Amicus Curiae Brief — Delta Air Lines, Inc. v. Summerfield

Office - Supreme Court,

w 2iv ae ie

is THE HAROLD B. WILLEY,

Supreme Court of the United

October Term, 1953

No. 222

Crvi. Azronavtics Boarp,

Petitioner,

Vv.

Artuur E. SuMMERFIELD, Postmaster General of the United

States, and Tue Unirep Srares or America, on behalf of

the Postmaster General,

Respondents.

No. 223

Deuta Ar Lines, Inc.,

Petitioner,

v.

Artuur E. SuMMERFIELD, Postmaster General of the United

States, and Tue Unitep States or America, on behalf of

the Postmaster General,

Respondents.

Fe —————_________________}

BRIEF FOR BRANIFF AIRWAYS, INC., NORTHWEST

AIRLINES, INC., AND TRANS WORLD AIRLINES, INC.

AS AMICI CURIAE

v Husert A. ScHNEDER,

Attorney for Braniff Airways, Inc.

¥ C. Epwarp Leasure,

Attorney for Northwest Airlines, Inc.

GeraLp B. Bropnry,

Attorney for Trans World Airlines, Inc.

Pao Re

IES RY SHE SEY RETIRE HM EIS MG ELE G NPS eT.

BLEED THROU GH-— POOR COPY

INDEX

PAGE

Senso PRLOW occ ccc sc csccdvvvesccvrercessesace 1

MOUNT 5g cn cv devp tt aewsteeueresavervegecsene 2

STATUTE INVOLVED .........eccccesccceecccerevces 2

HE QUESTIONS PRESENTED ....--. 0-000 sees eeeeeeees 2

STATEMENT OF THE CASE ........-0cecceccccecccececs 6

SUMMARY OF ARGUMENT .........2cccccceccecccecees 11

»ornt I—The Act clearly delegated to the Board the

power which the Court of Appeals held nonexistent . . 12

Point I11—The decision of the Board to exclude do-

mestic revenues was based on appropriate policy

considerations and should not be disturbed by the

ie ueeuandecehess bee berwsecegrerseeres 19

ee oeeews beeen e tar Pes RC CHCER OR ENE 27

eee ea week eo ee leaders heees ewe 28

TABLE OF AUTHORITIES

CasEs

American Airlines, Inc—Mail Rate Proceeding, 3

©, BR, SIR ED nc cc ccecccccesscvvccsvscesnves 16

In the Matter of American Airlines, Inc., et al.,

Cc. A. B. Docket No. 2849 et al., Serial No. E-5715

(September 19, 1951) ..........cseecececsessvees 8

——

il INDEX

PAGE

American Toll Bridge Co, v. Railroad Commission of

California, 307 U. S. 486 (1939) affg., 12 Cal. 2d 184,

Se ie ee Oe CR Te 6 osc evececdvccoveverues 12

Boston Consolidated Gas Co. v. Department of Public

Utilities, 327 Mass. 103, 97 N. E. 2d 521 (Sup. Ct.

Ua 4 co ciaenne kes beck ua es chek der oeueee phere 13

Braniff Airways, Ine, Mail Rates—Domestie Opera-

tions, C. A. B. Docket No. 5142, Serial No. E-7780

SE a EE. bs kadcocevaceescuvecepevaewesies 8,9

Braniff Airways, Inc.—Mail Rates—Latin America Op-

erations, C. A. B. Docket No. 2886 (pending) ...... 8

Braniff Final Mail Rate Case (domestic operations),

C. A. B. Docket No. 5142, Serial No. E-7815 (Oc-

RE SE on cenes dev ce ceuenaxccuesses 4-5, 8, 9, 19

Braniff Airways, Incorporated, Domestic Operations,

C. A. B. Docket No. 5142, Serial No. E-6257 (March

Sb AE cbs bad cavivancenemekinie oka aban 24-25

Braniff Airways, Inc.—Mail Rate Proceeding, 2 C. A. B.

SE EE oa cbc nak dibs wees anew cinceatet seein 16

Re Central Arizona Light & Power Company, 9 P. U. R.

(N.S.) 270 (Ariz. Corp. Comm., 1935) ............. 13

Chicago & Southern A. L. Mail Rates—Route No. 8 and

i ee Es Os GUD Vp eNeind sdeveeeaneeunee 17

Re Detroit Edison Company, 16 P. U. R. (N. S.) 9

(Hip. Pas. Ot. Coens, SOUR) cos cevccdvecsscese 13

City of Douglas v. Arizona Edison Company, 1 P. U. R.

(N. S.) 493 (Ariz. Corp. Comm., 1933) ............ 13

City of Grand Forks v. Red River Power Company,

8P.U.R. (N.S.) 225 (N. D. Bd. Rd. Comm., 1935) .. 13

Continental Air Lines, Inc.—Mail Rates, 1 C, A. A.

Se EE. cbcewaeodveds oes vues ditea ahd sas aaonen

BLEED THROUGH-— POOR COPY

INDEX lii

PAGE

Delta Airlines, Inc. Mail Rates, Latin American Opera-

tions, C. A. B. Docket No. 6110, Serial No. E-7738

(September 21, 1953) ............++- 4, 13, 14-15, 19, 26

The Five Per Cent Case, 31 I. C, C. 51 (1914) ......... 13

General Passenger Fare Investigation, etce., C. A. B.

Docket No. 5509, Serial No. E-7376 (May 14, 1953) .. 23

Inland Air Lines, Inc.—Mail Rates, 1 C. A. A. 155

CERT ona Sesh savvacdvassececsvasscensdquvevéete 16

Interstate Commerce Commission v. City of Jersey

City, 323 0. B. GOB (19GE) ... oc cccccesccvccerveere 13

Latin American Air Service Case, 6 C, A. B. 857 (1946) 6

Leeman v. Public Utilities Commission of District of

Columbia, 104 F. Supp. 553 (D. C. 1952) .......... 12-13

Re Long Island Lighting Co., 18 P. U. R. (N. S.) 65

(N. Y. P. S. C., 1935) affd. sub. nom. Long Island

Lighting Company v. Maltbie, 249 App. Div. 918,

992 N. Y.8. 807 (3rd Dept. 1037) ........cccscceeee 20

McLean Trucking Co. v. United States, 321 U. S. 67

GE a dd whvevcesebaedeweeokhawoss sdeceedeeneens 16

Mid-Continent Airlines, Inc., Mail Rates 1 C. A. A.

ED oc decerccbecuavsucdssaveusessetrarares 16

National Airlines, Inc., C. A. B. Docket Nos. 3037, 3248,

Serial No. E-6344 (April 21, 1952) ................ 7,18

New York v. United States, 331 U. 8S. 284 (1947) ...... 20

Northwest Airlines, Inc., Domestic Operations, C. A. B.

