate for the operation of the proposed service over ‘the pro-

posed routes, no evidence and no ‘substantial evidence that a Cer-

tificate of -Public Convenience and Necessity .could be issued to

AIR SOUTHWEST CO. without. undue harm to existing carriers, '

and-no. evidence and no: substantial evidence that AIR,SOUTH- .

. WEST CO. has complied with. the standards for operation which

’ the Commission is ‘required to prescribe.” ;

o f

_* Worth and Houston, twelve flights per day between San

t%

- Electras are configured -for

*

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‘We sustain this counterpoint.

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i

—_—"

Air Southwest intends to provide scheduled air service &

among and between the cities of Dallas/Fort Worth, Hous-

ton and San Antonio, Texas. At least initially, it would serve

only these cities, utilizing four Electra turbo-jet aircraft

| purch: ised from American Airlines and seating 90 passengers

craft used by Braniff in thege markets, except that Braniff’s _ goo

each in a single class in thee mar These are the ‘same air-

th first class and ‘coach seating. «‘

Air Southwest ‘places considerable emphasis on accom- +

modating the “commuter” passenger who wishes to depart

from one. of the cities that it serves and to‘return thereto *

on the same day. It propeses to begin operations with eight

flights per day between Dallas and Houston, six flights per

day between San Antonio and > Dallas /Fort: Worth and

four flights per day between Houston’and San Antonio. As °

the air passenger market becomes stimulated by the addi-

tion of Air -Southwest’s service ‘and the. Company. increases

its penetration of that ‘tharket, it intends to add additional

flights so that by the end its first year of operation it’

will be providing sixteen flights per day between Dallas Fort’ ¢

-

Antonio and Dallas/Fort Worth and eight flights per day

between Houston and San Antoni6. These will be its basic

~ weekday schedules which will. depart betwéen -7: 00 . a.m.

and 9:00 p.m., with emphasis ‘on flights in the prime com-

~ smuter hours of .7:00 a.m. to 9:00 a.m. and 4:00 p.m. to 7:00

p.m. Additional flights will be ‘added on Friday afternoons,

which are historically pegods a heavier than normal air

_ travel. ;

The stage lengths eouight to ie flown by Air Sauitiowest

are 194 statute miles between Houston and San Antonio;

246 statute miles between Dallas/Fort Worth and Houston; -

. and 260 statute miles betweeri San Antonio and Dallas/Fort ©

Worth. The average flying time between these pairs of cities

will be 33 minutes on: the Houston-San Antonio leg; 46

minutes on <the Dallas/Fort Worth-Houston leg; and. 46

minutes on the-San Antonio-Dallas/Fort Worth leg. Air:

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Southwest’s aircraft in their 90 passenger seating configura-

tion will provide more leg room ‘and ‘seat width. than the

- coach ‘sections of jets competing in the same markéts. .

The Company seeks to maintain a reservations’ service

operating from a single central location in San Antonio to °

~ which all reservation calls, including those .placed in Dallas, .

- Fort Wotth and Houston, will come directly. These calls will

be monitored ‘by an automatic cal director which stacks -

the calls, shows how many, are ‘waiting, and. would enable

Air Southwest to- promptly vary the number of reservations

personnel. in accordance with demand. . : af?

‘It desires to sell ticket’ through independent travel agents,

“in Texas, who will be paid a 7% commission, on each. gale,

which is 2% higher than the commissions -paid by competing

airlines. Prepunched IBM tickets will bé-issued to regular ©

customers. These tickets may sithply be presented at. the

passenger boarding gate, and they do not require that any

information be written thereon. At the end of each month,

_ the prepunched tickets, identified by customer code number

“and destination, are processed through an. IBM: computer

which computes the customer's bill for that’ month. ‘More-

‘ever, tickets couldebe purchased at airport gountets, at the ©

passenger boarding gate or.on the airplane itself in flight.

“Tickets at the airport counters could be-issued hy .a. cash

register utilizing two different colors of tape,.so:that th

eounter -ggent need only punch the destination and hand

the passénger his ticket, which is cut off the tape by the

‘register in the manner of a ticket fot a bus trip. All credit

carts, except. the universal air travel card, would.be honored:

for the purchase of tickets. Air Southwest could not; and .

would ‘not, “interline” with any interstate air carriers, which.

means’ that it would not sell tickets on such carriers to

passengers traveling beyond Heuston,, Dallas Fort. Worth

or San Antonio. This is not to say, however, that the Corn-

pany cannot, or would not, carry such passengers who chose’

_ to separately purchase an Air Southwest ticket to. travel .

between its four cities as’ part of their overall journey, and

a

,

.

EG.

its: Sicha travel agents eile aia ‘oa auld

sell separate tickets on Air Southwest and on other carriers

. covering journeys to’ Houston, patos! Fort — or San

Antonio and beyond.

Air Southwest would proyide curbside checkin: facilities

- for baggage, would accept luggage check;ins at its passenger

-boarding gates and “would permit baggage to be carried

_ ° aboard its: aircraft by the. passenger. There wquld be no

weight limitation’ on. the amount of baggage that car ac-

company each passenge _* ;

_. Air Southwest: would spend $400, 000 per year in cg ana |

_ offer $200,000 worth of tickets by way of exchange for ex-

change for advertising solely in, and of, the Houston,

Dallas’ Fért Worth and San Antonio markets. It would also

employ a‘ salesman in the cities on its routes and promote f

_ recreational trayel and tours’ to its cities and the, areas sur- -

rounding them. |

The Company would charge full tosen of $14.95 parnien

ns Houston-Dallas Fort Worthsand San Antonio-Dallas/Fort

- Worth and of $12.95.between! Houston-San Antonio. It- would :

also offer military standby ‘and ‘children’s: fares of $8.10

between ; Houston-Dallas Fort Worth and San Antonio-

Dallas _ Worth and of $7.10 between Houston-San An-

tonio. These ‘tares “would: bé available on all of the Com-

. pany’s flights, at any time of day. or _— and ¢ on any day

of the week.

~On the San Antonio-Dallas Fort Worth stage) Air South-

west would nominally compete with three other, carriers,

An erican Airlines. Braniff and Trans-Texas. ‘Of thse three,

only Braniff has. unrestricted authority from the Civil Aero-

nautics Board permitting it te operate a non-stop flisht serv-

‘ing solely Dallas Fort Werth-San Antonio and, in fact, most .

of its service consists of long haul, through flights originating

‘andor terminating in other cities in the United States and

/or Mexico. Trans-Texas is required to serve an intermediate

ston in either direction between - Dallas ‘Fort Worth- San

a A:

— and American Airlines’ ights in either direction

\

Nine

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iG eke a E-7

the S: asthe, ne. Air Southwest jroutd

inally vompete with five other carriers, American Air-

Again, however, of these five, only Braniff and Eastern have

unrestri¢ted authority permitting them to serve solely these

markets \on a non-stop basis, and Eastern does not. utilize

this auth rity at all, while Braniff has but one non-stop a

dayyse only. these cities. American Airlines’ flights. be-

_ tween San\Antonio and Houston must also serve California |

> as part’ of heir itinerary, and each of Continental's is re- .

quired to rvé an out of state point as well. Trans-Texas ;

_must*operagée without subsidy on non stop flights- between

these two cities, and*its flights are a to serve points

beyond either Houston or San Antonio!

— ° Braniff and Trans-Texas are the only two competing car- ”

riers on. the’Houston:Dallas/Fort. Wor th stage, and both of

therm have substantially unrestricted authority. Many of

_ their ‘flights: nonetheless, are medium and‘long haul in na-

“ture; * serving cities other than_ those under consideration.

In addition, ‘Air Southwest maintains that it will be sub- |

ject to the same Federal Aviation Agency rules: regulations,

requirements, supervision and inspection Pa the other major.

interstate airlines involved herein’ under. Part 121 * the Fed-

_ eral Air Regulations.

Appellants vigorously maintain that- there is a need as

their proposed service inasmuch as their reservations would

all be made through a central office in San ‘Antonio; that

their tickets-could be purchased quickly and efficiently with-

out waiting at airline counters as they would be prepunched

IBM tickets; that these fares would be cheaper than those

present], charged byethe competing carriers; that they could

be’ purchased at the “gate” or even. after. boar ding their air-

craft; that their passengers would take_ their baggage with _

them onboard thus doing away, to a considerable degree,

_with lost baggage“

Appellants contend that in 1967, the latest year for which

. figures were ayailable, Braniff: cancelled 4.44%, -or 243, of its

flights’ from Houston to caaay Fort W orth and: 14.27%, of

3

raniff, Continental, Eastern Airlines and Trans- Texas.’

