Delta Air Lines, Inc. v. C. A. B.

• Decision Date: 21 September 1977
• Docket Number: No. 76-1095,76-1095
• Citation: 184 U.S.App.D.C. 107,564 F.2d 592
• Parties: DELTA AIR LINES, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent, Eastern Air Lines, Inc., Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 592

564 F.2d 592

184 U.S.App.D.C. 107

DELTA AIR LINES, INC., Petitioner, v. CIVIL AERONAUTICS BOARD, Respondent Eastern Air Lines, Inc., Intervenor.

No. 76-1095.

United States Court of Appeals District of Columbia Circuit.

Argued March 31, 1977.

Decided Sept. 21, 1977.

Don M. Adams, Atlanta, Ga., with whom James W. Callison, Atlanta, Ga., Robert Reed Gray, Benjamin R. Achenbach, Jr. and John E. Gillick, Jr., Washington, D. C., were on the brief, for petitioner.

Barbara Thorson, Atty., C. A. B., Washington, D. C., with whom James C. Schultz, Gen. Counsel, Jerome Nelson, Deputy Gen. Counsel, Glen M. Bendixsen, Associate Gen. Counsel, C. A. B., Barry Grossman and Lee I. Weintraub, Attys., Dept. of Justice, Washington, D. C., were on the brief, for respondent.

Allison Wade, Washington, D. C., with whom Robert N. Duggan, Washington, D. C., was on the brief, for intervenor. Paul Thomas Michael, Alexandria, Va., also entered an appearance for intervenor.

Before TAMM and MacKINNON, Circuit Judges, and OLIVER GASCH, ^* U. S. District Judge for the District of Columbia.

Opinion for the court filed by TAMM, Circuit Judge.

TAMM, Circuit Judge:

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 (ALJ) 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. ¹ The ALJ did note that Eastern had one flight scheduled to depart Minneapolis/St. Paul at 7:00 a. m., the same 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 ² 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 Delta, while practically all would have one-stop service on Eastern. This was another convenient feature in Eastern's favor.

Eastern's proposal was also deemed superior in that it offered more convenient service to the traveling public from the standpoint of connecting flights in and out of Atlanta to nearly all points which exchange significant numbers of passengers with Fort Myers. Id at 120. Eastern will provide Fort Myers the first single-plane service to six important points to the north and midwest: Chicago, St. Louis, Minneapolis, Pittsburgh, and, in 1977, Detroit and Charlotte. Delta would offer single-plane service to four cities in the summer: Chicago, Detroit, Cincinnati, and Columbus. Indianapolis and Dayton would be added in the winter. Eastern's first single-plane one-stop service would reach markets which generated 25,790 passengers in 1974, while Delta's similar proposal would reach markets which generated 23,870 passengers in 1974. Id. at 124-25.

Both Eastern and Delta had identity with Atlanta and markets between Atlanta and Florida. Eastern offers nonstop service between Atlanta and fifty cities. In the Florida markets, Eastern serves the Tampa area with 44 daily flights, Sarasota with 15, Orlando with 30, West Palm Beach with 23, Fort Lauderdale with 40, and Miami with 102. Id. at 126. Eastern has been serving Florida's west coast for thirty-seven years. Delta also has very strong identity in the Florida markets. The ALJ noted that carrier identity is but one part of the picture, and unless it appears that an applicant is so unknown, unliked, or unsuccessful in the area that its likelihood of economic success there is threatened, a slight difference in degree of identity should not control over other more important considerations. Thus, since both applicants enjoyed strong identity, this factor was not as important in making the final decision.

Historically, route and system strengthening have always been given considerable weight by the Board in the carrier-selection area. The ALJ found that Eastern was most in need of the economic strengthening the Fort Myers-Atlanta route would provide. Id. at 127. From 1970-1974, Eastern suffered a system-wide loss of $12,000,000. During the same period, Delta earned a profit of $323,550,000. Were Delta to receive the new route, the ALJ estimated the resulting loss of revenues to Eastern...