Docket No. 3211, Serial Nos. E-6717 (August 21,

1952), E-6959 (November 17, 1952) ............. 7, 9, 25

Northwest Airlines, Ine. Mail Rates—Trans-Pacific

Operations, C. A. B. Docket No. 2539 et al., Serial

Nos. E-7079 (January 13, 1953), E-7136 (February

iv INDEX

PAGE

Pan American Airways, Inc., Alaska Mail Rates, 6

eee Ge ee EE heb ova nveles taeaaaestekedeenseée 17

Pan American Airways Company—Mail Rates 1

es Ee EE 0 ace ad vaksddvvncdenvedecdeass 16

Pan American Airways Company—Mail Rates, 1

Dy ie a EE Sieh ve kkdnelinsie dese’ covseees 16

Pennsylvania Central Airlines Corporation, et al., 8

C, A. B. 685 (1947) affd. sub nom. Transcontinental

& Western Air Inc. v. Civil Aeronautics Board, 169

F’. 2d 893 (C. A. D. C. 1948), 336 U.S. 601 (1949) .. 9,18

Secretary of Agriculture v. Central Roig Refining Co.,

338 U.S, 604 (1950) revg., 171 F. 2d 1016 C. A. D. C.

EE Saas aseahek eee ues paeeise eed tees 11, 15-16, 27

Transatlantic Final Mail Rate Case, C. A. B. Docket

EG. BIG OC OE. COOMEINED occ cccscccosccsvcdveces 5, 8, 21

Transcontinental & Western Air Ine. v. Civil Aeronaut-

ics Board, 336 U. S. 601 (1949), affg., 169 F. 2d 893

(C. A. D. C. 1948), 8 C. A. B. 685 (1947) ..... 8, 9, 11, 12,

20, 22, 24

United Air Lines, C. A. B. Docket Nos. 5683, 2913,

Serial No. E-6676 (August 7, 1952) ................ 18

Wabash Valley Electric Co, v. Young, 287 U. S. 488

FRE hie UVES Kate Vane ddd e es caobueekarcs racks 13

Western Airlines Case (Nos. 224, 225) .............. 19

STATUTES AND OTHER AUTHORITIES

Civil Aeronautics Act of 1938, as amended, 52 Stat.

973, as amended, 49 U.S. C. §401 ................. 2

See. 2, Declaration of Policy (52 Stat. 980, 49

Se Oe ED oo Ce ee orn es natiok en beveewrs 16, 17

BLEED THROUGH-— POOR COPY

INDEX Vv

PAGE

Sec. 406, Rates for Transportation of Mail (52

Stat. 998, 49 U.S. C. §486) ............. 3,5, 14, 19

See. 416, Classification (52 Stat. 1004, 49 U.S. C.

GOED occ cvecccvvccnerccaseserevessecvestuses 14

Sec. 801, Approval of the President (52 Stat. 1014,

BT. OG. GED oc cccvcadevvvcevccvccnessees 6

Sec. 1006, Orders of Board Subject to Review (52

Stat. 1024, 49 U. S. C. §646) .............-00e- 2

C5. GG GREG co ccccccccscecvecccvensecsreveccere 2

C. A. B. Report, Administrative Separation of Subsidy

from Total Mail Payments to Domestic Air Carriers

(September, 1951) ..........--2sceccccceccecceees 10

C. A. B. Report, Administrative Separation of Subsidy

from Total Mail Payments to United States Inter-

national Overseas and Territorial Air Carriers

(Fame, TIGR) cc ccncevcrccvscvovecsesvvvereeredes 13

C. A. B. Report, Administrative Scparation of Subsidy

from Total Mail Payments to United States Air

Carriers, September 1953 Revision ..........+0++:+ 7,10

Lissitzyn, Public Aid to Major Foreign Airlines, 19

J. Air Law & Commerce 38 (1952) .............44.: 13

“Survival in the Air Age,’’ a Report by the President’s

Air Policy Commission (January 1, 1948) ......... 26

BLEED THROU GH- POOR COPY

a

IN THE

Supreme Court of the United States

No. 222

a.

vv

Crvi. AEronavtics Boarp,

Petitioner,

Vv.

Arruur E. SumMeERFIELD, Postmaster General of the U nited

States, and Tue Untrep States or AMERICA, on behalf of

the Postmaster General,

Respondents.

No. 223

Detta Arr Lives, Inc.,

Petitioner,

v.

Arruvr E. SumMerrie.p, Postmaster General of the United

States, and Tue Unitep States or AMERICA, on behalf of

the Postmaster General,

Respondents.

dy.

vv

BRIEF FOR BRANIFF AIRWAYS, INC., NORTHWEST

AIRLINES, INC., AND TRANS WORLD AIRLINES, INC.

AS AMICI CURIAE

Opinions Below

The opinion of the Court of Appeals reversing the order

of the Civil Aeronautics Board, one judge dissenting, which

has not yet been reported, appears at pages 68-72 of the

to

Transcript of Record. The opinions of the Civil Aero-

nautics Board, which have not yet been officially printed,

appear at pages 6-58 of the Transcript of Record.*

Jurisdiction

The judgment of the Court of Appeals was entered on

May 4, 1953 (77). The jurisdiction of this Court is invoked

under 28 U. S. C. §1254 and section 1006(f) of the Civil

Acronauties Act of 1938, 52 Stat. 1024, 49 U.S. C. §646(f).

The petitions for writs of certiorari were filed on July 31,

1953 and granted on October 12, 1953 (79).

Statute Involved

The pertinent provisions of the Civil Aeronautics Act

are set forth in the brief of the Civil Aeronautics Board.

The Questions Presented

1. Does the Board have the power, in fixing a final mail

rate for a past period for the international division of an

air carrier which rate includes some subsidy, to refuse for

important reasons of policy to offset any part of the car-

rier’s domestic revenues earned under a previously fixed

final mail rate for the carrier’s domestic division, where

that rate also included some subsidy?

* Unless otherwise stated, numbers in parentheses refer to the

pages of the Transcript of Record and wherever italics appear they

have been added. The Civil Aeronautics Board will sometimes be

referred to as the “Board”, the amici as “Braniff”, “Northwest” and

“TWA”, and the Civil Aeronautics Act of 1938, as amended (52

Stat. 973, as amended, 49 U. S. C. $401) as the “Act”.

