Pan American World Airways, Inc. v. CAB

Decision Date31 January 1968
Docket Number21149.,No. 20860,20860
PartiesPAN AMERICAN WORLD AIRWAYS, INC. and Trans World Airlines, Inc., Petitioners, v. CIVIL AERONAUTICS BOARD, Respondent, Sudflug Suddeutsche Fluggesellschaft mbH, Intervenor. PAN AMERICAN WORLD AIRWAYS, INC. and Trans World Airlines, Inc., Appellants, v. Robert T. MURPHY et al., Appellees, Sudflug Suddeutsche Fluggesellschaft mbH, Intervenor.
CourtU.S. Court of Appeals — District of Columbia Circuit

COPYRIGHT MATERIAL OMITTED

Mr. William E. Miller, Washington, D. C., with whom Messrs. Richard P. Taylor, James V. Dolan and Hubert A. Schneider, Washington, D. C., were on the brief, for petitioners in No. 20,860 and appellants in No. 21,149.

Mr. O. D. Ozment, Deputy General Counsel, Civil Aeronautics Board, with whom Asst. Atty. Gen. Donald F. Turner and Messrs. Joseph B. Goldman, General Counsel, Warren L. Sharfman, Associate General Counsel, Litigation and Legislation, and Robert L. Toomey, Attorney, Civil Aeronautics Board, and Howard E. Shapiro, Attorney, Department of Justice, were on the brief, for respondent in No. 20,860 and appellees in No. 21,149.

Mr. Paul Reiber, Washington, D. C., with whom Mr. Mario F. Escudero, Washington, D. C., was on the brief, for intervenor.

Before EDGERTON, Senior Circuit Judge, and WRIGHT and ROBINSON, Circuit Judges.

J. SKELLY WRIGHT, Circuit Judge.

These consolidated appeals challenge a single order of the Civil Aeronautics Board (Order E-24697) adopted under Section 402 of the Federal Aviation Act, 49 U.S.C. § 1372 (1964 ed.), and approved by the President under Section 801 of the Act, 49 U.S.C. § 1461 (1964 ed.), temporarily authorizing a small German airline, Sudflug,1 to fly inclusive tour charters from Germany to the United States. In the course of the proceedings culminating in the issuance of Sudflug's permit, the Board declined to exercise jurisdiction over the unlicensed German tour operators who will be organizing the inclusive tours2 and chartering Sudflug's aircraft. The petitioners, two large, regularly scheduled, United States air carriers holding certificates of public convenience and necessity to fly between the United States and many points throughout the world, challenge this declination of jurisdiction. In No. 20,860 they have petitioned for direct review of the Board's non-exercise of jurisdiction as it is embodied in Order E-24697, while in No. 21,149 they have appealed from the District Court's dismissal of their companion suit against the members of the Board for a declaratory judgment that the Board's refusal to exercise jurisdiction was in violation and excess of its statutory power, and for mandamus directing them to exercise jurisdiction over the German tour operators.

Petitioners' argument on the merits is the same in both actions. They contend that, since the persons who will organize the tours in Germany and will charter Sudflug's aircraft for their patrons will be "indirect foreign air carriers" under the Federal Aviation Act,3 the Board's refusal to require them to secure air carrier permits was illegal under the Act and consequently the Sudflug permit must be set aside. Petitioners filed companion actions in this and in the District Court because neither path to review of the Board's action is unobstructed by jurisdictional obstacles. However, because we uphold the Board's interpretation of the statute it administers as authorizing the declination of jurisdiction challenged here, we do not decide the jurisdiction to review questions.4

I

Sudflug is a German air carrier which holds a foreign air carrier permit from the Board authorizing it to engage in certain charter foreign air transportation between Germany and the United States. The genesis of the controverted proceedings at issue here was Sudflug's application, which was forwarded to the Board by the German Government through diplomatic channels, for additional authority to operate inclusive tour charter flights during the period of the existing permit. Thirty such inclusive tour charters were projected for 1967, 16 of which were to be organized by two well established and experienced German tour operators, Scharnow and Touropa, both of whom made an appearance before the Board. The other 14 inclusive tour charters were to be undertaken by non-appearing, unnamed, German tour operators. Under Sudflug's proposal, the tours are to be arranged, sold and conducted by the tour operators. As the sellers of the tour packages, the tour operators, not Sudflug, would determine how much each tour purchaser will pay for air transportation and connecting ground services. Sudflug aircraft and crews would then be chartered by the tour operators for the transatlantic air transportation which had been sold to tour members.

