Legend Airlines v. City of Fort Worth

• Decision Date: 25 May 2000
• Parties: (Tex.App.-Fort Worth 2000) LEGEND AIRLINES, INC.; CITY OF DALLAS, TEXAS; CONTINENTAL AIRLINES, INC.; AND CONTINENTAL EXPRESS, INC. APPELLANTS v. CITY OF FORT WORTH, TEXAS AND AMERICAN AIRLINES, INC. APPELLEES NO. 2-99-098-CV
• Court: Texas Court of Appeals

Page 83

23 S.W.3d 83 (Tex.App.-Fort Worth 2000)

LEGEND AIRLINES, INC.; CITY OF DALLAS, TEXAS; CONTINENTAL AIRLINES, INC.; AND CONTINENTAL EXPRESS, INC. APPELLANTS v. CITY OF FORT WORTH, TEXAS AND AMERICAN AIRLINES, INC. APPELLEES

NO. 2-99-098-CV

COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH

May 25, 2000

FROM THE 48TH DISTRICT COURT OF TARRANT COUNTY

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Panel A: Cayce, C.J.; Day ^* and Dauphinot, JJ.

OPINION

John Cayce, Chief Justice

The issues we decide in this appeal are 1) whether enforcement of restrictions on air passenger service at Love Field Airport contained in a 1968 Bond Ordinance between the City of Fort Worth and the City of Dallas are preempted by the Airline Deregulation Act, and 2) whether the air passenger service proposed by Legend Airlines, Inc., Continental Airlines, Inc., and Continental Express, Inc. is within the "commuter airlines" exceptions to the Wright and Shelby Amendments. ¹ Because we conclude that the restrictions in the Bond Ordinance are preempted by the ADA and that the proposed service falls within the commuter airlines exceptions to the Wright and Shelby Amendments, we will reverse and render.

BACKGROUND FACTS

In 1962, the Civil Aeronautics Board (CAB) instituted the Dallas-Fort Worth Regional Airport Investigation to determine whether public convenience required the two cities to consolidate commercial air passenger service at one airport. At the time, Dallas's commercial air traffic operated out of Love Field, while Fort Worth's airport was Greater Southwest International Airport (GSIA). The CAB stated that the use of multiple airports produced fragmented and more expensive service.

An evidentiary hearing was held before an administrative law judge, who ruled that neither Love Field nor GSIA could meet the future aviation requirements for the Dallas-Fort Worth area. The CAB then issued an order in September 1964, in which it concluded that "service to Dallas and Fort Worth should be required through a single airport." The CAB instructed the cities that if they did not agree on a single airport for all commercial passenger service, the CAB would designate one for them. The order provided:

[W]e are aware of the practical difficulties involved in the transition to service through a single airport, and contemplate a voluntary arrangement . . . . Should the parties, contrary to our expectation, be unable to agree to designation of the airport to serve the area, the Board will then proceed promptly to issue a decision.

As a direct result of the CAB's order, the cities created the Dallas-Fort Worth International Airport (DFW). In April 1968, the cities entered into an agreement (the 1968 Agreement) that created a joint venture to build DFW. Under the 1968 Agreement, the cities are co-owners of DFW, which is operated on their behalf by the DFW Airport Board. The DFW Airport Board is comprised of members appointed by the two city councils.

In November 1968, the cities also passed the 1968 Regional Airport Concurrent Bond Ordinance (the Bond Ordinance) to authorize the issuance of bonds to finance DFW. The Bond Ordinance provided that the cities would "take such steps as may be necessary, appropriate, and legally permissible . . . to provide for the orderly, efficient and effective phase-out at Love Field [and other local airports] of any and all Certificated Air Carrier Services, and to transfer such activities to [DFW]."

After the 1968 Agreement was signed and the Bond Ordinance was passed, Fort Worth demolished GSIA, and Dallas required all federally certificated air carriers to transfer their operations from local airports under its control to DFW. The DFW Airport Board entered into use agreements with the major air carriers then serving the cities' local airports. In exchange for benefits accompanying "signatory" status, each of these carriers agreed to provide certificated air carrier services serving this region exclusively at DFW "to the extent required by the terms of the . . . Bond Ordinance."