BLEED THROUGH- POOR COPY

3

The Board held that ‘‘while we are required to take

nto consideration the need of a carrier for mail compensa-

ion together with ‘all other revenue,’ we believe that we

re not required by section 406(b) to reduce the carrier’s

nail pay with any part of such other revenue if there are

ound reasons for not doing so as a matter of economic

yoliey.”? The Board concluded that because such reasons

were present in the case, ‘‘the earnings from C & S’ domes-

‘ie routes should not be used to offset the ‘need’ resulting

from the earrier’s international routes’’ (54-3).

The Court of Appeals reversed, Judge Prettyman dis-

senting, because it found that section 406(b) requires the

Board to treat a carrier as a single entity and to include

as ‘‘other revenue’? so-called ‘‘excess’’ earnings on domes-

tic operations in computing the need of its international

operations (71).

2. If the Board did have such power, was it properly

exercised in this case?

The Board refused to make the offset because it found

in this and other cases that to require unprofitable foreign

operations to be supported by domestic profits would

(1) force domestic carriers to abandon their

foreign routes and result in the monopolization of

foreign routes by an existing non-domestic carrier,

or operation by a new company with inadequate fi-

nances and experience, or operation by a surface

carrier, all contrary to established national policy

and the public interest;

(2) make it impossible to fix uniform domestic

class rates under which there will be competitive

incentive for efficient domestic operations; and

———____—_——_——————

(3) cause further, if not permanent, delay in the

fixing of final mail rates which the Board concluded

are needed to provide an incentive for efficient air

carrier operations.

The Court of Appeals did not consider whether these

were proper factors to be taken into consideration in deter-

mining whether to make the offset, because of its holding

as to the Board’s lack of power. However, the dissenting

judge agreed with the Board’s decision stating, ‘It seems

to me that the intermingling of foreign and domestic factors

in the computation of each separate rate would lead to

great confusion and to inaccuracy in supposedly separate

results’’ (76).

3. Does the Board have the power, under any circum-

stances, to refuse for important reasons of policy to offset

part of a carrier’s domestic earnings under a final subsidy-

free mail rate, in fixing mail rates for the international

division of the carrier?

The Court of Appeals did not expressly relate its deci-

sion to the peculiar facts of the case before it—where both

the domestic and international divisions of the carrier were

receiving a subsidy mail rate. Subsequently, the Post-

master General has urged the application of the Court of

Appeals decision in mail rate cases involving carriers whose

domestic mail rate was completely free of subsidy. Delta

Airlines, Inc. Mail Rates, Latin American Operations,

C. A. B. Docket No. 6110, Serial No. E-7738, pp. 6-15 (Sep-

tember 21, 1953); Braniff Final Mail Rate case, (domestic

BLEED THROUGH— POOR COPY

operations) (C, A. B. Docket No. 5142, Serial No. E-7815

(October 13, 1953).*

While the Postmaster General, in cases involving the

amici now pending before the Board, is insisting on this

expanded application of the Court of Appeals decision, the

respondents in this case have indicated that the Court

should limit its decision to the peculiar facts of the instant

ease. The opening sentence in ‘‘ Memorandum for the Post-

master General and the United States of America’’, filed in

this Court October 27, 1953, reads as follows:

‘‘These petitions present the question whether

section 406(b) of the Civil Aeronautics Act...

requires the Civil Aeronautics Board, in fixing past

subsidy mail pay for the international division of

an air carrier, to offset the carrier’s excess subsidy

earnings from its domestic operations.”

Amici submit that if this Court should affirm, its deci-

sion should be expressly limited to the factual situation

* See also Transatlantic Final Mail Rate Case, C. A. B. Docket

No. 1706, et al., Brief to the Examiner on Behalf of the Postmaster

General, p. 12 (July 3, 1953) :

“It is, of course, recognized that in the case of TWA the

excess earnings of its domestic division were realized during

a period when the carrier was operating under a final future

mail rate determined to be subsidy-free or, as commonly desig-

nated, a service rate. To that extent there is a distinction

between the C & S Case; C & S’s domestic division realized

excess earnings while operating under a final future subsidy

rate. The Department does not believe that the fact that TWA

operated under a service rate is of such a distinguishing

nature with respect to TWA as to warrant a conclusion differ-

ent from that reached by the Court in the Chicago and

Southern Case.”

here presented. The Board’s power to refuse to offset

under other circumstances and especially where a carrier

receives no domestic subsidy, should either be recognized

or left for future decision.

Statement of the Case

The facts of the case are stated in the brief of petitioner

Delta. Here we will set forth those additional facts which

will help explain the presence of amici in this case.

Amici, as well as petitioner Delta, are air carriers en-

gaged in transporting persons, property and mail by air-

craft within the United States and to foreign points under

certificates of public convenience and necessity issued un-

der the Act by petitioner Civil Aeronautics Board.

Domestically, Northwest and TWA operate transconti-

nental routes stretching across the United States, while

Braniff and Delta operate routes principally through the

Middle West and South. Under separate international cer-

tificates, Northwest operates across the Pacific, TWA

across the Atlantic, Braniff to South America and Delta

through the Caribbean.*

* All of these routes were certificated by the Board after approval

by the President under section 801 of the Act. In addition, Braniff’s

route was certificated pursuant to a directive from the President

under such section: “Because of certain factors relating to our broad

national welfare and other matters for which the Chief Executive

has special responsibility, he has reached conclusions which require

* * * the extension of an additional carrier to South America as far

south as Rio de Janeiro, Brazil, and Buenos Aires, Argentina.” Latin

American Air Service case, 6 C. A. B. 857, 860 (1946).

Delta had no international route prior to the merger with C & S.

BLEED THROUGH- POOR COPY

7

On their domestic routes all four of these carriers face

substantial competition from other air carriers which oper-

ate domestically only, except for ‘‘stub-end’’ routes classi-

fied by the Board as part of domestic services for rate mak-

ing purposes. On their foreign routes amici are in compe-

{ition with foreign airlines and with Pan American World

Airways, Inc., the only United States carrier operating

exclusively in the international field.* The international

operations of amici and Delta, because of their distinctive

character and extensive nature, have been classified as

separate units for rate-making purposes. However, in

the case of Northwest, its operations between points in the

United States and poinis in Canada have been included in

its domestic operations. See Northwest Airlines, Inc.,

Domestic Operations, C. A. B. Docket No. 3211, Serial No.

E-6717, p. 1 (August 21, 1952).** There are no other U.S.

air carriers similarly situated to amici and Delta, and

therefore liable to be as directly affected by the decision

in this case.

The Board, from its inception, has been primarily con-

cerned with fixing final rates for the future. However, it

has found it necessary, at times, because of the delays in-

* Pan American has an affiliate, Pan American Grace Airways,

which also competes with Braniff between the United States and

South America.