Scharnow and Touropa argued before the hearing examiner and the Board that despite their proposed tour operations in conjunction with Sudflug they are not "foreign air carriers" subject to the permit requirement of Section 402(a) of the Act.5 Alternatively they urged that, in any event, the Board should not exercise any jurisdiction it did have because all of the tour operators' services would be performed in Germany and would involve German residents. Consequently their obligations to their patrons would be subject to the law of Germany, and no effective regulatory purpose would be served by the Board's attempting to give United States law extraterritorial effect.

Petitioners, Trans World Airlines and Pan American World Airways, as intervenors below, argued that as non-citizen lessees of foreign air transportation the tour operators are clearly foreign air carriers within Section 101(19), 49 U.S. C. § 1301(19), of the Act which defines a foreign air carrier as "any person, not a citizen of the United States, who undertakes, whether directly or indirectly or by lease or any other arrangement, to engage in foreign air transportation." They argued further that as foreign air carriers the Board was not authorized to permit the tour operators to conduct their services without a permit issued by the Board after a finding by it that the tour operators are "fit, willing, and able properly to perform" their proposed operations and that "such transportation will be in the public interest."6

Evidence concerning the organization, experience and financial stability of Sudflug, Scharnow and Touropa was introduced before the hearing examiner. He found that there was no real doubt that Sudflug and the tour operators were capable of mounting the operations contemplated, and that the proposed flights would have "no appreciable adverse impact on the ability of Pan American and TWA to conduct their authorized services." Nevertheless, for reasons not relevant here the examiner recommended a discretionary denial of Sudflug's application7 and so never considered the tour operators' request that jurisdiction over them be disclaimed or declined.

Meanwhile, the Board's recommendation in Reopened Transatlantic Charter Investigation, Order E-24240, September 27, 1966, which was highly relevant to the Board's disposition in Sudflug, had wound its way to the President, and on the day of the examiner's decision in Sudflug he adopted the Board's Transatlantic proposal. The President agreed with the Board's determination in Transatlantic that the public convenience and necessity required inclusive tour charter operations by United States supplemental air carriers to points in Europe, including Germany, and he approved the Board's authorization of such services to six United States supplemental carriers.8

In part because of the President's approval in Transatlantic, the Board voted to recommend to the President favorable action on Sudflug's application. In its opinion urging approval of this application, the Board explained in some detail why it had not accepted the examiner's recommendation. The Board found that Sudflug's operations would stimulate underdeveloped German tourism to the United States and that expenditures by German tourists here would help reduce our international balance of payments deficit. At the same time such operations, limited to the "carriage of German-originated passengers," would have no significant adverse impact on United States scheduled carriers. And, because of the developments in Transatlantic, the Board felt that considerations of comity and the public interest in obtaining landing rights in Germany for inclusive tour charters operated by United States carriers provided additional justification for its favorable recommendation of Sudflug's application. Though the Board shared certain of the examiner's reservations about Sudflug's proposal, it felt that authorization for only 30 inclusive tours was, on balance, in the public interest.

On the jurisdictional question at issue here, the Board felt that the tour operators participating in Sudflug's proposal were indirect foreign air carriers and consequently that it did have jurisdiction over them. Nevertheless, the Board decided that it could and would decline to exercise it. In its opinion the Board set out its reasons for not asserting jurisdiction:

"The question remains whether as a matter of policy and discretion the Board should exercise its jurisdiction over the foreign tour operators. We find a number of compelling reasons why we should not do so. It would be extremely burdensome for foreign tour operators to comply with the hearing and other requirements of sections 402 and 801 of the Act. Their offices are outside of the United States. Many may be interested in performing only one or at most a few tours. Under our normal procedures they would be required to file an application through diplomatic channels, retain counsel, and attend hearings. Until the permit was approved by the President there would be no assurance that the tour could be performed. Further, the mounting of an inclusive tour program
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