# Petition for Writ of Certiorari — Braniff Airways, Inc. v. Texas Aeronautics Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385605_0344%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1970 - **Citation:** 400 U.S. 943 ## Text a IBRARY + Dia ee . | ite i oe ’ 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 ‘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). 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° . - ”~ \ =) : Q 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 CY 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. " @ a ee 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-., \ ; . \ . ee Sa a ° ae e ao - j # | 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 - — a 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 oe m. | q 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. 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 x 8 . ; ° : Fae > oe C-1 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 e D-2 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 ‘ oe |. hae - 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 * * E-4 | # Ww ‘~ 6 ‘We sustain this counterpoint. hs 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 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 ———$—— gers °C VY. hee 2 ee: ee a 1's ae 60d - dS&¢'T _ = it 3 te co 60d dv. LWP “WOb:CT GG oun, “ON IANQADAOCF 912] punogisay 41 soInpowps “ted ‘LE sr ne OL ? | 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 ° 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, 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385605_0344%3A1. Public record. Not legal advice.