** Five other U. S. air carriers conduct “stub-end” operations

into Canada, Mexico, Cuba and Bermuda, which, like Northwest’s

Canadian operations, are integrated with and treated as part of their

domestic operations. See National Airlines, Inc., C. A. B. Docket

Nos. 3037, 3248, Serial No. E-6344, p. 4 (April 21, 1952); C. A. B.

Report, Administrative Separation of Subsidy from Total Mail Pay-

ments to United States Air Carriers, September 1953 Revision, Ap-

pendices 6-10.

herent in the mail rate-making procedures, to fix temporary

rates for a carrier pending the determination of a final mail

rate, which is then made retroactive to the date of the com-

mencement of the mail rate-making proceeding. See Trans-

continental & “estern Air, Inc. v. Civil Aeronautics Board,

336 U. S. 601, 605 (1949). These delays have been ap-

preciably greater in fixing international mail rates than in

fixing domestic rates. Thus proceedings are still pending

before the Board for the fixing of final international mail

rates for TWA and Braniff for the entire period of their

international operations—from 1946 in the case of TWA

and from 1948 in the case of Braniff. Transatlantic Final

Mail Rate case, C. A. B. Docket No. 1706 et al.; Braniff

Airways, Inc—Mail Rates—Latin America Operations,

C. A. B. Docket No. 2886. But their domestic rates for that

period and for the future have already been fixed. See, Jn

the Matter of American Airlines, Inc., et al., C. A. B.

Docket No. 2849 eft al., Serial No. E-5715 (September 19,

1951); Braniff Airways, Inc. Mail Rates—Domestic Opera-

tions, C. A. B. Docket No. 5142, Serial Nos. E-7780 (October

1, 1953),* E-7815 (October 13, 1953).

In the Transatlantic Final Mail Rate case, supra, the

Postmaster General has demanded that the Board reduce

TWA’s international mail pay for the past period by off-

setting some domestic profits earned in 1951 and 1982,

even though TWA received no domestic subsidy for those

years and even though TWA’s domestic mail rate for those

years was finally fixed and cannot be reopened. See Trans-

* This tentative decision is still subject to final order of the Board,

but Braniff has not objected to the proposed rate. which is a purely

service rate without any subsidy element.

BLEED THROUGH— POOR COPY

continental & Western Air, Inc. v. Civil Aeronautics Board,

336 U. S. 601 (1949).

In Braniff Airways, Inc. Mail Rates—Domestic Opera-

tions, supra, the Postmaster General has demanded that

the establishment of Braniff’s domestic mail rate for the

period on and after October 1, 1951 be stayed until the

proceeding involving its international rate is ripe for finai

determination. Should the decision below be affirmed,

Braniff would be faced with the prospect of having its

international mail rate offset by domestic profits all the

way back to June 1948 when international operations were

inaugurated by Braniff, notwithstanding the fact that be-

tween June 1948 and October 1951 Braniff’s domestic sys-

tem was operating under closed rates.

Neither TWA nor Braniff had the slightest reason to

believe it necessary to set aside domestic profits earned

in the past under final mail rates, for the purpose of ‘‘off-

set’? against international needs. See Pennsylvania Cen-

tral Airlines Corporation, et al., 8 C. A. B. 685, 703 (1947)

affd. sub nom. Transcontinental d Western Air, Inc. v.

Civil Aeronautics Board, 169 F. 2d 893, 336 U. S. 601. As

a practical matter, the offset would amount to the recapture

of funds already committed to the business of the two

carriers or paid out in dividends. The effect of such re-

capture would seriously disrupt their businesses.*

* As to Northwest, both its international and domestic mail rates

have been fixed, except for the year 1951, so that it is not as vulner-

able to the recapture of past profits under the Court of Appeals deci-

sion as the other amici. Northwest Airlines, Inc., Domestic Opera-

tions, C. A. B. Docket No. 3211, Serial Nos. E-6717 (August 21,

1952), E-6959 (November 17, 1952) ; Northwest Airlines, Inc. Mail

Rates—Trans-Pacific Operations, C. A. B. Docket No. 2539 e: al.,

Serial Nos. E-7079 (January 13, 1953), E-7136 (February 4, 1953).

10

For the future, amici and petitioner Delta will be at a

serious disadvantage in competing with their domestic

competitors that have no international routes to which the

domestic profits may be siphoned off under the decision

below.

The mail rates under which Delta and amici are operat-

ing domestically are devoid of subsidy and are called ‘‘ser-

’? They compensate ‘‘the air carriers for carry-

ing the mail, reimbursing them for the related costs, in-

cluding a fair return on the investment which is used in the

mail service.’’ C. A. B. Report, Administrative Separation

of Subsidy from Total Mail Payments to Domestic Air

Carriers, p. 8 (September, 1951). In this report, the Board

classified the domestic carriers into seven groups ‘‘to re-

flect their relatively attainable unit costs as determined by

the revenue ton-miles per station transported by each car-

rier’’ (id., at p. 4). TWA’s domestic division, and three

other carriers which except for ‘‘stub-end’’ routes operate

only domestically, are classified in Group I, which has the

lowest service rate. The domestic divisions of Braniff,

Northwest and Delta are classified in Group II, together

with exclusively domestic carriers, which has a somewhat

higher service rate than Group I (id., September, 1953 Re-

vision, Appendices I-V).

vice rates.

As will be shown below, the value of this classification

in future rate-making proceedings may be substantially im-

paired by the decision of the Court of Appeals, since the

combined domestic and international operations of Delta

and amici cannot be properly classified with any other

groups of carriers.

BLEED THROUGH— POOR COPY

1l

Summary of Argument

The Court of Appeals did not challenge the Board’s find-

ing that any offset would interfere with the furtherance

of the basie objectives of the Act, including the develop-

ment of economically sound domestic and international air

transportation systems and the avoidance of monopolistic

control of United States international air transportation.

Instead, the Court held that section 406(b) absolutely

forbids the Board to refuse to offset, regardless of how

cogent the reasons. It reached this conclusion by focusing

on the words ‘‘all other revenue of the air carrier’’ in

that section. But that is just one of the elements which

the section directs the Board to ‘‘take into consideration,

among other factors.’’? This Court has previously recog-

nized that such language empowers the administrative

agency, after due consideration, to refuse to give any

weight to one factor where to do so would interfere with

the general scheme of an act and make it impossible to

give effect to other and more pressing factors which the

statute requires the agency to consider as well. Secretary

uf Agriculture v. Central Roig Refining Co., 338 U. S. 604

(1950).