Southwest Airlines was not a signatory and refused to move its operations from Love Field to DFW. Dallas, Fort Worth, and the DFW Airport Board sued Southwest in federal court, seeking to exclude it from operating out of Love Field upon the opening of DFW. The federal court held that Dallas could not force Southwest to vacate Love Field as long as Love Field remained open, because Southwest was not a federally certificated air carrier and was flying only intra state routes. ²

In 1978, Congress deregulated the airline industry by enacting the Airline Deregulation Act (ADA). The ADA expressly preempts and prohibits states and their political subdivisions from enacting or enforcing "a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier." ³ After the ADA was passed, Southwest applied for and obtained federal certification to begin interstate service from Love Field to New Orleans. ⁴ Dallas, Fort Worth, and the DFW Airport Board opposed Southwest's application through an administrative appeal, but the appeal was unsuccessful. ⁵

Southwest's success in obtaining federal authority to offer interstate service out of Love Field prompted former Fort Worth Congressman and Speaker of the House Jim Wright to seek legislation that, in its original form, would have barred all regularly scheduled interstate passenger flights from Love Field, except for "commuter airline operations." ⁶ The Dallas City Council passed a resolution expressing its support for this legislation. Although Congressman Wright's bill banning all interstate service at Love Field was adopted by the House, the Senate rejected it. The conference committee, however, reached a compromise that resulted in the legislation known as the Wright Amendment. The Wright Amendment prohibited the CAB and the Department of Transportation (DOT) from certificating interstate flights at Love Field, subject to two pertinent exceptions:

* commuter airlines operating aircraft with a passenger capacity of 56 passengers or less; and

* flights between Love Field and points in Louisiana, Arkansas, Oklahoma, New Mexico, and Texas, provided the carrier does not offer through ticketing or service beyond Texas and the four-state perimeter, either itself or through another airline. ⁷

After passage of the Wright Amendment, Southwest began interstate service within the Amendment's parameters. In 1982, Dallas, Fort Worth, American Airlines, Inc., and the DFW Airport Board were permanently enjoined from litigating "the validity, effect, or enforceability of the [Bond Ordinance] . . . insofar as it may affect the right of [Southwest] to the continued use of and access to Love Field." ⁸

In July of 1992, the DOT published a study prepared by the Interdepartmental Task Force on the Wright Amendment (the Love Field Study Task Force) on the likely effects of repealing or loosening the restrictions on Love Field service under the Wright Amendment. ⁹ The study addressed five questions arising from a debate between members of Congress who sought to amend or repeal the Wright Amendment and members of the Texas congressional delegation who opposed those efforts:

* What will be the impact on competition and fares?

* How much capacity can Love Field add?

* What will be the impact of opening Love Field on the continued growth of DFW?

* Will travelers prefer Love Field over DFW?

* What are the likely environmental consequences of more air traffic at Love Field? ¹⁰

In summary, the Love Field Study Task Force reported that expanding Love Field service through modification or repeal of the Wright Amendment would cause no significant harm to DFW and would greatly benefit the Dallas-Fort Worth metropolitan area. Specifically, the report concluded:

A change to the Wright Amendment will result in more service, more competition, lower fares, and more traffic for the Dallas-Fort Worth Metroplex and the region. Travellers to or from the Metroplex region will save an estimated $183 million per year in air fares. The amount of additional service that can be provided at Love Field beyond the 214,000 annual operations today will be limited by airspace interactions caused by Love Field's proximity to Dallas-Fort Worth Airport and the orientation of its runways in relation to those at Dallas-Fort Worth Airport. Safety will be maintained by [Federal Aviation Administration]-imposed procedures, and noise impacts on the region will continue to decline as older "Stage 2" aircraft are phased out. Aircraft delays would become a significant problem only if operations reach the unlikely level of 360,000 operations annually. Under all possible scenarios, Dallas-Fort Worth Airport will continue to grow and remain the region's dominant airport. [Emphasis supplied.]¹¹

The DOT submitted the report to Congress, but made no recommendation on whether the Wright Amendment should be repealed or modified.

In 1996, Astraea Aviation Services, Inc. sought to enter the Dallas air passenger market by providing long distance flights from Love Field using large jet aircraft reconfigured to accommodate no more than 56 passengers. Astraea requested an opinion from the DOT that its proposed service would meet the requirements of the "commuter airlines" exception to the Wright Amendment. The DOT concluded that such service "would be contrary to the Congressional goals underlying the [Wright Amendment]" and that whether long-haul service should be allowed at Love Field "is a question that should be resolved by Congress." Astraea appealed the DOT's ruling to the Fifth Circuit.

Before the appeal was resolved, however, Congress adopted the Shelby Amendment, named after Senator Richard Shelby, Chairman of the Senate Appropriations Committee. The Shelby Amendment authorizes a limited increase in Love Field service in two respects:

* the Wright Amendment's ...