Continental Air Lines, Inc. v. Civil Aeronautics Board

443 F.2d 745
Court of Appeals for the D.C. Circuit·Decided February 12, 1971·No. Nos. 23560, 23561·Published·Cited by 4 cases

Opinion

McGOWAN, Circuit Judge:

Continental Air Lines, Inc., presents two petitions seeking review of orders of the Civil Aeronautics Board making route awards. In No. 23,560, it complains of a grant of certificate authority to Delta Air Lines, Inc., between Dallas/Fort Worth and Phoenix. In No. 23,561, it challenges an award to the same carrier of a route between Houston and Miami. The orders under attack issued from two proceedings instituted by the Board under Section 401 of the Federal Aviation Act of 1958 (49 U.S.C. § 1371). Due to the interrelationship between these two proceedings, and the fact that Continental’s allegations stem in large part from this connection, we heard these appeals at the same time and now find it suitable to dispose of them in one opinion.

I

In 1961 the Board made an extensive, area-wide investigation of the existing long-haul airline service in the Southern portion of the United States, carefully analyzing the service currently being provided to more than twenty-two cities ranging from Florida to California. Southern Trans-continental Service Case, 33 C.A.B. 701 (1961). The Board’s awards in this case included two transcontinental routes to Delta (Atlanta to Los Angeles, and Atlanta to San Francisco) and one transcontinental route to National Airlines (Miami to Los Angeles). Continental received no transcontinental route, but was permitted to serve the Houston-Los Angeles segment. The Board, in granting the awards, made two major policy decisions. First, in order to provide service to the broadest spectrum of passengers, no restrictions were to be placed on intermediary stops on the route segments granted.1 Second, no competition was to be permitted on these routes, because the carriers were “just emerging into the jet age with the financial and equipment problems attendant thereto.”

By 1967 the Board was aware of changing conditions which made reexamination of its earlier awards necessary. In the intervening years, there had been a striking increase in the number of passengers traveling the various routes in this part of the country; and the carriers serving these routes had reached a high degree of financial stability. There were large numbers of passengers and potential passengers asking for improved and more direct service between important cities in the area in the form of nonstop and turnaround flights — a demand which tended to be frustrated by the monopoly nature of the earlier awards.

Thus the Board predicated its new look at the situation on the principle that competition on the established routes, rather than the creation of new routes, was needed. In this manner, it was hoped that better service between the principal city-pairs in the South would result. Therefore, rather than institute a general area-wide study of the kind used in 1961, the Board wanted to focus attention on existing service in particularized markets. Accordingly, it initiated four separate proceedings before four separate hearing examiners. The principal issues to be decided in each of these proceedings were (1) whether there was a need for competitive service in the relevant markets, and (2) which carrier should be selected to provide any needed competitive service. Two of these proceedings are the respective sources of [748] the orders presently under attack, namely, the Southern Tier Competitive Nonstop Investigation, which included Houston-Miami along with seventeen other city-pairs, and the Dallas/Fort Worth-Phoenix Nonstop Investigation, which involved only the Dallas-Phoenix market.2

In each appeal before us, petitioner Continental urges that the Board utilized its selection criteria inconsistently in these proceedings, especially as between the Dallas-Phoenix and the Houston-Miami awards; and that, in No. 23,560, a consequence of this is that the Board’s order is lacking in the reasoned conclusions, founded upon requisite findings, contemplated by the applicable statutes. In No. 23,561, these lines of attack are supplemented by a further claim that the Board’s order lacks the support of substantial evidence in the record.3

A. The Dallas-Phoenix Case (No. 28,-560).

The Board, in its order initiating this proceeding, emphasized its acute concern for the service being provided by American Airlines to passengers in the local Dallas-Phoenix market, due to American’s practice of serving the route only as a small segment of its longer route. As a result of this concern, the Board imposed the following prehearing restrictions: “(1) that any authority granted in this proceeding shall be in the form of a separate segment; and (2) that single-plane service beyond Dallas/Fort Worth shall not be permitted.”4 However, at the time the Board consolidated the applications for hearing, Delta asked the Board to delete the restriction against single-plane traffic east of Dallas/Fort Worth. The Board granted this request because it thought the restriction “would unduly and prematurely limit the possibilities for new and improved single-plane service in a market where connecting passengers outnumbered local passengers in this market, and * * * the bulk of these connecting passengers make their connections at Dallas for points east.” This, said the Board, would allow “applicants with existing routes east of Dallas to propose single-plane services in many of these markets and to argue these ‘beyond area’ service benefits and traffic support in aid of their proposals in the principal market at issue * *

Ten carriers, including Continental and Delta, applied for the route. In its showing at the hearing, Continental [749] pointed out that it had served both Dallas and Phoenix since 1961, but that operating restrictions had prevented it from providing service between the two points. It proposed two daily, nonstop, turnaround flights, with early morning and late afternoon departures in each direction.5 In addition to offering various promotional fares, Continental said that, if the route were awarded, it would offer an economy rate of $46.00, available for a limited number of seats.

Delta related that, although it had no identity 6 at the Phoenix airport, it was already serving Dallas on its Atlanta-Los Angeles transcontinental route. It proposed the operation of five daily nonstop jet flights in each direction.7 All of these would be segments of longer routes, and each would serve three or more cities east of Dallas/Fort Worth. There would be morning flights in each direction as well as midday service. Two flights in each direction were to operate [750] at off-peak night hours, and were “designed particularly for the carriage of mail and cargo” and to “meet the demands for night coach service with attendant lower fares.”

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Continental Air Lines, Inc. v. Civil Aeronautics Board, 443 F.2d 745 (D.C. Cir. 1971).

443 F.2d 745 (Continental Air Lines, Inc. v. Civil Aeronautics Board) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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