Moreover, the Court of Appeals decision, if not directly

in conflict with this Court’s decision in Transcontinental

¢ Western Air, Inc. v. Civil Aeronautics Board, 336 U. S.

601 (1949), certainly eliminates much of the practical sig-

nificance of that decision; for, as the Board has pointed

out in the case now pending before this Court and in subse-

quent cases, under the Court of Appeals decision carriers

with domestic and international routes will be subject to

a ‘‘cost-plus’’ system of regulation.

12

POINT I

The Act clearly delegated to the Board the power

which the Court of Appeals held nonexistent.

This is the second time this Court has been called upon

to determine the power of the Board under section 406 of

the Act. In Transcontinental & Western Air, Inc. v. Civil

Aeronautics Board, 336 U.S. 601 (1949), the Court agreed

with the Board that it had no power ‘‘to fix a new mail

rate for air carriers and to make it retroactive for a period

in which a final rate previously fixed by the Board was in

effect and unchallenged by the initiation of a mail rate

proceeding’”’ (336 U. S. at 602, 607).

The reason for that decision was that section 406

‘‘reads like a typical public utility rate-making authority”’

(604), that there was nothing in the legislative history or

scheme of the Act to indicate that it was not meant to be

‘*typical’’ (605-606), and therefore the Board was right

in holding that it could not make so ‘‘unprecedented a

departure from the conventions of rate-making’’ (607).

In the current case, respondents challenge the Board’s

power to exercise a ‘‘typical public utility rate-making

authority’’—the power of the Board to decide, in its dis-

cretion, whether to treat separate operations of a carrier

independently for the purpose of rate-making. Yet this

power is one typically exercised by rate-making agencies.

American Toll Bridge Co. v. Railroad Commission of Cali-

Jornia, 307 U. S. 486, 494 (1939) affg., 12 Cal. 2d 184, 83

P. 2d 1, 7-8 (Sup. Ct. 1938). As said in Leeman v. Public

Utilities Commission of District of Columbia, 104 F. Supp.

5538, 560 (D. C. 1952) :

BLEED THROUGH— POOR COPY

13

‘‘Ordinarily, whether a smaller unit should be

used as a basis for rate-making is a matter of dis-

cretion for the regulatory agency.’’ *

That the separate classification of domestic and inter-

national operations is reasonable cannot be disputed since

‘‘many considerations which enter into the fixing of an

international rate are different from those entering into

the establishment of a domestic rate’’ (20). ‘‘Operating

problems such as the necessity for special equipment for

long over-water flights, customs procedures, problems ot

currency fluctuation and control, compliance with many

and varied foreign laws, dealings and negotiations with

foreign governments as well as the State Department, the

pressure of foreign flag carrier competition—all character-

ize international air transportation as a separate class of

service.’? Delta Air Lines, Inc., Mail Rates, Latin American

Operations, C. A. B. Docket No. 6110 Serial No. E-7738,

p. 9 (September 21, 1953).**

* See also Wabash Valley Electric Co. v. Young, 287 U. S. 488,

497 (1933) ; Interstate Commerce Commission v. City of Jersey City,

322 U. S. 503, 517 (1943) ; Boston Consolidated Gas Co. v. Depart-

ment of Public Utilities, 327 Mass. 103, 110, 97 N. E. 2d 521, 525-26

(Sup. Ct. 1951); The Five Per Cent case, 31 I. C. C. 51, 387, 392,

407-408 (1914) ; City of Grand Forks v. Red River Power Company,

8 P. U. R. (N. S.) 225, 243 (N. D. Bd. Rd. Comm., 1935); Re

Central Arizona Light & Power Company, 9 P. U. R. (N. S.) 270,

280 (Ariz. Corp. Comm., 1935) ; City of Douglas v. Arizona Edison

Company, 1 P. U. R. (N. S.) 493, 498 (Ariz. Corp. Comm., 1933) ;

Re Detroit Edison Company, 16 P. U.R. (N. S.) 9, 18-19, (Mich.

Pub. Ut. Comm., 1936).

** “Tt is evident that all of the major foreign airlines here studied

have been dependent on public aid in varying degrees and forms.”

Lissitzyn, Public Aid to Major Foreign Airlines, 19 J. Air Law &

Commerce, 38, 65 (1952). See also C. A. B. Report, Administrative

Separation of Subsidy from Total Mail Payments to United States

International Overseas and Territorial Air Carriers, pp. 3-5 (June,

1952).

a

14

Section 406(b) directs the Board in determining the

mail rate to:

‘take into consideration, among other factors, * * *

the need of each such air carrier for compensation

for the transportation of mail sufficient to insure the

performance of such service, and, together with all

other revenue of the air carrier, to enable such air

carrier under honest, economical, and efficient man-

agement, to maintain and continue the development

of air transportation to the extent and of the char-

acter and quality required for the commerce of the

United States, the Postal Service and the national

defense.”’

This is not the language of absolutes. Moreover, the

scheme of the Act clearly contemplates the establishment

hy the Board of reasonable classifications for rate-making

and other purposes. Thus the opening sentence of section

406(b) provides that the Board ‘‘may fix different rates

for different air carriers or classes of air carriers, and

different classes of service,’’ and section 416(a) provides

that the Board may ‘‘establish such just and reasonable

classification or groups of air carriers for the purposes of

this title as the nature of the services performed by such

air carrier shall require.’’

Indeed, Judge Prettyman’s dissent below, after point-

ing out that ‘‘the Board clearly had power to fix different

rates for international service and for domestic service”

(75), stated that ‘‘the ‘all other revenue’ which [the

Board] must ‘take into consideration’ means revenue re-

lated to that service for which the rate is being fixed”’

(76). And the Board has expressed the same view in a

subsequent case involving a similar situation. Delta Air

BLEED THROUGH-— POOR COPY

=_

15

Lines, Inc. Mail Rates, Latin American Operations, C. A. B.

Docket No. 6110, Serial No. E-7738, p. 8 (September 21,

1953).

The Court of Appeals focused on the words ‘‘all other

revenue of the air carrier,’’ and in spite of the other

language of sections 406 and 416 found a ‘*plain meaning’

depriving the Board of power to consider separately the

domestic and international divisions of the carrier, regard-

less of how cogent the reasons for doing so. But at most,

the Act requires the Board ‘‘to take into consideration,

among other factors,’’ the revenue of the domestic division

in fixing a mail rate for the international division. It

nowhere compels the Board, after such consideration, to

give the domestic revenue any quantitative part in comput-

ing the final international rate.

This distinction was pointed out in Secretary of Agri-

culture v. Central Roig Refining Co., 338 U. S. 604 (1950).