4

°

G

E-8 | i: pea og

780, were more than fifteen minutes late. During the same

period, Trans-Texas eancelled 5.15%, or 98, of its flights, and”.

23.29.% , oY 443, were more than fifteen minutes late. Coming =~

in the other direction, from Dallas/Foft Worth to ot

Braniff cancelled 4.28°¢, or 228, of its flights, and :31:83%

1,697, were more ,than fifteen mintstes late. 4.86%, or ‘01,

_ of Trans-Texas’ Dallas/Fort Worth to Houston flighgs were

cancelled and 21.44%, or 401, were more than fifteen minutes

late. Overall, the Braniff and Trans-Texas flights in this .

air corridor were either late, or cancelled, 27.32% of .the

time during 1967, which means that almost*one-third of the

4 time air travelerg either did not fly at all or-were substanti-

- ally late.in arriving. In December, 1967, for instance, Trans-

_ Texas scheduled 573 flights, of which fully.38 were cancelled .

andl 287 were more than fifteen minutes, late, for a reeord |

of only .43% arriving and on fime.

Appellants further contend that a major « cause ‘of the

poor. on-time performance of-the airlines presently serving

- ‘this triangle is the fact that so many of their flights originate

. outside of the market area Appellants seek. to serve and

are subject to delays not occurying in the area itself. eS

‘Appellants point out that their advertising would be.

slanted to encourage flights witpin the proposed triangle | as

rather-than the intérstate character of advertising presently ——— a

used by the interstate carriers with whom they propose to |

compete. :

Appellants then debe the economic fctors i in the pro- r

“posed market as having a: population in excess of five million

people with a, total effective buying income of over eleven.

and one-half million’ dollars. That between 1960 and 1965

‘the population:in what they designate as their primary. .

market area grew at a rate of 17,36 or more than twice’ |

as great as Texas as a whole whic’: was 6.81%.-That the oe

Texas Water Development Board predicts. that by 1980 the

population of the primary markets in question will have

expanded to 6,727,084 persons or a 77. 44% gain since 1960:

That according to the U. S.’Départment of Commerce,

through the year 1975 both the population of Texas and

nes

i . v8 E-9 .

¢

will grow at a rate seventeen percent greater than the fore-

cast for the nation as a wh@le. ze : ‘

‘Appellants presented the market projections of ‘a’ Mr. .

C. W. Pope, Sr. of San Antonio, their principal market wit-

ness, ‘who testified that the entry of Appellants’ ‘services

, the total value of goods san services : -the State produces | a

into the proposed triangle would: “stimulate” the market ‘

so that by 1970'there would be ¥,249,415 passengers in ‘the ©

Houston, San Antonio, Dallas, Fort. Worth markets rather

than 1,012,519. should this proposed service be denied. “This

would be an increase~of 236, 896, or roughly 23%.

Mr. Pope put great pernes on the. ability of Appellants |

to “stimulate” the market through lower fares and the .

various advantages claimed above. He forecast that after

a reasonable time or, after achieving “full market identity”. |

Appellants - ‘would carry 60% of the origin and destination

passengers between San Antonio and Houston, 50% of such

passengers between’ San Antonio, and Dallas Fort Worth

and 37.5%, between Dallas ‘Fort Worth ‘and Houston. This

would a.system wide average of 49. 1%.

“s

Mr. Pope’s forecasts were vigorously challenged by ae

.* pellees_as having—been arrived at by highty—unorthodox

«methods; that he used factors to obtain these results _that

a

‘

were patently incorrect, resulting~in - a forecast that was: .

unrealistic, incorrect and even -absurd.

é

Appellant’ s then presented evidence sof four: commuter:

markets in'the-United States these being .San Francisco-Los.

* Angeles; New York-Boston, New York-Washington > arid

Boston-Washington. Their purpose here was to show. that.

_ in spite of areas served by -the lar’ge-interstate airlines,

there was a need for the commuter services in these areas:

that the services were financially successful signifying that’

. they had: generated tremendous volumes of additignal pas-

sengeys. In this respect Appellants stressed: the. highly suc-

cessful operation of Air California-‘which operates: principally

- between Los nngcies and San Francisco!

\

t

———$——<——

E-10

‘It should be pointed out here that: this case took some

’ five weeks to try. and has a statement of facts numbering

nearly three-thousand pages. Appellants’ market projections * i

br ought out principally through Mr. Pope’s testimony com-

prises .. substantial part of this record especially when Ap-—

pellees’ cross examination and rebuttal testimony is added

thereto. ' oS ae av-4 s

eo .

We-have not ignored .this testimony, how ever, we have .-

‘aa stated it in ‘the detail that would be required should

we believe it to be decisive. We do not believe it so to be

- under our view that Appellants have not made their case for

‘public convenience and‘necessity or to state.it more simply,

A need for the proposed service. ‘This does not mean that

many. of the advantages to, the traveling public that Appel-

lantS assert will come to pass should they be granted a

certificate are iflusory, however, this Court is-bound by the

law of stare decisis with respect to, what the law requires

~ a prospective carrier to prove before it can enter into com-_

petition over a given route with presently certified .carrriers.

rae

+o

II.

This_suit was. hecuahit under the provisions of ‘Tex.Rev. -

Civ.Stat.Ann. Art. 46c-6; which is generally concerned with

the powers and: duties of the Texas Aeronautics Commis-

* sion. Subdivision . "3-of this article states .the necessary

requirements, for the i issuance of a certificate to a ‘carrier .

‘ as follows:

e fi o: 4

peta to the economic regulations promulgated,

. the ‘Commission shall take into account the financial

" peabonetiliey" ‘of the carrier, the public convenience :

and: necessity « for the proposed service, routes, propesed

ane

. . mitted to the Civil Aeronautics Board, the Federal Aviation Agency

a

¢

E11 ;

rates ‘or charges, ‘thé effect on existing carriers, and.

any other factors bearing a relation theretd and per-

-’ taining to the public interest and necessity. * * *”

We agree with both ‘parties hereto that the case is gov-

erned by the substantial evidence rule and so hold. Sub- —

division 3 of Article 46c-6 states, in part:

“Any interested party, affected by the Commission’s

"’ final order to the state courts shall be entitled to a trial

de novo on all facts and circumstances involved jin

such matter.” ~ a i

We hold that the trial de novo provisions are to be: con-

. Strued in the light of the holding of the Supreme Court

in Board of Water Engineers v. Colorado River Municipal.‘ ~

| Water District, 152. Tex. 77, 254 S.W. 2d 369 (1963) and

the cases therein cited. — ee oe

- In this case the public need and the public interest’

cannot be considered mierely as a.whole but must be con- -

sidered upon. a route by route basis. Railroad Commis-

sion v. Red Arrow Freight Lines, 167 S.W. 2d.249 (Tex.

Civ. App. .Austin 1943, writ ref;d Ww. 0. m.). : ese

It is clear from the controlling Statute itself, that the

Legislature intended that the route-by-route interpretation.

which this Court had placed on the Motér Carrier Act be

‘applied to the Certificates of Public Convenience and Neces-

Stat.Ann. art, 46c-6, Subdivision 3; requires that the Com-_

mission’s determination be based, among ether things, upon

_ the “routes” which the applicant seeks to serve. The same _

_ section’ further requires that copies of the application be° ..

*“Any applicant for an intrastate certificate of puhlic convenierice

and necessity shall file a signed, verified original andix (6) con-

formed copies of an application therefor and shal¥ transmit the

same ‘by certified mail to the Commission’s headquarters, Austin,

Travis County, Texas, addressed to‘the Directoy,’ Such application

_ Shall set forth any pertinent facts or data required under this Act,

or required by thie rules, regulations and ogders-of the‘ Commis-

sion. Copiés of such application shall be coritemporaneously trans-'

é me

ri

: ; Ki a f

sity which the Texas Aeronautics Commission was autho-. 4”

~ rized to-issue, under the Air Carrier Act. Tex. Rev. Civ,’ —

£

f as : E-12. , Stee z" ;

"served upon any air carrier serving “the same, or mabbatim-

‘tially the same, routes.”? Moreover, the Commission is autho-

rized to grant or deny a Certificate “in whole or in part.”

Unquestionably, the fact that the Legislature authorized the

Commission to grant the Certificate for which application

was made “in whole or in part,” constituted a requirement

that the Commission make a separate determination: upon

. the basis of each route proposed to be served. The phraseol-

. ogys of, the Act itself, thus, makes it clear that the Legis-

lature intended and required that the Texas Aeronautics

Commission approach its determination.on applications for .

