Braniff Airways, Inc. v. CAB, 16499.

• Decision Date: 24 May 1962
• Docket Number: No. 16499.,16499.
• Citation: 113 US App. DC 132,306 F.2d 739
• Parties: BRANIFF AIRWAYS, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, Continental Air Lines, Inc., Delta Air Lines, Inc., Eastern Air Lines, Inc., National Airlines, Inc., City of Houston, Texas, Houston Chamber of Commerce, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

113 US App. DC 132, 306 F.2d 739 (1962)

BRANIFF AIRWAYS, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent Continental Air Lines, Inc., Delta Air Lines, Inc., Eastern Air Lines, Inc., National Airlines, Inc., City of Houston, Texas, Houston Chamber of Commerce, Intervenors.

No. 16499.

United States Court of Appeals District of Columbia Circuit.

Argued March 9, 1962.

Decided May 24, 1962.

Petition for Rehearing Denied July 27, 1962.

Mr. B. Howell Hill, Washington, D. C., with whom Mr. Walter D. Hansen, Washington, D. C., was on the brief, for petitioner.

Mr. O. D. Ozment, Associate Gen. Counsel, Litigation and Research, Civil Aeronautics Board, with whom Messrs. John H. Wanner, Gen. Counsel, Joseph B. Goldman, Deputy Gen. Counsel, and Robert L. Toomey, Atty., Civil Aeronautics Board, and Richard A. Solomon, Atty., Dept. of Justice, were on the brief, for respondent.

Mr. Robert Reed Gray, Washington, D. C., with whom Mr. Joseph J. O'Connell, Jr., Washington, D. C., was on the brief for intervenors Delta Air Lines, Inc., argued for intervenors Delta Air Lines, Inc., Continental Air Lines, Inc., and National Airlines, Inc.

Messrs. C. Edward Leasure and Joseph F. Healy, Jr., Washington, D. C., were on the brief for intervenor Continental Air Lines, Inc.

Messrs. John W. Cross and Andrew T. A. Macdonald, Washington, D. C., were on the brief for intervenor National Airlines, Inc.

Mr. Robert N. Duggan, Washington, D. C., also entered an appearance for intervenor Continental Air Lines, Inc.

Mr. R. S. Maurer, Atlanta, Ga., also entered an appearance for Delta Air Lines, Inc.

Mr. James H. Bratton, Jr., of the bar of the Supreme Court of Georgia, Atlanta, Ga., pro hac vice, by special leave of court, for intervenor Eastern Air Lines, Inc.

Messrs. E. Smythe Gambrell and Harold L. Russell, Atlanta, Ga., were on the brief for intervenor Eastern Air Lines, Inc.

Messrs. Cecil A. Beasley, Jr., and R. J. Shortlidge, Jr., Washington, D. C., were on the brief for intervenors, City of Houston, Texas and Houston Chamber of Commerce.

Before EDGERTON, FAHY and WASHINGTON, Circuit Judges.

FAHY, Circuit Judge.

As the case is finally presented in this court we have for consideration only the petition of Braniff Airways, Inc., for review of orders of the Civil Aeronautics Board of March 13, 1961 and May 26, 1961.¹ These orders were the culmination of a very extensive proceeding before a Hearing Examiner of the Board and later before the Board itself, known as the Southern Transcontinental Service case. It was instituted by the Board in 1958 to reach a determination with respect to new or improved air routes, and the carriers which should operate them, in an area bounded on the east by Georgia and Florida and on the west by California, transversing Alabama, Mississippi, Louisiana, Texas, New Mexico, Arizona and Nevada. One of the problems which was resolved, was the initiation of previously non-existent direct single-carrier transcontinental service in this area, with the elimination of interchanges which had been used to provide this service between the Southeast and the West Coast. Braniff submitted applications which may be generally described as (1) a proposal to provide transcontinental service through the southern tier of states between Florida and California, a Florida-California route, (2) a proposal for regional service between Texas and California, a Texas-West route, and (3) a proposal to provide regional service between principal cities in Texas and points in Florida, a Texas-Florida route.²

Applicants for these route authorities in competition with Braniff were American Airlines, Continental Air Lines, Delta Air Lines, Eastern Air Lines, National Airlines, Trans World Airlines and Western Air Lines.³ The Board selected National to provide the transcontinental service between Florida and California, Delta was awarded the transcontinental routing between Alabama/Georgia and California, Continental received the Texas-West regional routing, and Eastern, rather than Braniff as recommended by the Examiner, was granted authority to provide service over the Texas-Florida route. The Board also granted American limited operating rights between Houston-San Antonio and the West Coast.⁴

Braniff was granted none of the route authorities for which it applied. Subject to the qualification hereinafter stated we find no basis upon which to set aside the decisions of the Board except its award to Eastern of the Texas-Florida route. As we have said, the Examiner favored Braniff for this route, though not in the exact form granted by the Board to Eastern; that is, he had awarded to Braniff "a new segment between Fort Worth and the coterminal points Miami and Fort Lauderdale via Dallas, Houston, New Orleans, Tampa, and St. Petersburg-Clearwater," whereas the Board, while it concurred in the authorization of a new Dallas/Fort Worth-New Orleans-Florida regional route, did not include Houston.

Before selecting Eastern the Board eliminated all applicants except Eastern and Braniff as a result of comparative considerations; that is, it eliminated American, Delta and National. As to Eastern and Braniff the Board set forth a short comparative analysis, including the following: "In terms of quality of service to the public and historic interest in the traffic to be served, we do not find that either Braniff or Eastern has any significant advantage in these respects." The Board found also that Braniff needed additional long-haul, high-density markets properly to strengthen its competitive position, which was "a significant factor in Braniff's favor;" but "in order to properly weigh the applicability of the `strengthening' factor in this case, we think it is important to consider the overall impact which the present decision will have on both carriers as well as the relative economic position of Eastern in relation to other carriers, such as American, United, and TWA, with whom it must compete."⁵ The Board found that its decision would subject neither Eastern nor Braniff to any sizable diversion of traffic, though Eastern would stand to lose more by diversion. The Board then reached the critical basis for its choice of Eastern for the Florida-Texas route, as follows:

"While such diversion, standing alone, would not be crippling, we cannot close our eyes to Eastern's worsening financial position in the industry during the past several years and the probable diversionary impact on the carrier of the announced merger between United and Capital.58 It is also true that Eastern's traffic opportunities have been appreciably curtailed during the last five years by the grant of competitive authority in most of Eastern's paying markets, as well as the disappointing lack of growth in the Florida market, one of Eastern's richest markets.

"58. See CAB Press Announcement, dated January 31, 1961. While the Board's formal decision approving the proposed United-Capital merger has not as yet been issued, the potential impact on Eastern from such a merger cannot be ignored."

"It is the cumulative effect of these many factors and the steadily decreasing opportunities for growth available to one of our larger carriers, whose services are vitally important to a substantial segment of the traveling public, which are of concern to the Board. We are convinced that the competition between carriers required by the Act cannot be preserved if the economic position of any of the trunks, whether classified as a Big Four or a nonmember Big Four, is permitted to deteriorate in relation...