There the question presented was whether the Secretary of

Agriculture obeyed the requirements of the Sugar Act in

allotting the amount of sugar individual refiners could

‘mport into the United States. The Sugar Act required

the allocation to be made by ‘‘taking into consideration”’

three factors. After due consideration, the Secretary con-

cluded that one of these factors could not properly be ap-

plied and therefore gave it no weight in his final deter-

mination. The Court of Appeals held that the Sugar Act

required the Secretary of Agriculture to give ‘‘some effect

to each’’ of the three factors. 171 F. 2d 1016, 1019, (C. A.

D. C. 1948). This Court reversed and upheld the action

cf the Secretary, saying (338 U. S. at 611-12):

16

‘*Moreever, he is under a duty merely to take ‘into

consideration’ the particularized factors. The Sec-

retary cannot be heedless of these factors in the

sense, for instance, of refusing to hear relevant evi-

dence bearing on them. But Congress did not think

it was feasible to bind the Secretary as to the part

his ‘consideration’ of these three factors should play

in his final judgment—what weight each should be

given, or whether in a particular situation all three

factors must play a quantitative part in his compn-

tation.’’

Cf. McLean Trucking Co. v. United States, 321 U. 8. 67

(1944).

Here there is even less reason to ‘‘bind’’ the Board as

to the effect to be given one enumerated factor. Section

406(b) also directs the Board ‘‘to take into consideration

. other factors’? than those specifically enumerated in

79

that section. These ‘‘other factors’? obviously include the

general policy provisions found in section 2 of the Act,

which apply to rate-making as well as to every other fune-

tion of the Board, Mid-Continent Airlines, Inc., Mail Rates

LC. A. A. 45, 55 (1939).°

The relationship between section 406(b) and section 2

of the Act was also recognized by this Court in Transcon-

tinental & Western Air, Inc. v. Civil Acronautics Board,

536 U.S. 601, 606 (1949).

* See also Inland Air Lines, Inc-—Mail Rates, 1 C. A. A. 155, 15%

(1939): Continental Air Lines, Inc.—Mail Rates, 1 C. A. A. 182,

18k (1939); Pan American Airways Company—Mail Rates 1

C. A. A. 220, 254 (1939); Pan American Airways Company—Mail

Rates, 1 C. A. A. 529, 544 (1940) ; Braniff Airways, Inc-— Mail Rate

Proceeding, 2 C. A. B. 555, 582 (1941); American Airlines, Inc—

Mail Rate Proceeding, 3 C. A. B. 323, 346 (1942)

ELEED THROUGH-— POOR COPY

T

2 of

inte!

men

indu

anu

repo

7

Boat

gres

fact

com)

sion

fact

of t]

7

by }

all t

unit

Rou

Am

67

we

Boa

Cou

of t

cret

Boa

tion

cast

to t

unit

an Gt iOS > MERE a 0a ha RN hi OO, NL) NE

17

These general policy considerations set forth in section

2 of the Act command the Board to consider as in the public

interest such factors as the ‘‘encouragement and develop-

ment’’ of the air transport industry, the regulation of the

industry so as to ‘‘foster sound economic conditions’’ and

a number of similar factors indicating the broad discretion

reposed in the Board.

The decision of the Court of Appeals holds that the

Board may not evaluate all the factors expressed by Con-

gress in the Act and decide what weight, if any, to give such

factors. Instead, the Court below held that the Board is

compelled not only to ‘‘consider’’ one factor to the exclu-

sion of all others, but is also compelled to give that single

factor a prescribed quantitative part in its computation

of the rate.

The Court of Appeals attempted to support this view

by pointing out that in some cases the Board has treated

all the operations of an air carrier as a single rate-making

unit, citing Chicago and Southern A. L. Mail Rates—

Route No. 8 and 53, 3 C. A. B, 161, 190 (1941), and Pan

American Airways, Inc., Alaska Mail Rates, 6 C. A. B. 61,

67 (1944). The Court of Appeals concludes that ‘‘Thus

we have an established construction of the Act by the

Board which should be given weight’’ (72). What the

Court of Appeals refers to as ‘‘an established construction

of the Act by the Board’’ was merely an exercise of dis-

cretion by the Board in one particular direction. The

Board has also exercised its discretion in the other diree-

tion. Each case has been judged on its facts. In some

cases the Board, after considering all the facts, has decided

to treat a carrier’s entire operations as one rate-making

unit and in other eases it has decided to treat each separate

BLURRED COPY

Se a ree

SETI FO RES

SEMEL ENT ERIS FI

women ct ere 2 ae a alae

PN tC AN MRD Mg OIE ALA A ap at BB OED LT IIE REDO ELE LAP GE BAL OLE AA AC AED =

18

division of a carrier as a separate rate-making unit.*

This has not been inadvertent, but has been done deliber-

ately by the Board. For example, regarding TWA‘s two

divisions, the Board has said:

‘In that order [i.e., order issued in 1945 fixing

TWA’s domestic rate] we specifically provided that

the rate was net to apply to the international opera-

tion, for which we subsequently in a separate pro-

ceeding fixed a temporary rate. This has the effect

of a determination that TWA’s domestic and inter-

national operations are separate units for rate-mak-

ing purposes.’’ Pennsylvania Central Airlines Cor-

poration et al., supra, 8 C. A. B. 685, 703 (1947)

affd., 169 F. 2d 893, 336 U. S. 601.

We are dealing here with an Act which empowers the

Board to make subsidy grants in order to effect certain

broad statutory objectives. Where the Board has found

that it would attain the desired objectives by treating an

air carrier as a single rate-making unit it has done so.

Indeed, it is the Board’s stated policy ‘‘to treat the entire

operations of a carrier as a single unit for rate-making

purposes . . . except in those instances in which the charac-

teristics of different operations made the accomplishment

of the objectives of the Act feasible only by treating the

different operations as separate rate-making units.’’ Na-

tional Airlines, Inc., C. A. B. Docket Nos. 3037, 3248, Serial

No. E-6344, pp. 2-3 (April 21, 1952).

* In instances where conditions change, the Board may decide

that two divisions of a carrier previously considered as separate

rate-making units shall thereafter be considered as a single unit for

rate purposes. See United Air Lines, Inc., C. A. B. Docket Nos.

5683, 2913, Serial No. E-6676, p. 2 (August 7, 1952).

BLEED THROUGH-— POOR COPY

19

Section 406(b) should net be construed to prevent the

Board from thus accomplishing the objectives of the Act.*

POINT II

The decision of the Board to exclude domestic reve-

nues was based on appropriate policy considerations and

should not be disturbed by the courts.