Certificates. of ‘Public Convenience -and Necessity in? the

same manner in which the Railroad Commission, following

this Court’s construction of the statute involved in Red.

Arrow above. *-

This would have been the proper ae the Ease:

sion to have followed in -arriving at its decision. Railroad

Commission v. Jackson, 157 Tex. 32, 299 S.W. 2d 266 (1957).

It is apparent from the evidence that each and every seg-

. ment which Appellants propose to serve is already being

\ served ‘so adequately that there is no ‘substantial .evidence

‘indicating either a — or a convenience for additional serv-

ice. ; :

‘The following from Officia} Airline Guide, ‘Quick ‘Refer-

enc@ Edition, February 1, 1968, entered-into’ evidence, :sum-

marizes the 52. daily schedules. between Dallas Fort Worth

and Houston:

°

(or its or their*successprs), and to ‘any air carrier which is serving,

‘or which. has applied for permission to serve, the same, or sub-

stantially the same routes. After receipt of such application the

Commission shall sét a date for. hearing which may be conducted _

by the Commission, or at its direction, by the Director, or any

other. staff member of the Commission, but thd final determination

‘shall be. made by the Commission and shall be evidenced by a.

final written order. granting or denying such ¢ertificate in. whole

or in. part.” ~ : we F

E-13

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| E17

tie of the ae were arguments ‘pertaining to conveni-

ence and necessity was inadequacy of present’service during

“rush hours” ‘or. during the. most heavy periods of the, day.

The fallowing is a schedule of “rush hour” schedules, en-

“Y _fered into evidence showing the Proposed sérvice of Appel-

lants. .

8 " * “HOUSTON—DALLAS

*“ ~* .°«. @Rush Hour’ Schedule,

‘Northbourid ° f 7 Southbound:

Houston to Dallas’ — -- * Dallas to Houston

Morning . — Morning ~ i

aq: 00 Braniff jet 7:05 Braniff jet:

7:25 T.T.A.- jet. =... « 7:20 T.T.A, jet

7:00 Braniff jet —. ' 7:45 Braniff jet :

8:00 Air’ Southwest Electra* 8:00 Air Southwest’ Electra*

8:30 T.T.A. jet’ - 8:10 T/T.A. jet ;

8:30 Braniff jet. .T.A. jet

9:05 T.T.A. jet ae raniff jet

9:30 Braniff jet 0, 45 /Air Southwest Electra*

. 9:45 ‘Air Southwest Electra* 19: 10 Braniff Electra

10:45 Braniff ale 10: 30 Air Southwest: Electra *

y Proposed,

Northbound Southbound

- Houston to Dallas * . \ Dallas to Houston

7 Afternoon a * Afternoon

~ 1:30 -Braniff jet 1:45 Braniff Electra

- 2:00 Braniff jet 2:50 Braniff jet —

3:45 Braniff jet - 4:00 Braniff Electra

4:00 T.TA.. jet 4:30 Air Southwest Electra*

‘4:30 Air Southwest Electra* 4:35 T.T.A. jet

4:40 T.T.A. jet 7” - 6:15 Braniff. jet

4:45 Braniff jet - 5:30 T.T.A. jet

5:00- Braniff jet ~ 6:00 Air Southwest. Electra*

° 5:45 Braniff jet 6:05 Braniff jet

. 5:54 T.T.A. jet 6:50 Braniff jet

6:00 Air Southwest Electra* 6:50 T.T.A. jet .

6:30 Braniff jet “ (9:50 T.T-.A. jet

7:45 Braniff jet ee 55 Bramifi _

8:00 T.T.A. “jet a Vas

* Proposed

o

EAS

In addition to ie extensive flight ‘nina’ set wat above,

the majority of these. flights arrive and depart with a goodly

percentage of their seats. unsold and empty. /

- There are 4.352 ava tilable dels seats in the Houston:

Dallas niarket. Tn J: inuary, L968 Trans-Texas had an-aver-

age. of 671° empty seats per day between Houston and

Dallas, and, «luring the same month, there was a daily

average of 1301 empty seats:dn the Br: aniff flights between

Houston and Dallas. This included an average of 227 a uly

empty se: its for, Braniff between 7 a.m. and 9 a.m. “rush”

hours and 277 daily empty seats during the afternoon “rush”

hdurs between 4 p.ni. and 7 pms ow

The existing carriers provide 22 non-stop flights daily

°

between Dallas. Fort Worth and San Antonio. Braniff had»

a daily average of 1098 empty: seats between Dallas ane

Sar Antonio during January, 1968, and an average of 205

-empty seats during the morriing rush hp between 7 a.m.

and 9 am. and an average of 125 daily’empty. seats during

the afternoon “rash hours.” The daily’ empty Braniff seats

are equivalent to°17 empty twin-eugine Jets.

There are 37 daily flights between Houston and San

- Antonio. Braniff, which serves this. market together with

Tisans-Texas Continental Fastern and Amerie: an, .was ahle

to fill only 30.1 percent of its seats during Janua? ry, 1968

-with an average of over’241 empty seats daily. Continental’s

highest load factor om an eastbound flight oceurred in Jan-

uary, 1967 and on that flight the load facter was only 42.8%

leaving the plane considerably less than one haif full.

~ Thus it. is apparent that Appellants’ soaennent concerning

public convenience and nece: ‘sity is not based upon facts -

as they existed at the time the Commission entered the

order, oy as’ they exist’ as. present but is Wased.ia ike main

wpon’ ‘ projections into the future. Their evidence as io the

alleged «inconveniences inflicted upon the public by the

Ay »pellee carriers is evidence as to present conditions and.

will be dealt with later: in - this Opinion.

y

E-19

It is ‘well established that in any appeal cae the

substantial evidence rule, the courts must consider the sifu-

ation as it existed at the time the administrative agency en-

tered the order in question. Magnolia Petroleum Com; pany -

w: New Process Production Company, 729 Tex. 6J7, 104

S.W. 2d 1106 (1937); Railrbad Commission v. Shell Oit

Company, 139 Tex. 66, 161 S.W. 2d. 1022 (1942): Blair v.

Board of Trustees, Trinity. Independent School District, 161

_ §.W. 2d 1030 (Tex. Civ. App. Galveston 1942, no writ);

- and Southern Canal Company v. State Board of Water En-

girieers, 159 Tex. 227, 318 S,W. 2d 619 (1958).

Adequacy of existing service in ‘transportation ‘cases

- requires the denial of application, for new service. The Su-

préme Court in. Railroad Commission v. Jackson, 157 Tex. 32, -

299 S.W. 2d 266 (1957), explained that (299 S.W. 2d 268.

260): re

“The theory underlying the statutes applicable to motor

carriers is that the public interest is better served by

gulated rather than by excessive 6 destructive com-

petition and in determining the-issue of public ,conven-

ience and necessity requisite to the creation of a ‘new

service’ consideration must be given to the competitive |

effect upoén presently operating carriers in.the area and:

their continued ability to render effective public service.

Texas & Pacific Ry. Co. v. Railroad Commission, Tex.

Civ. ‘App., 138 S.W. 2d 927, reversed on other grounds,

138 Tex. 148, 157 S.W. 2d 622, cited with approval in -

Steele v. General Mills, 329 U.S. 433,°67 S. Ct. 439,

91 L. Ed. 402; Texas Motor Coaches v. Railroad €om-

mission, Tex. Civ. App., 41 S.W. 2d 1074; Id.; Tex. Civ.

App., 59 S.W. 2d 923, affirmed 123 Tex. 517; 73 S.W. 2d

511. As bearing upon this issue, the* record discloses

that there are now six through carriers aia be-

tween Amarillo and Lubbock.” :

This holding applies hore where five carriers are already

serving the Houston-San Antonio route which Air Southwest

seeks to serve; three carriers are already serving the Dallas-

San Antonio route which Air‘Southwest seeks to serve: and

two carriers are providing abundant service in, vigorous com-

. \

mie |

‘ : E-20 -

\ >

: petition | ‘on the Dallas- Houston ‘iin which Air Soulty-

west seeks to ®erve..Because of a showing of adequacy” of

existing service, the Supreme - ‘Court in Miller:v.. Railroad

Commission, 363 S.W. 2d 244 (Tex. 1963), held that there

‘was no substantial evidence to support an order granting

a Certificate of Public Convenience’ and Necessity. That

portion of the opinion reads in part (363 S.W. 2d 246-247):

“We hold also that the order granting the certificate .

is invalid for lack of support by. substantial. evidence’

ie ee

* %

The ‘evidence adduced by petitioners established,

prima facie, that the services and facilities of the exist-

ing specialized motor carriers for transporting roadway

construction materials "were adequate and that there

/ was no public necessity for the. proposed service.’

