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09/21/77 Delta Air Lines, Inc., v. Civil Aeronautics Board

September 21, 1977

DELTA AIR LINES, INC., PETITIONER

v.

CIVIL AERONAUTICS BOARD, RESPONDENT, EASTERN AIR LINES, INC., INTERVENOR 1977.CDC.224 DATE DECIDED: SEPTEMBER 21, 1977



Before this court, Delta sets forth four claims of error in the Board's order. First, Delta argues that the Board erred by accepting Eastern's traffic forecast figures and declaring an advantage for Eastern when, according to Delta, Eastern's forecast was actually the same as Delta's. Delta asserts the Board also erred when it found that Eastern would operate at a load factor of 39%, when the correct figure was 34.4%. Second, Delta contends that the Board failed to articulate adequately the so-called "economic incentives" decisional factor, neglected to clarify the decisional significance of this factor, and did not make comparative findings to support its conclusion that Eastern's economic incentives ensured the best service. Delta concludes this portion of its argument by asserting that these shortcomings contributed to a decision unsupported by a reasonable basis, leaving Delta and this court to speculate as to the grounds for the Board's decision. Third, Delta cites the Board's failure to address the significant factor of "comparative economic efficiency" as a violation of its statutory mandate to promote adequate, economical, and efficient air services. Finally, Delta argues that the unexplained inconsistency between the Board's decision in this case and a contemporaneously decided case constitutes reversible error. ISSUE ANALYSIS

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petition for Review of an Order of the Civil Aeronautics Board.

APPELLATE PANEL:

Tamm and MacKinnon, Circuit Judges, and Oliver Gasch,* U.S. District Judge for the District of Columbia. Opinion for the court filed by Circuit Judge Tamm.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE TAMM

Delta Air Lines, Inc. (Delta) seeks review of a Civil Aeronautics Board (Board) decision wherein the Board, having determined that the public convenience and necessity required the authorization of nonstop air service between Fort Myers, Florida, and Atlanta, Georgia, awarded Eastern Air Lines, Inc. (Eastern) the new route. The Board found that of the six applicants for the route Eastern had the better service proposal, route structure, beyond-segment capability, market identity, and a greater need for economic strengthening. We must determine whether the Board's discretionary selection of Eastern rests on adequate findings supported in the record and represents a fair comparative consideration of the carriers' applications. We find that the Board's order is supported by substantial evidence in the record and constitutes a fair comparative consideration of the applications. Therefore we affirm the Board's order.

HISTORY OF THE LITIGATION

This proceeding was instituted on December 6, 1974, by Board Order 74-12-26, to investigate the need for nonstop air service between Fort Myers, Florida, and Atlanta, Georgia. Prior to the institution of this proceeding, National Air Lines, Inc. (National) was the sole certificated air carrier serving Fort Myers. National's domestic system extends primarily to other Florida cities, up the east coast of the United States, and along the southern tier of states to California. Consequently, Fort Myers was without adequate air service to Atlanta, the major air transportation center and hub of the southeastern United States, and had no access at all to the vast Midwest/Great Lakes region. In light of this, a major focus of the administrative proceedings centered on Fort Myers' need for service to the Midwest/Great Lakes area via the Atlanta gateway. J.A. 92, 189.

Six certificated air carriers, Delta, Eastern, National, Northwest Air Lines, Inc., Southern Airways, Inc., and United Air Lines, Inc., applied for the Fort Myers-Atlanta route. The Administrative Law Judge concluded the two most logical candidates for the route award were Delta and Eastern, since both carriers had major operations at Atlanta and were authorized to serve the greatest number of Midwest/Great Lakes cities beyond Atlanta. As between Eastern and Delta, the ALJ determined that the public interest would be served by awarding Eastern the new route. The losing applicants, including Delta, petitioned the Board for review of the ALJ's carrier-selection decision. The Board found that the ALJ's decision was reasonable and affirmed it. Thereafter, Delta filed a petition for reconsideration, and the Board stayed Eastern's permanent authority but granted Eastern temporary exemption authority to commence service between Fort Myers and Atlanta on December 10, 1975. This action was followed by the Order on Reconsideration January 22, 1976, which reaffirmed the award to Eastern and denied all petitions for reconsideration. Delta then filed this petition for judicial review on January 29, 1976.

FACTUAL BACKGROUND

The need for improved air service at Fort Myers was not seriously disputed by any of the parties participating in the administrative proceedings, and that need is not questioned by Delta in this appeal. For our purposes it will suffice to point out that the record indicated that Fort Myers (1) was among the fastest growing cities in the nation (J.A. 90); (2) experienced a large increase in the volume of air passenger traffic in general and, in particular, between it and cities in the midwest (Id. at 189-90, 192); (3) did not receive adequate service to Atlanta or the midwest through the Tampa gateway which was the only direct connecting point to Atlanta or the midwest for Fort Myers passengers. The evidence clearly demonstrated that the public convenience and necessity required the institution of the proposed service to and from, as well as through, Atlanta.

Since a prime consideration in the authorization of this new route was the need for service from Fort Myers to the midwest, the ALJ narrowed the field of six applicants to two, Eastern and Delta. Id. at 94. Both of these carriers' route systems radiated from the Atlanta airport, and the new route readily integrated into their systems. Furthermore, Eastern and Delta proposed to offer levels of service that could not be equaled by any of the other four applicants. The ALJ candidly admitted that the choice between Eastern and Delta was an extremely close one. Id. at 191. In arriving at a decision in favor of Eastern, the ALJ considered a number of carrier-selection factors, including service proposals, route structure and ability to provide service to points beyond Atlanta, carrier need for economic strengthening, and carrier identification in the area under consideration. Id. at 188.

The service proposals were appraised in terms of their frequency and timing. Eastern's proposal included four daily nonstop round-trips from Fort Myers to Atlanta. Delta's proposal scheduled four round-trips in the winter and three in the summer months. The ALJ concluded that, with four round-trip flights per day, year round, Eastern would provide more frequent service than Delta. Id. at 118. The ALJ also found that Eastern's scheduling provided significantly more convenient timing for passengers bound to and from Fort Myers. Delta's proposed wintertime departure times from Columbus and Chicago and arrival time at Detroit were 7:00 a.m., 3:15 a.m., and 2:45 a.m., respectively. Id. at 112. The Eastern flights were scheduled at more convenient hours. *fn1 The ALJ did note that Eastern had one flight scheduled to depart Minneapolis/St. Paul at 7:00 a.m., the same time as the Delta flight from Chicago. Although this is an inconvenience, the amount of traffic out of Minneapolis/St. Paul is only twenty-seven percent as much as that out of Chicago. Id. at 120. Thus, fewer people would be inconvenienced by the Eastern flight.

The ALJ found an added convenience in Eastern's proposal over and above the frequency and timing of its flights. All but one of Eastern's flights will provide first single-plane *fn2 nonstop service to and from Atlanta, giving one-stop service for Fort Myers. Id. at 168. The Delta schedule connects Fort Myers with only two-stop service to Detroit and Columbus. The ALJ concluded that nearly half the travelers on the first single-plane service would have two-stop flights on ...


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