The Board has found, beth in this case and in subsequent

decisions, that domestic profits cannot be offset against the ~ &§

needs of the international divisions of air carriers without

doing violence to practically all the major policy considera-

tions whick the Board is required to take into consideration

(55). See also Delta Air Lines, Inc. Mail Rates, supra, y

Serial No. E-7738, pp. 6-15; Braniff Final Mail Rate case, i

supra, Serial No. E-7815, pp. 8-9. In the latter case the }

Board summarized the policy reasons as follows:

‘‘We pointed out that the national policy, developed j

over a considerable period of time, required partici-

pation by domestic air carriers in international air

transportation, and that such policy would be seri-

ously threatened should the domestic air carriers

be required to use the profits of their domestic busi- :

ness to subsidize their international operations. We

also noted that an offset policy may adversely affect

PLP LIE SION

* The Western Air Lines Case (Nos. 224, 225), consolidated for

argument with this case (79, 80), involves the question of the abuse

of the Board’s discretion rather than its existence. The Court of

Appeals held that the Board could not refuse to give any weight to ;

revenues derived from the sale of a route in order to provide an i

incentive for voluntary route transfers. Whether or not the Court

too narrowly viewed the area of the Board's discretion is of no par- 4

ticular significance here on the basic issue of administrative power. 4

ener Tone

BLURRED COPY

SP ohms ae SLSR RTAE RAGBRAI ME Once som ———

20

the possibility of improved domestic service and

lower passenger and property rates. We expressed

concern that a policy which would require the estab-

lishment simultaneously of final rates for domestic

and international operations may result in substan-

tially longer periods of ‘cost plus’ operation and

higher rather than lower subsidy payments.’’

‘* There may be differences of opinion concerning the weight

But their significance is for

the [Board] to determine; and, though we had doubts, we

would usurp the administrative function of the [Board]

to be given those factors * * *.

if we overruled it and «»!)<tituted our own appraisal of

these factors."’ New Y.' . United States, 331 U.S. 284,

349 (1947).

The respondents here seek a ruling which at the moment

may seem to be in their interest, without consideration of

its significance in different cases where respondents’

present contentions may redound against them. See Re

Long Island Lighting Co., 18 P. U. R. (N. 8.) 65, 213-14

(N. Y. P.S. C., 1935), affd. sub. nom. Long Island Lighting

Company v. Maltbie, 249 App. Div. 918, 292 N. Y. 8S. 807

(3rd Dept. 1937).

Consider, for example, what would happen under re-

spondents’ theory if Chicago and Southern Air Lines had

suffered a substantial loss under a final mail rate on its

domestic division during the period for which its mail rate

for its international division was to be fixed. Under this

Court’s decision in Transcontinental & Western Air, Inc.

v. Civil Aeronautics Board, 336 U.S. 601 (1949), the Board

would have no power to go back and raise the domestic mail

rates. But, under respondents’ theory in this case, and the

decision below, the Board apparently would be compelled to

BLEED THROUGH— POOR COPY

eo“ ROA ANGI BES a SMI

21

give full effect to that domestic loss by increasing the mail

rate which would otherwise be fixed for the international

division, if that division was considered by itself.

A situation very like this exists with respect to fixing

TWA’s mail rate for its international division in the pend-

ing Transatlantic Final Mail Rate Case, C. A. B. Docket No.

1706 et al. During the period for which a final past interna-

tional mail rate is to be fixed in that case, February 5, 1946

to December 31, 1952, TWA contends its domestic division

earned a return of about 5.2% on its investment, yet 7%

is the rate of return normally allowed by the Board in fixing

domestic mail rates for past periods. Under respondents’

theory, TWA may seek to have the mail rate for its inter-

national division covering that period fixed high enough

to account for this 2% deficiency.*

It is interesting to observe that a primary cause of this

low domestic return was a 32.38°° loss on investment suf-

*In his brief to the Examiner in the Transatiantic Final Mail

Rate Case, the Postmaster General suggests offsetting the return in

excess of 8% earned by TWA on its domestic routes in 1951 and

1952, and completely ignores the prior years when TWA reported a

lesser return or suffered a loss. But he does not suggest how such a

one-sided view could be justified.

The record in that case (p. 4236) shows the following colloquy

between counsel for the Postmaster General and TWA’s counsel.

“Mr. Brahm [Counsel for the Postmaster General]: Pending

the decision of the Court the Department of course maintains its

position, that in determining the subsidy mail pay of one division

of a carrier’s operation, the Board must offset any excess earnings

realized from another division.

“Mr. Rowe [Counsel for TWA]: Does that apply to deficiencies

in the past periods as well?

“Mr. Brahm: I was speaking of excess earnings.”

BLURRED COPY

OT RY AONE ED

GONE OM

:

f

}

2

22

fered by TWA in 1946, which prompted TWA’s unsuccess-

ful effort to have its domestic mail rate for that year

retroactively increased. See Transcontinental & Western

Air, Inc. v. Civil Acronautics Board, supra. Thus, what

this Court held the Board could not do directly, it is now

asked to hold the Board may do indirectly.

Consider further a situation where a carrier with do-

mestic and international routes earns less than forecast

under a final mail rate fixed for its international route.

Under the decision below, such a carrier could apparently

seek to make up the difference in a pending domestic mail

rate proceeding. In short, under the decision below, mail

rates for such carriers may never be finally closed and a

cost-plus system of rate-making will prevail, in spite of

this Court’s decision in Transcontinental & Western Air,

Inc. v. Civil Aeronautics Board, supra.

Why, then, do amici seek a reversal? First, because the

decision introduces an unfair and improper element of

chance in the businesses of amici, It proposes to take away

domestic profits in excess of a certain level accruing during

the period the international rates may be open. This would

be especially harmful to a carrier which has had a long

succession of domestic losses over a period of years, but

whose domestic business took a favorable turn and showed

good profits during the years for which international rates

are to be fixed.

This is a very real problem in the air transport industry

which lacks the stability of the more usual forms of public

utilities. The Board has pointed out that ‘‘there have

been substantial variations in airline earnings over the his-

BLEED THROUGH-— POOR COPY

23

tory of the industry. Although for certain periods they

have been what might be considered excessive, over the

entire period the average return has not been prima facie

unreasonable.’’ and ‘‘better than average earnings are

required in good times to offset less than average earnings

in poor ..mes.’’ General Passenger Fare Investigation,

etc., C. A. B. Docket No. 5509, Serial No. E-7376, p. 9 (May

14, 1953).