Also applicable is *the decision in Railroad Commission

v. National Transport Corporation, 363 S.W. 2d 360 (Tex.

Civ. App. Austin 1963, writ ref’d mr.e.). In affirming the

judgment. ofthe trial court there setting aside fhe certificate

. which the Congpniseian had ordered, this _Court-wrete -(s03""

i 2d 364) + rs .

“Existing carriers are entitled to transport all of the -

& , traffic in. the area of their authority as long as they can

*do so in a reasonably adequate ntanner, and until ite

20 be shown by substantial evidence that the existing car-

riers cannot adequately handle the. traffic, there is no

‘basis upon which new and competing operating rights

can be gr anted.”

And further in this same opinion, this Cour, said:

“The Trial Court did not usurp the functions of the —

‘Commission, but did upon the basis“of the testimony

- find that-the action of the Commission in granting the

orders was not supported by substantial evidence, and

we believe properly. so.

'. Robertson Transports, Inc., et al. v. Pacman Co. of

Texas et al., Tex. Civ. App., 269 S.W. 2d 472, err. ref.

n.r.e.” _—

E-21. eae

Appellants presented seven w jiauiees who beatified | in their

behalf. Of the seven, four were from San Antonio. The first . .

witness from San Antonio was the Executive Vice President

of San Antonio’s fair,‘ Hemisfair ; the second was a lawyer

who is President of the Airline Passengers Association; the

third was the. Executive Director of the Alamo Area. Council Se

of Government; the fourth was the immediate past President

‘of the San Antonio Chamber of Commerce. The remaining

three were a State Senator. and a teacher by profession, an

investment banker and the President of a trave! agency.

Without going into detail with respect to this testimony,

suffice to say that, while the tenor of the testimony was to

the effect that present service is inadequate, | these wit-

nesses’ assertions were too: vague and general to formulate

. evidence of a nature substantial enough to cast any doubt.

syhatsoever on the adequacy: of service A aisenated through :

the testimony of the appellees.

. Se

‘Nor does the evidence presented. by ic ficiciaas =

a superior service to that presently offered by Appellees.

-——With respect to on-time performance, there is no reason to_

believe that their service will be immune from bad weather,-

crowded airport facilities or mechanical breakdowns. Ob-

viously, with only four aircrafts that are used to begin with,

any break down gf one ‘ynit would seriously disjoint thi

entire schedule. With respect to the advantages of Abie

- lants’ proposed ° ‘simplified ticketing, Trans-Texas has ‘for

several years had available an IBM ticket obviously’ similar

to the type proposed to be used by Air Southwest. ne ticket

is prepared and has the customer’s name and account

number on it. It is :prepunched for billing purposes. The

passenger can carry tickets in his pocket like a checkbook

- and, when: he is‘ready to go somewhere, he can write his

origin and destination on the ticket, make his reservation,

enter his flight number and sign the tieket. All the passenger

needs to do is to hand over the ticket and go to his airplane.

For some reason, however, the testimony. indicates that ‘the

public. has not accepted this type of ticketing.

" Trans-Texas. also has another type of fast-draw ticket for

credit card use. aan ticket was esigned to be used to

«4

i E-22°,

-

expedite: general travel ne also te serve in emergency-type

situations when ‘a passenger might arrive at the last minute

when the ‘flight was ready to leave. il :

' Braniff also has the fast-pack ticket. Any person can aoly |

for credit and get fast-pack tickets from Braniff so that: he

can prepare histown. All the* passenger needs ‘to do is to |

make his reservation. He doegnot need to check in at the

ticket, counter but can go. directly: to the flight gate.

Appellants description: of the inconvenience of persons

_ Standing ii in long lines waiting to buy tickets is not conyinc-

‘ing. In serving “the Houston “and Dallas market, the’ largest

which Air’ Southwest proposes to serve, Trans-Texas main- ~

tains a — ticket counter in Houston for its Dallas pas-

sengers so thatthey ¢arr purchase their'tickets without any

delay at all in waiting for others to buy more complicated ,

tickets to more distant points. Tickets for Houston are sold

in- Dallas at the flight gate so that. passengers do not even

need to go te the main ticket counter to purchase ihet

tickets for Houston.

. Although Air Southwest has taken the pecitios that its |

lower base fares will stimulate travel and encourage vaca-

tioning in Texas, it does not propose to offer either a con--

firmed youth fare or a ‘family plan. The existing carriers all

offer family fares which would nrovide nrogressively lower —

* total fares as the number of niembers of the traveling family

increased: Trans- -Texas also offers a group fare which is avail-

_ able any time serveral persons are traveling together.

Furthermore, fares are sabject' to. regulation and if it ©

is in the public interest to lower them -then they should

be dawered. By adding. service. to already existing service,

‘part of which is going begging, is not the answer. While

“Public Corfvenience-and Necessity” has not been construed

by the Texas courts with respect to Tex. Rev. Civ. Stat. Ann.

art. 46c-6(3) we see’ no reason, why air travel should not.

be regulated ‘under much the same standayds and rules appli-

cable to highway travel under the same phrase in the Motor

Carrier Act, Tex. Rev. Civ. Stat. Ann. art. 911 (a).

_E- 93 .

Appellants go , somewhat further than this and ‘Contend

that “public néed” as used in’ the Savings and Loan Act'

and “public necessity” as used in the banking..code’ present

much the same sort of “need” as “Public. Convenience. and

Necessity” under the Motor Carrier Act. Then, we are cited —- °

to banking and savings and loan cases,’ which for the most:

part, are used to buttress Appellants’ ar eument, Taking its

cue from these cases, Appellants have presented their elabor-.

ate projections of what air travel will be in the futirre. What-

-ever may be the relevance of the banking and savings and. ~

loan cases here, in the cases cited the evidence éverwhelm-

ingly disclosed presently expanding markets coupled with’

projections indicating ¢ontinued expansion. Consequently, in

these cases the courts have either affirmed charters gra: nted

or reversed the Banking Board-or the Savings and. Loan

Commi:sioner where charters were denied. In addition, where

charters were granted, the evidence in these cases disclosed

' that the banks or savings and loan companies protesting the -

new charters had vastly increased their. own deposits thus

indicating that competition was needed in order to deter.

- monopolies. State Banking Board y. Airline National Bank,

.3898 ‘SW. 2d 805 (Tex. Civ. App. Austin 1966, no writ).

The evidence in these cases is certainly incompatible with

the “empty seat” evidence presently by the protestants here.

We hold. that in considering this record as a whole there

is no substantial evidence existing at the time of the

entry of the order to uphold the order of the Commission as

to, the need for the additional service..Consequently, there

is No public convenience and necessity for the proposed serv-

der the act. Since such finding must be in the affirm-

pt o uphold the order under the act, the.order must fall.

Art. 46c-6(3); Gibralter Savings -& Loan Association v.

_ Falkner, 371 S.W.-2d.548 (Tex. 1963).

* Article 852a, Sec. 2.08(3) V-A.CS. |

* Article 342- 305, V.A.C.S. :

* Principally: Gerst v.. Nixon, 411 S.W.. od 350 (Tex. 1966): Chim-

ney Rock National Bank of Houston v. State Banking Board, 376

S.W. 2d 595 (Tex. Civ. App. Austin .1964); Gerst_v. Houston First -.

Savings ‘Association, 422 S.W. 2d 514 (Tex. Civ. App. Austin 1967,

no writ); Phillips v. oe a = Lean a 366 S.W.

2d 929° (Tex. earn :

\

nee : : : E-24,

.

error leous*it was harml

Appell: ints’ point of error maa is that of the court

in ncorr ‘ectly exc luding admissi le evidence during the trial .

of this cause. cane 5 ran

We overrule this point.

~The evidertée excluded was a 5 pelle sehiiek survey con-,

Peet by -thtee women either by telephone or person to

“person interviews. The purpose of the poll was to ascertaih’

whether those interviewed saw a real need. for op proposed -

service, whether they, would find it more gonverient and

whether, should it be put. into operation, y would fly

more frequently. Due to the position we have taken on this?

case it becomes unnecessary for us to, decide on.the ad-

missibility of a opinion: polls, ya ;

Appellants’ powt of error number VIT is that of the trial

courkKin ze ee inadmissible evidence to be. introduced.

We ovet rule this point.

_ The court. permitted appellees, over objection, to -ad-

Mit into. evidence a want ad from the Dallés Morni ng

~news, wherein Appellants were purportedly seeking’ nities .

“reserv ations -help ‘in: a “Type 40” category: at $485 plus.

