CAPITAL AIRLINES, INC., v. CAB

• Decision Date: 11 July 1960
• Docket Number: No. 15475.,15475.
• Citation: 281 F.2d 48
• Parties: CAPITAL AIRLINES, INC., Petitioner v. CIVIL AERONAUTICS BOARD, Respondent, City and Chamber of Commerce of Toledo, Ohio, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

281 F.2d 48 (1960)

CAPITAL AIRLINES, INC., Petitioner v. CIVIL AERONAUTICS BOARD, Respondent City and Chamber of Commerce of Toledo, Ohio, Intervenor.

No. 15475.

United States Court of Appeals District of Columbia Circuit.

Argued May 12, 1960.

Decided July 11, 1960.

Mr. Macon M. Arthur, Washington, D. C., with whom Messrs. Robert B. Hankins and James H. Bastian, Washington, D. C., were on the brief, for petitioner.

Mr. Morris Chertkov, Attorney, Civil Aeronautics Board, with whom Messrs. Franklin M. Stone, General Counsel, Civil Aeronautics Board, John H. Wanner, Deputy General Counsel, Civil Aeronautics Board, O. D. Ozment, Associate General Counsel, Litigation and Research, Civil Aeronautics Board, and Richard A. Solomon, Attorney, Department of Justice, were on the brief, for respondent.

Mr. William C. Burt, Washington, D. C., for intervenor. Mr. Robert M. Beekman, Washington, D. C., also entered an appearance for intervenor.

Before BAZELON, WASHINGTON and BASTIAN, Circuit Judges.

BAZELON, Circuit Judge.

This case raises a new and important question in the administration of the Federal Aviation Act. It is the first proceeding in which the Civil Aeronautics Board has found a certified carrier's service to be inadequate and has ordered it to provide additional flights.¹

The City and Chamber of Commerce of Toledo, Ohio, filed a joint complaint before the Board alleging that Capital Airlines ("Capital") was not rendering Toledo adequate service to and from New York, Chicago, Philadelphia and Cleveland, as required by § 404(a) of the Act.² The Board ordered an investigation and consolidated it with an investigation, ordered sua sponte, concerning United Air Lines' ("United") air coach service³ between Toledo and the same four cities. The examiner found that United's service was adequate and dismissed the proceeding as to it. But he found that Capital's service to New York, Chicago and Philadelphia (but not Cleveland) was inadequate and recommended that Capital institute, for a one-year trial period, two daily round-trip air coach flights (one during daylight hours) to each of these three cities. The Board affirmed and issued the recommended order.⁴ Capital has petitioned for review contending, inter alia, that the Board's subsidiary findings do not support its ultimate determination of inadequate service; that the remedy ordered is in excess of the Board's authority and, in any event, is not warranted by the record.

Capital, one of twelve trunk-line domestic air carriers, has been authorized since 1947 to provide first class or coach flights from Toledo to New York and Chicago. Since 1955, this authorization has included non-stop flights to these points as well as non-stop service to Philadelphia. Capital has never flown coach flights between Toledo and any of these three cities. It has never rendered any through schedule service (i. e., without change of plane) between Toledo and Philadelphia. For a short time in 1955 and 1956, it had one and one-half through schedule round trips per day to New York, and Chicago. At the time of the hearing in the instant case, Capital provided no service of any kind to Philadelphia, and its service to New York and Chicago had dwindled to one east-bound (Chicago-Toledo-New York) and one west-bound flight per day, each of which entailed a change of plane and a long layover.

By contrast, United offered at the time of the hearing three first class roundtrip flights daily to New York; five and one-half to Chicago; one to Philadelphia. Only a few required a change of plane; many were non-stop.

Capital contends that the order must fall because the Board's determination, that Capital's service is inadequate, was made without finding that "the existing air services of all carriers in the markets at issue do not satisfy the reasonable requirements of the travelling public." In other words, the Board made no finding that Toledo passengers could not find space aboard United's single-plane flights. To this the Board responds that such a finding is unnecessary, for if two carriers are certificated to service a market, each must render adequate service, and "the fact that the aggregate of service is adequate does not necessarily absolve the carrier whose services are inadequate." More specifically, the Board contends that where, as here, it certificated Capital to serve Toledo in order to provide a competitive spur to United,⁵ Capital's duty of service cannot be discharged by United's adequate service.

The Board's argument rests upon 404(a)'s directive that "It shall be the duty of every air carrier to provide and furnish * * * air transportation, as authorized by its certificate, upon reasonable request therefor and * * * to provide * * * adequate service" (emphasis supplied). It recognizes that "in determining service adequacy of a particular carrier, one of the factors to be considered is the aggregate of services offered by other air carriers in the markets in question." See Fort Worth Investigation, Docket No. 7382, decided Sept. 23, 1958. But it held that where a carrier is authorized to provide competitive service and never even attempts to comply, the fact that other carriers provide a market with minimally adequate service does not discharge the offending carrier's obligations under its certificate. In short, the Board held that the Act must be read as a whole and that the purposes for which a carrier is certificated are relevant to the duty of service imposed by § 404(a).

We think the Board has properly construed the Act. As the Board noted, § 404(a) requires every carrier to provide "air transportation, as authorized by its certificate" and to provide adequate service and facilities "in connection with such transportation" (i. e., the transportation authorized by the certificate). A carrier may be certificated, upon request, if the Board finds that it "is fit, willing, and able to perform such transportation properly" and that "such transportation is required by the public convenience and necessity." 72 Stat. 754 (1958), 49 U.S. C.A. § 1371(d). In determining the public interest, the Board must observe the congressional declaration that the public convenience and necessity are enhanced by:

"The promotion of adequate, economical, and efficient service by air carriers at reasonable charges * * *" 72 Stat. 740 (1958), 49 U.S.C.A. § 1302(c).

and

"Competition to the extent necessary to assure the sound development of an air-transportation system * * *" 72 Stat. 740 (1958), 49 U.S.C.A. § 1302(d).

We do not decide whether a certificated carrier can be required to undertake competitive service where it can show that the potential market is completely satisfied and that service could only be instituted at a hopeless loss.⁶ That is not this case. Here the Board found, upon substantial evidence that, even if Capital's and United's combined service to Toledo is not legally inadequate, there is a potential demand for service between Toledo and New York, Chicago and Philadelphia which is not being fulfilled.⁷ Although the Board did not attempt to estimate the precise size of this potential market, we think it was fully justified on the record before it in concluding that the existence of more adequate Capital services, plus the expected improvement in United's service as a result of competition, would generate the demand necessary to sustain Capital's new flights.⁸ Moreover, the Board's estimates, also supported by substantial evidence, show that Capital will...