Thus, the application of the offset would depend on the

particular point in the business cycle that a mail rate pro-

ceeding was commenced. A carrier operating both domes-

tie and international routes could find all the high points

of its domestic earnings cycle leveled off by offsets against

international losses, with no means of filling in the valleys

in domestic earnings occurring in poor years. In every

instance where the Postmaster General has alleged ‘‘ex-

cess’? domestic earnings, the claimed amounts are not ex-

cesses over any extended period of time, but represent the

peaks occurring in a few isolated years during which the

air carrier attained better than average earnings. The

Postmaster General’s position means that where profits are :

above average they accrue to the government; below-aver-

age earnings and losses are to be borne by the carrier.

Second, the decision below imposes an unfair burden

on carriers engaged in both domestic and international ;

operations. Domestic carriers which operate international

routes are in vigorous competition domestically with other

carriers engaged exclusively in domestie air service and j

whose domestic earnings would not be subject to offset

against international losses. TWA, which receives the

lowest domestie service rate prescribed by the Board, a

—_ [

BLURRED COPY

24

rate devoid of any subsidy, competes with three other large

domestic carriers being paid the same mail rate. The

purpose of such a uniform rate is to provide incentive, a

fact this Court recognized in Transcontinental & Western

Air, Inc. vy. Civil Aeronautics Board, supra, 336 U. S. at

606-07 :

**Section 406 (b) authorized the Board to fix

rates for ‘classes of air carriers.’ It is plain that

the uniform rate for the class is an important reg-

ulatory device * * *. A uniform rate forces carriers

within a given class to compete in securing revenue

and in reducing or controlling costs.’’

The Board establishes uniform class rates in the do-

mestic field by grouping in one class all of those carriers

whose domestic routes are comparable. As _ previously

mentioned, the Board has classified the domestic operations

of the nation’s carriers into seven groups, and has deter-

mined a service rate for each of those groups. For ex-

ample, in proposing a final mail rate for Braniff, whose

domestic operations are in Group II, the Board said:

‘it is proposed to fix a rate of 53 cents per mile-

ton of mail as the fair and reasonable rate of com-

pensation for Braniff on and after October 1, 1951.

This rate, developed by the Board for administra-

tive purposes as the compensatory rate for Group

II cariers, including Braniff, was first set forth in

the Board’s report entitled ‘Administrative Separa-

tion of Sudsidy From Total Mail Payments To

Domestic Air Carriers’ (September 28, 1951) ...

It is the Board’s view that the rates shown in the

separation report are sound and, at the present time,

represent fair and reasonable compensatory rates

of mail compensation.’’ Braniff Airways, Incorpo-

BLEED THROUGH— POOR COPY

25

rated, Domestic Operations, C. A. B. Docket No. 5142,

Serial No. E-6257, pp. 8-9 (March 26, 1952). Accord,

Northwest Airlines, Inc., Domestic Operations,

Cc. A. B. Docket No. 3211, Serial No. E-6717, p. 8

(August 21, 1952).

In theory all carriers in the same group have the same

opportunity, they receive the same incentive, and the rela-

tive success or failure of each carrier in the group is de-

pendent on its individual initiative in developing revenue

and minimizing expense in its domestic service.

But under the Court of Appeals decision equal oppor-

tunity would no longer exist because a carrier with both

domestic and international routes would have a risk not

imposed on other domestic carriers. Carrier A, engaged

solely in domestic operations, gets the full return offered

to domestic carriers; carrier B, operating purely an inter-

national service, is entitled to what it can earn as an

international carrier; but carrier C, operating both types

of routes and in direct competition with A and B (although

perhaps smaller than either), must be satisfied with some-

thing less than A and B.

The relative success or failure of C’s domestic route

under such circumstances would not be the result of its

initiative in its domestic operations, but would be substan-

tially determined by the extent to which the carrier was

called upon to make up deficiencies in international mail

need. Therefore, such a carrier could no longer be grouped

with purely domestic carriers and the fixing of mail rates

by classes would, for all practical purposes, be impossible.

Finally, the doctrine advocated by respondents will

weaken, if not destroy, the incentive for domestic carriers

BLURRED COPY

pr Nee 2am oe ne

26

to continue in international operations.* Consider, for

cxample, the present situation of Braaiff which competes

internationaliy with Pan American World Airways and

Panagra and domestically with American Airlines on the

Chicago-Dallas route. American is appreciably larger

than Braniff and operates no system of international

routes (other than trans-border ‘‘stub-end’’ routes).

American’s domestic earnings are, and will be, available

for possible reduction in rates on its domestic system and

for the acquisition of more deluxe equipment, or for any

other competitive attractions which Braniff could not afford

if its domestic earnings must first be used to offset losses

on its international services. Moreover, effective competi-

tion would not be possible if Branifi’s passenger and

cargo rates were higher than American’s, or if Braniff

were unable to match any reduction in rates which American

might offer to the public. What has been stated above

with respect to Braniff applies equally to Northwest, TWA

and petitioner, Delta, which also compete domestically with

large carriers whose operations are confined to the domestic

field.

*“Tt is not through happenstance that, with the exception of Pan

American and Panagra, all United States international air transpor-

tation service is rendered by carriers which also operate domestic

divisions. Rather, this is the result of a long and arduous policy

development participated in by all branches of the Government. Hav-

ing adopted the policy that the objectives of the Act, the national

interest and the public convenience and necessity would best be served

by a system of regulated competition in international air transporta-

tion in contrast to the so-called ‘chosen instrument.’ similar considera-

tions have moved the Government to adopt the policy of certificating

domestic carriers to perform international services.” Delta Air Lines,

Inc. Mail Rates, Latin American Operations, C. A. B. Docket No.

6110, Serial No. E-7738, p. 10; see also “Survival in the Air Age,”

a Report by the President’s Air Policy Commission, pp. 118-19

(January 1, 1948).

BLEED THROUGH-— POOR COPY

_7~X~” ee se ae a smal,

These, then, are some of the factors which led amici to

intervene in this case and which led the Board to refuse,

in the exercise of its discretion, to make the offset. As it

cannot be said that ‘‘the balance’’ the Board ‘‘struck on

consideration of all the factors’’ is one ‘‘that a fair-

minded tribunal with specialized knowledge’’ could not

have reached, the Board’s decision should be affirmed.

Secretary of Agriculture v. Central Roig Refining Co., 338

U. S. 604, 614 (1950).

CONCLUSION

The judgment of the Court of Appeals should be

reversed and the orders of the Board affirmed.

Respectfully submitted,

Hvusert A. ScHNeEwer,

Attorney for Braniff Airways, Inc.

C. Epwarp Leasure,

Attorney for Northwest Airlines, Inc.

GeraLp B. Bropry,

Attorney for Trans World Airlines, Inc.

Dated: November 16, 1953

BLURRED COPY