Appellants contend that the ad in question does: not. state

the airline involved, the type of job to be performed, the

place where the position is ‘te be filled, etc. Consequently; it -

is hearsay testimony. We hokl that if the admission was °

< error under Tex. R. Civ. P. 434.

Appellees have a enoss point to the effect that the trial

court erred in failing te hold that the granting of the Cer-

tifieate of Public Convenience and Necessity sought by Air

‘Southwest and operation. thereunder would be unconsti-

tutional as a burden:on interstate commerce and in conflict

with federal law.. :

__Due to the’ disposition“ ‘we have made of this case, further | ;

lissertation — be useless.’

OW e affirm the judgment of the trial ae:

- Affirmed. ? ¥ | a

4: ae ; E22 .!

“ O'QUINN, Justice diay, - 3

In my opinion there is in the record \ deateoabie’ webitiie

to support: the decision of, the Texas Aeronautics Commis-

‘sion to award a certificate of public convenience and neces:

* sity to Air Southwest for the operation proposed in its

application. - 5

Traditionally. the literatatre of dissent enjoys greater free-

_ dom, less restraint, than the cdutious pronouncements of the - °

~. majority. ‘But this -is a license that in this case neéd not

‘ be indulged. My purpose is to state briefly my most im-

pelling rezsons for dissenting. No attempt will’ be made to

marshall all the evidence composing substantial support for

the order of the Comiiission.

The record: in this case, as poirited out =" ’ the majority,

embraces nearly 3,000. pages of testimony adduced at a trial ©

. lasting more than a month. A substantial part of the record

‘ oinsists ‘of studies and market ‘projections. offered by the :

‘applicant through C. W. Pope, Sr., who qualified as an ex-

pert, together with the ‘cross examination ene” rebuttal

_ testimony resulting from this evidence. - «

_ "The Commission heard and. obviously ileseed the testi-

~ mony of Pope. The Commission heard the challenges of the

protesting airlines claiming that Pone’s forecasts had been

arrived at. by highly unorthodox methods, - that he used

‘patently incorrect factors to obtain these results, and that

‘the forecast was unrealistic, incorrect, and even absurd. It

is evident that the Commission concluded. that the attacks

were not a complete answer to the testimony of Pope, and

that the Commission accepted as:a basis for its decision the

showing made by Air Southwest — the testimony of

Pope. 2 omer

The fact’ that sietesiig is “yabattea and. contradicted °

does not destroy it or remove it from the record. Nor does

such conflict cause the testimony to be less substantial, in

support of the Commission’s decision, if thé Commission in ts

the exercise of its discretion believes. and accepts , the evi-

dence.

So's

3

E-26 -..

A casé was made out, in my opinion, to show the need .

in Texas for an airline commuter service to ‘operate initially

connecting the three most populous reys of the State, In°

several significant phases this proposed : service was shown

to differ essentially from the service offered by existing air-

et and to be a service for which there is a public need

3

nd one in the public interest.

-

Sales Commission, with ‘the evidence heliee it found in

ereeqrd, could find the publie interest and need in a:

pe providing (1) flight -schedules uniquely flexible to.

fit the changing “tooils of a commuting public; (2) transpor- ;

tation of baggage without commingling with the-abundance

of baggage belonging to passengers, traveling to and from

other states and to: and from Mexico and Canada; (3)

speedy, streamlined reservation procedures: peciliarly adapt-

able iv commuter service, with one: -central contro! for all.

cities served; (4) greatly simplified ticket haneling dlesigned *

for this type of service; (5) lower fares: and (6) greater

‘reliability for promptitéss and non- ‘cancellation of scheduled _

flights. - . ay!

It was *-eontended by the protesting | airlines that the

higly percentage of delays-and cancellations of their flights

werevaceounted for m part. by wether conditions and ‘con-

gestion over -airports,. and that the same adversities woutd

contront Air Southwest. The Commission. in- consideripg

these factors no doubt recognized that Air Southwest would

he delayéd by airport: congestion at only three sites, all

Yocated in. Texas, and by weather conditions existing only in

this ‘State. The protesting airlines are affected by weather

and airport congestion not only in Texas but at all cities.

and in all states from ‘which theif flights are made approach-

ing Teéxas.. Their problems of meeting schedules. and avoid-.

“ing cancellation ef flights are. multiplied by the number of

cities and states, they serve. in flying ‘to this —

- The. C ommission had before: it substantial evidence that.

no existing airline would be unduly liarmed by the commut-

er service proposed by -Air Southiwvest. A showing that Air .

Soushw est-would: p rovide. compatition’ and as a result some

,

. . f

/

: which. the Commission was restral

7 _ certificate.

epee E-27 See “

_of the existing services would suffer some’loss in revenues

is nota showing of ‘undue harm. Ali of” the protesting.

_ s airlines affected by: the application serve extended areas out

of this State as well as within it. The proposed commuter

rouses would be only partially competitive with these lines.

Continental Airlines conceded it’ would not be .unduly

harmed. Both Braniff and’ Trans-Texas were shown to be

. healthy, growing airlines, “Fheir claims of harmful diversion |

of revenues if thrown: into competition, with Air Southwest .

~ do not stand up under close scrutiny. The. fallacies and.

discrepancies of these claims are pointed out in detail by the.

_ Attorney General and counsel for Air Southwest in their

, brief. The Commission. correctly. decided against the’ claims i

“of undue harm. By

The service pro by Air Southwest and approved ie

‘ the Commission pee inauguration in Texas is more than a

mere partial duplication of existing services. As pointed out

by the ry General, Air Southwest proposes ‘**

_ instead * | to | furnish a unique service whici: is pre-

_ cisély iain to * * convenience and er of the. »

people of. —. ve

It is nmiy ‘view that the ‘iid of the district court

should be reversed, and that judgment should be rendered

by this ‘Court Setting aside the trial court’s vacation of the

order of the Commission and rested the injunction by

d from : issuing. a

~?*

F-1

THE TEXAS AERONAUTICS: COMMISSION

7 et al. Petitioners,

: v.-

BRANIFF AIRWAYS, INC. et al.,

Respondents.

_ ., No. B-1552.

Supreme Court of Texas.

"May 13, 1970. .

. _ Rehearing Denied — 17, 1970;

REAVLEY, Justice. -

The Texas Aeronautics Commission on i telwedes 20; 1968, .

approved the issuance 0° a certificate of public convenience:

and ° necessity authorizing Air Southwest Co.. to provide

intrastate air service between. Dallas/Ft. Worth, Houston

and San Antonio. Braniff Airways, Inc., Continental Air-

lines, Inc., and Trans-Texas Airways, Inc. initiated this

action in the Travis County ‘District Court to stop issuarice

of the certificate by the Commission. Air Southwest inter-

vened on the side of the Commission. Following a seven

weeks trial, that .court sustained all of ‘the contentions of

Braniff et. al., set aside the order of the Commission and .

- enjoined it from i issuing a certificate to Air Southwest. The ©

‘court of civil appeals: affirmed the judgment of the trial

court. 439 S.W. 2d 699. The Texas Aeronautics «Commission

and Air Southwest Co. are .petitioners here.

By its application to the Commission, Air ditties

proposés to operate four Lockheed Electra aircraft: between

_ the three named airports and, initially, to schedule eight |

flights per day between Dallas/Ft. Worth and Houston, four

flights per day between Hous{6n and San Antonio, and Six

flights per day between San Antonio and Dallas/ Ft. Worth.

These flights are to be scheduled on weekdays during the

hours between 7 ‘a.m. and 7 p.m., with as many departures

as possible between 7 and 9 a.m. and between 4 and 7 7 p.m.”

The three routes to be served i by Air Southwest are cur-

; i i

rently served by the following airlines, all holding certifi- .

eates from the Civil: Aeronautics Board acting under the

Federal. Aviation Act: Dallas/Ft. Worth-Houston by Bran- |

iff and Trans-Texas; Dallas/Ft. Worth-San Antonio by

American Airlines, Braniff and Trans-Texas; and Houston-.

San Antonio by American Airlines, Eastern Airlines, Braniff,

Continental and ‘Trans-Texas. :

In all matters of flying safety, such as the air worthi-

ness of the aircraft arid the skill of its. operators, Air

Southwest would be regulated by the Federal Aviation

Agency. All Air Southwest aircraft and pilots would have

ifederal certifi¢ates. However, by flying only in intrastate

commerce and by not interning with any CAB certificated

carrier, making no connection for passengers or baggage, Air

| Southwest will not require a certificate from the federal .

agency in charge of economic regulations, the Civil Aeronau-

tics Board. Congyess has not pre-empted the field of the

economic regulation of air carriers, and the states have the

power to act so long as there. is no con‘lict with federal

aw. 49 U.S.C.A. § 1301(3). and (10), and § 1371; Western

of Air Lines Ine. v. California, 42 Cal. 2d 621, 268 P. 2d 723

(1954), cert.-denied, 348 U.S. 859, 75 S. Ct. 87, 99 L. Ed.

677; see Island Airlines, Inc. v. C. A. B., 331 F. 2d 207 (9th

Cir. 1964); Island Airlines, Inc. v. C. A. B., 363 F. 2d 120

(9th Cir. 1966); Comment, 47 Texas L. Rev. 275 (1969).

A copy of the Air Southwest application was served upon

the CAB, as required by the rules of the Texas Aeronau-

tics Commission, but the .CAB has taken no part in the

matter. .

SUBSTANTIAL EVIDENCE REVIEW

- The Commission has’ acted under ‘the Authority of Art.

46c-6, sub. 3, Vernon’s Anno. Texas Civil Statutes, which.

-has since 1961 provided,’ in part: 7

. - “As ‘to the economic regulations promulgated, the

‘ _ Commission. shall take into account the financial re-

' ‘This statute was significantly amended by Acts 1969, 61st Leg.,

p. 1394, ch. 424, $1, eff. Sept. 1, 1969. The amendment expressly -

provides: “Nothing in this Act affects any litigation pending on

the effective date of " Act.”. .

/

y

F-3

sponsibility of the carrier; the public convenience and’

necessity for the proposed service, routes, proposed

rates or charges, the effect on existing cayriers, and any °

other factors bearing a relation thereto and pertaining -

to the public interest and necessity.” 4

The statute. further provides that after final determination

by the Commission any interested party may appeal to the

state court ‘and “shall be entitled to a trial de novo on all

_ facts and circumstances involved in such matter.” In ac-

cordance witk long precedent, the words of the statute are

taken to provide for the usual judicial réview of administra-

tive orders by which it is the court’s responsibility to de-

termine if that order is reasonably supported by substantial -

' evidence. Fire Department-of City of Fort: ‘Worth v. oo of

Fort Worth, 147 Tex. 505, 217 S.W. 2d 664 (1949)

The CAB carriers (Braniff, Trans-Texas and‘ Continental)

‘contend that the court need only examine the présent serv-

' Ices afforded by them to thesé cities and, upon finding those

_ services to be adequate, conclude the case in\their favor.

They argue that there is no need to look at the effect the

* proposed service by Air Southwest would have upon passen-

ger traffic or ypon the state. The court of civil appeals based

its decision on the proposition that it was “bound .by the

law. of stare decisis with respect to what the law requires a

prospective carrier to prove before it can enter into com-

petition over.a given route with presently. certified carriers.”

The statute governing the regulation of air carriers does

n@t specifically require the Aeronautics Commission to de-

termine that existing services are inadequate prior to the

granting’ of a new certificate. This is the statutory duty of

the Railroad Commission prior to ‘its issuance of a certifi-

cate for a motor carrier. Art 911b, $ 5a(d), V.A.C.S. From

the beginning of the legislative declarations with respect to

the licensing of motor carriers, the Railroad Commission dras

been directed to conserve the highways of the state by not

burdening them with more trucks- and busses than are

- necessary. Bailey, Motor Trucks Certificates and Permits in

Texas, 20 Texas L. Rev. 165. (1941).

¢

_F-4

- Whether named/ in the statute or. not, adequacy of ex- .

isting service is always an important consideration in de-

termining public need for additional service. See Benson

v. San Antonio, Savings Association, 374 S.W. 2d 423, 427

(Tex: Sup. 1963). However, insthis context “adequacy”

should not be taken to denote bare sufficiency. The existing

air service, for example, could be inadequate even though

anyone with the fare is presently able to obtain passage.

If it can-be’said that the public need does not ordinarily

require a new service where existing service is adequate, it

can also be said that the public need would ordinarily re-

quire that new service which will substantially improve

“existing service.

The decision as to where the. subilie interest lies -and

what air service is best for Texas’ must be made by the

Texas Aeronautics Commission. The courts may not make -

this decision for the Commission, nor may we set ourselves .

to analyze the Air Southwest market projections in order to

decide for its investors the profitability of their venture.

The ‘Commission has decided the disputed contentions as ©

to the public interest in favor of Air Southwest; we may

interfere with that decision only ‘if there is no, reasonable,

support for it in the judicial record. *

After . studying this’ lengthy record with the extensive

ceomentalion made by each side, we cannot say that a

_ decision either to grant or deny the application would be

unsupported by: substantial evidence. We will summarize

‘the reasonable support we find here for the =

order.

POOR PERFORMANCE BY

EXISTING CARRIERS —

" We have the CAB records of the time performance of all

flights. scheduled on two e: these routes in 1967. The record

is not a good one.

&

On the Dallas/ Ft. Worth-Houston: route in 1967 Branift:

canceled 471 flights and arrived late by CAB standard. (at

\

F-5

least 15 minutes behind ‘schedtlle) on~2,477 flights. In the-

same year Trans-Texas canceled 189 flights and arrived late * °

with 844 flights, OF all the flights by these two existing‘

carriers, 27.32% were either late or canceled. In the month Bee oe

of ‘December, 1967, ‘Trans-Texas arrived qn time with only

% of its flights. -

On the Dallas/Ft. Worth-San Antonio route Braniff has

an effective monopoly. Trans-Texas cannot fly non-stop be- |:

tween these cities. American can do so only as the leg of —

a flight to Mexico, and it has orily one flight each way .

daily. On this route in 1967 Braniff canceled 202 flights and

was late on 1,748 occasions. Of all scheduled flights, 28.26%:

were either late or canceled. ,

_ itis significant that these late arrivals were much more

common on the southbound flights than on the northbound

flights. Braniff flights from Dallas/ Ft..Worth to San Antonio

were late on 31.78% of the trips as “compared with 18.45%

late flights in.the other direction. From Dallas/Ft. Worth

' to Houston 31.83% of Braniff flights were late, while only —

14.27% of the northbound Braniff flights were late. The

Braniff southbound flights usually originate ih distant cities

such as Denver, Chicago, Kansas City, or New York and are

subject to weather and traffic delays in those areas. Air

Southwest. insists, that_it can assure better schedule com- |

pliance by being subject only to Texas weather problems and »

by being free of the problems of other areas. The 1967 per-

formance record of existing carriers supports that contention.

The schedule of existing flights, particularly those flying |

- south from Dallas non-stop to San Antonio, leaves some-

' thing to be desired. The first daylight flight i in the morning ©

_ ° leaves Dallas at 8:25 a.m. and the next one is at 11:20 a.m.

Only one flight, non-stop goes south between 4 -p.m. and 7

p.m.

We. do not have in this. record the slit in ‘on the

arrival performance of the flights between Houston and

- San Antonio. It. does show that available schedules are

poor. Though five carriers have authority from the CAB

Fa

7

to flyjthis route, their schedules. are wisi to fit long hauls

’ either to the east or west coast..In 1965 Continental carried

62.47%.of the passengers on this route, and Eastern carried

another 27.82%. Braniff and Trans-Texas each -had two

flights going in each direction at the time of the commission

’ hearing. The CAB carriers point out that they have 37 daily

flights on this route. The problem is the timing of those

—flights to meet the needs of. thie people commuting between’

these two cities. For example, between midnight and 7:15

a.m., a person has the choice of six flights from San Antonio.

to Houston, but. if he does not make -the Eastern flight

No. 50 which leaves at 7:15-a.m. he must wait until the

Braniff flight No. 194 departs at 11 a.m,

Braniff and Trans-Texas give the number of empty seats

on their flights as proof that existing flights offer more

space than the traffic needs. The majority opinion of

the court of civil appeals accepts this evidence as forceful

_ proof of the adequacy of existing service. But we should

«

_

expéct empty seats on most airline flights. Air passengers

cannot be compared with surface passengers or freight inf -

this respect. To travel by air, one must have a seat which

he ordinarily reserves in advance. When a reservation holder

cancels or fails to show, there is usually no one there to

take the seat. The significant statistic is the load factor, or.

percentage of occupied seats, a than the total of empty |

‘Seats.

)We are not given en load factors for all flights through-

. out:the vear of 1967. ‘Trans-Texas gives: us no load factors.

Both Trans-Texas and Braniff only give us figures for one

month, that of January,4968. January is admittedly a poor:

month for air travel. All flights are lumped together so

that we cannot: tell the experience during peak traffic hours.

Braniff had anyaverage 54.1 load factor between: Dallas/

Ft. W: orth and Houston.and an average 61% load factor be- -

tween Dallas Ft. Worth and. Sam Antonio during January

1968. This average includes all —— at. any hour and on

every day of the week,

~~

‘Ne

line.

‘ F-7

Though these January lo’d factors were ae by the

CAB carriers for purposes of their argument, the percentages

are not so low as to give force. to that argument, Seventy

percent is considered a high load factor-by air carriers, and

when all flights are considered no airline i i. the nation shows

so high a factor. .

Four out of the seven public witnesses testifying for

Air Southwest expressed strong dissatisfaction with the

ground service of the CAB carriers. They comnloined that

baggage did not arfive, that reservations required too much

time to obtajn, and. that the procedure at the check-in .

.counters was consistently slow and tedious. When they

_ desired only to take a flight on one of these routes, they were

required to stand in line and wait for long periods while

some person in front of them planned a complicated itiner-

ary with connecting flights and while elaborate information

was written on the CAB ticket form for each person in the

a

ADMISSIBILITY OF SURVEY OF

- PUBLIC ATTITUDE

Air Southwest offered in evidence the results of a - poll

or survey of the “Attitudes of travelers toward Air South-

west’s proposed service,” which was taken in October of

1967. We disagree’ with the trial court’s ‘ruling that the

survey results: were inadmissible. Mr. Walter Bowles, who

had directed the survey, testified as to its planning and

results. Mr. Bowles has some twenty years of experience in

‘and has supervised more than 2,000 surveys of

public gpinion. Since he testified about this survey at the

preserged his work papers, the CAB carriers. had full op-

portuntty to investigate and develop any particular objec-:

tions they. might have as to the methodoloxy and execution

ll. Three of the interviewers enplved by Mr.

J could have obtained testimony from other inter-

ad it t been — to them.

*

F-8

-- Thsofar as the poll tested the attitude .of satisfaction

or dissatisfaction with existing air travel service in these

markets, the evidence is‘ admissible whether it is considered

to be nonhearsay or within: the state of mind exception of

the hearsay rule. See generally: Zeisel, The Uniqueness of ~

Survey Evidence, 45 Cornell L.Q. 322 (1960); Note, 66

Harvard L. Rev. 498 (1953); Anno: Admissibility and a

weight of surveys or polls cr consummer’s opinion, recogni-

tion, preference, or the like, 76 A. L.R. 2d 619 (1961). The

more the questiofi and answer move into the realm of

opinion or risk the “hearsay dangers, the less acceptable

they. become as evidence. Five hundred air travelers were

questioned at airports at the three cities which Air South-

west seeks to serve. They were asked to rate existing airline

\ service as either “excellent,” “good” or “not so good.” Taken —

literally, this -may be considered ‘entirely objectionable as

eliciting. only opinion of ‘the interviewees, but the response

may also be construed as no more .than personal attitude ..

towards existing service. :

When Air Southwest had completed ‘its offer of proof

or “bill of exception” in connection with ‘this survey, the

attorney for. Trans-Texas sought to cross-examine Mr.

- Bowles and to refute Air Southwest’s contentions as to. the: .

weight to be given the survey in the event-the appellate

court disagreed, as we do, with the trial ‘court’s ruling as

to its.admissibility. The trial’ court would not permit this

and proceeded as if it were the usual type of trial where

‘fact issues are determined at. that stage and as though the

case would be remanded for new trial in the event of a

different holding on the admissibility of evidence. Since sub-

stantial evidence review presents only a question of law,

and the issues are not constricted by an appeal, the trial

court should have allowed rebuttal proof in.this instance in

order to avoid that possibility of retrial. :

The denial of this effort: to cross-examine and to under-

mine the weight of the survey prevents us from considering»

it as support for the Commissions order. Since we find suffi-

cient:support elsewhere in the record, there is no need for

further development of the evidence as to the survey.

Cal

s

C Fg”

THE AIR SOUTHWEST PROPOSAL

- We now turn to the present means and proposéd opera-

_ __-tions of the applicant. The record: shows that Air Southwest

has’ made careful plans for its operations, and its financial

responsibility cannot be disputed: An agreement. was

reached with American Airlines for the purchase of the

Electra aircraft and -for payment over a period of five years. .

Arrangements were made for their maintenance by Ameri- |

can Flyers Airlines of Ardmore, Oklahonia.. Officials of All-

_ state Insurance Company testified as. to their. willingness

_ to pay. $3,000,000 for preferred stock. An additional .

" $9 000,000 ‘has been obtained by private stock sales or will

‘be obtained according to subscriptions in hand./ fr’

_ Air Southwest will offer a type of service o travelers

between these cities which. the Commission could well have

decided would present considerable appeal. The Air.South-

_west flights will be scheduled and designed only for non-stop.

passage from one of these Texas cities to another.' Air

Southwest will not arrange for reservations on connecting

flights; it’ will only fly the sirfgle stage. While this may re--

move: Air Southwest from, competition for the passengér

traveling further, it will enjoy advantages for. the. com-

muter by\ simplification 0 of reservations, ticketing, baggage

handling and boarding. .

_ Any baggage on board when the plane lands will be taken

. off, and there will be no chance of it being carried. to or

removed at the. wrong airport. Since no reservations or

ticketing will be required for anything except the one stage,

_ these procedures will be considerably simplified and the

passenger may pay his fare and go on board without waiting.

Better schedule performance is promised because the weath- |

er and traffic congestion of New. York, Chicago or Denver

will not affect Air Southwest’s operations as they do the

flights of CAB carriers: having to come from those cities.

All of the above should cut down on the total trip time of

the traveler.

Air Southwest's fares will be alates mae than’

that of the CAB carriers: The Dallas Ft. Worth-Houston |

wy

_ by respondents.

oY F-10 ,

| 2 @ os |

. Air Southwest fare will be $14.95 as compared with the

/competition’s $19.00; Dallas/Ft. Worth-San ‘ Antonio fare

‘will also be’ $14.95 cémpared with $19.00; San Antonio- .

-Houstori Air Southwest fare will be $12. 95 as: semper’ with —

the competition’ s $17.00,

: Additional flights will be provided in ‘all of on markets

at the times most néeded by the public.

Charles W. Pope, Sr. of San Antonio and Alan G. Kenison

and James E. Thompson of California, all expert witnesses

for Air Southwest, testified as,to the successful-experience .

of similar service by Pacific Southwest Ailines. and Air

California, flying between San Francisco and Los Angeles.

Whereas the size of the market there may not be compara-

ble to these in Texas, it is significant that the carrier in that. e

market. providing this limited stage ‘flight without interstate

connections or CAB regulation, and at a lower fare, has so

attracted the public as to become prominent if not,dominant -

in the market served. CAB statistics and the three oe

witnesses prove this to be the fact. -

Since the’ record reasonably supports the: aes of thé’

Texas Aeronautics Commission of February 20, 1968, it is

entitled to be given full effect. The judgments of the trial

court and court of civil appeals are reversed; judgment ‘is

here rendered denying the agahetoan and all relief sought

‘

; Le

- .

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a. iB 2

ths es)

a at 5

ee : ;

( rues bere G - |

Order of the Supreme Coni of Texas

Entered June 17, 1970, 2

Greivating eapenene Motion for Rehearing _

. 7 , :

‘\

J

‘ ‘ af :

ee ”

yy «4. :

2

G- 1

- SUPREME COURT OF. TEXAS

-No. B- 1552.

‘The Texas Aeronautics -

Commission et al

v.

Braniff Airways, Inc. et al.

From Sravin, County, Third District.

June 17, 1970,

Motion for nelisalion on behalf of Braniff and Trans-Texas

Airways and motion for rehearing on behalf of Continental

Air Lines, Inc., filed respectively here on May 28, 1970,

having. been duly considered, it is ordered that said motions

be, and hereby are, overruled.

I, GARSON R. JACKSON, Clerk of the Supreme Court . |

of Texas, do hereby certify that the above is a true and

correct copy of the order of the Supreme Court of Texas in

the case of The Texas Aeronautics Commission et: al. vs.

Braniff Airways, Inc. et al., No. B-1552, From. Travis County,

Third District, as such: order appears in the minutes of

- gaid Court under the date of June 17, 1970..

_IN TESTIMONY WHEREOF, ‘Witness my hand and |

the Seal of the Supreme Court of Texas, at the re of

Austin, on Gus 4th day of September, 1970..

~ GARSON R. JACKSON,

CLERK.

EUGENE CERVENKA

By Eugene Cervenka, Deputy

H-1

NO. B-1552

| ~.In The a

SUPREME COURT OF TEXAS ©.

oO

—— AERONAUTICS COMMISSION, ET AL,

Petitioners, :

_V.

) ; \

BRANIFF AIRWAYS, INC, ET AL, - x

capi anoeiaae

ON WRIT OF ERROR TO THE .

COURT OF CIVIL APPEALS :

ON PETITION FOR REHEARING

MOTION. FOR LEAVE TO FILE

AMICUS CURIAE BRIEF AND

AMICUS CURIAE BRIEF

_ John H. Crooker, Jr. ©

IN THE SUPREME COURT OF TEXAS oe

NO. B-1552

TEXAS AERONAUTICS COMMISSION, ET AL,

ee

a ‘BRANIFF AIRWAYS, INC., ET AL,

Respondents.

ON PETITION FOR REHEARING

MOTION FOR LEAVE TO FILE

AMICUS CURIAE BRIEF

| yx . :

-_TO’THE HONORABLE JUDGES OF THE SUPREME

COURT OF THE STATE OF TEXAS:

NOW COMES John H. Crooker, Jr., former Chairman

of the Civil Aeronautics Board, in his individual capacity,

and files this his Motion for Leave to File Brief as Amicus -

Curiae in the event any party in the cAptioned proceeding

seeks rehearing of this Court’s Opinion, dated May 13,

1970, a copy of said Brief being attached hereto as Ex. '

- hibit “A”.

Movant seeks to file: his Amicus Curiae Brief to bring -

to the attention of this Honorable Court a mistaken im

pression apparently existing in the Court’s mind, as re-

flected by one. sentence of the Court’s Opinion in the cap-—

tioned case, indicating a possible negative inference by the

ae wg

Court because of the re Aeronautics Board’s me ‘to

take part in:the eau before the Texas Aeronautics Com-

mission.

WHEREFORE, Movant piays that if a Motion for Re--

hearing in the captioned case is filed by any party to such

case, his Motion for Leave to Five Amicus Curiae Brief be

granted and that. the Court accept such Amicus Curiae.

Brief which is attached hereto as Exhibit “A”, on the limited

point of the weight and effect: to_be given to the failure or

_disinclination of the Civil Aeronautics Board to participate

‘in proceedings before the State Agency. ' <

Respectfully submitted, Fis.

“JoHN H. Crooxer, JR.

IN THE SUPREME COURT.OF TEXAS .

, AQ

NO. B-1552_ .

\

_ TEXAS AERONAUTICS COMMISSION, ET A Al,

rat | Petitioners

w. > ean

BRANIFF AIRWAYS, INC. eT AL, .

3 Respondents.

ON WRIT OF ERROR TO THE we

COURT OF CIVIL APPEALS pes

ON PETITION FOR REHEARING |

AMICUS CURIAE BRIEF -

TO THE HONORABLE SUPREME COURT OF THE

‘STATE OF TEXAS: “|

NOW COMES John H. Crooker, Jr. seid submits this, —

_ his Brief as Amicus Curiae, in the above captioned proceed-

‘ing on Motion for Rehearing. This Brief is directed to one

sentence in the Court’s Opinion issued in this cause, and

is not-directed in — of the position of any party to

_ this case.

INTEREST OF AMICUS CURIAE

The Amicus Curiae is an individual and was formerly

Chairman of the Civil Aeronautics Board (“CAB”). .The

problem of state agency jurisdiction in connection with the

-award of air routes to intrastate carriers, especially when | —

competing on a head-to-head basis with CAB certificated

carriers, is one of vital.interest to the public at large, the

State of Texas, its’ agencies, the CAB, the carriers involved

and the Amicus Curiae herein, as a former Chairman of the

CAB and as ah individual citizen concerned with ‘this

problem. , ‘ |

STATEMENT OF CASE

_ This ease arose out of a decision of the Texas Aerenautics

Commission (“TAC”) granting operating authority to ‘Air

H-5

Southwest (“ASW”) between certain points whelly within

’ the State of Texas. Three certificated carriers operating in

interstate commerce and subject to regulation by the CAB .

(Trans Texas, ‘Braniff and Continental) opposed the ASW }

_ application and appealed the decision of the TAC to the

District Court of Travis County, Texas, which Court set

. aside the decision of the TAC. The Court of Civil A ppeals

affirmed the judgment of the lower Court. On May 13 1970,

this Court issued its decision reversing the judgment ran

Court of Civil Appeals and the District Court and. rein

stated the TAC’s award (13 Tex. Sup. Ct. J«+329).

In its. Opinion, this Court stated: “A copy of’ the Air

Southwest application was served upon: the CAB, as re-.

quired by.the Rules of the Texas Aeronautics Commission,

<but the CAB has taken no part in the matter.” (13 Tex.

Sup. Ct. J. at 330). It is to this sentence that the Amicus

Curiae is directing his.Brief and seeks, should any Petition —

: for Rehearing be filed, reconsideration or revision by this

Court.’

DISCUSSION

_ As a -former,CAB Chairman and an individual with an |

interest in the problems of intergovernmental relations,

(and possibly to assist in consideration of such matters in

the future) the attention of the Court is invited to the

rather unhappy dilemma facing the CAB in deciding wheth-

er to participate in or ignore a proceeding before any. state >

agency such .as the TAC. Aside from: budgetary problems -

and_manpower problems facing the CAB in its consideration

whether or not to participate in any State proceeding,

certain other procedural problems are connected with such

decision. If the CAB appears before a state agency and

presents its views to the. agency, this ‘makes the state

agency the judicial tribunal and the CAB a party or. a

witness or both.:The CAB is thus present before the state

agency, and the decision of that agency becomes even more

- difficult to overturn on review, even if a Court would have

reached a different conclusion had the matter. been con-

sidered de novo. ,

H-6

Staying out of a State proceeding, as was done in this

case, has the obvious drawback of leaving the impression

with a Court that the CAB is not concerned about the pos-

sibility that too much competition’ may adversely affect the

financial viability of a certificated carrier .(especially a sub-

‘sidized one).~Such matters, of course, might have some

adverse effect on the development, of the Nation’s air

‘transportation system.

~ The difficulty of the dilemma facing the CAB is apparent

from a review of People v, Western Air Lines, 268 P. 2d .

723 (Cal. 1954), in which the Court: (at Page 738) alluded

to one phase of the matter in which the CAB “apparently _

did not have sufficient interest to-intervene,” /and at the

same time alluded to another phase of the matter in which

the CAB-did intervene and in which the California Public

Utilities Commission reached a conclusion at variance with

what -was the apparent CAB conclusion as to the amount

which should .be charged for air transportation between Los

Angeles and San Francisco.

It is respectfully urged that if any Motion for Rshonsting

is filed, the Court indicate its awareness of the dilemma

which confronts the CAB in matters of this sort and further

indicate that no inference should bé drawn from the failure

‘of the CAB to intervene or ican: in any proceeding

before the State Agency. . |

iS ioees, . Respectfully submitted,

: JOHN H. CROOKER, JR.

John H. Crooker, J moe,

800 Bank of the Southwest Bldg.

Houston, Texas 77002

CERTIFICATE OF SERVICE

I, John H. Crooker, Jr., do hereby certify that on this —

6th day of July, 1970, copies of the foregoing Motion and

‘Amicus Curiae Brief were served on the following parties -

#7

dient their’ peer of Record by mailing a copy of |

same to them a the United States mail, postage

prepaid:

Honorable Ceavtend C. Martin, ies General

Honorable Thomas Sedberry, Assistant

_ Attorney General

- The StateofTexas™ . .

Supreme Court Building | A

Capitol-Station : eel,

- Austin, Texas 78701

Mr. Herbert Kelleher’ : a —_

Matthews, Nowlin, MacFarlane & Barrett

1500 Alamo National Building ._

San Antonio, Texas 78205 ;

Jacobsen & Long

208 Westgate ,

Austin, Texas 78701 li

Gates, Talbot, Morris & Merrell |

1541 Wilshire Boulevard ©

Los Angeles, California

Mr. Allen Butler. . |

Clark, West, Keller, Clark & Ginsherg

24th Floor, First National Bank Building

Dallas, Texas 75202 .

- Mr. James W. Wilson

- McGinnis, Lochridge, Kilgore, Byfield,

~ - Hunter & Wilson .

1030 Brown Building.

Austin, Texas 78701 .

Mr. Donald S. Thomas and ee

Mr. Barry Bishop re

‘ Clark, Thomas, Harris, Denius & Winters.

12th Floor, Capital National Bank Building —

Austin, Texas 78701

_JouN H. en JR.

nt ee ee ee

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

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