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10/28/76 Alaska Airlines, Inc., v. Civil Aeronautics Board

October 28, 1976

ALASKA AIRLINES, INC., PETITIONER

v.

CIVIL AERONAUTICS BOARD, RESPONDENT WIEN AIR ALASKA, INC. ALASKA AIRLINES MASTER EXECUTIVE COUNCIL, INTERVENOR

BP ALASKA, INC., PETITIONER

v.

CIVIL AERONAUTICS BOARD, RESPONDENT WIEN AIR



UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

ALASKA, INC. ALASKA AIRLINES MASTER

EXECUTIVE COUNCIL, INTERVENOR 1976.CDC.219

Petitions to Review Orders of the Civil Aeronautics Board.

APPELLATE PANEL:

Robinson and Wilkey, Circuit Judges, and Jameson,* Senior District Judge. Opinion for the court filed by District Judge Jameson.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE JAMESON

This is an appeal by Alaska Air Lines, Inc. , and British Petroleum Alaska Inc. *fn1 from Orders 75-6-93 and 75-8-153 adopted by the Civil Aeronautics Board in Docket 27617 on June 19, 1975, and August 29, 1975, respectively. The orders precluded ASA from operating regular and frequent intra-Alaska charters from Anchorage/Fairbanks to the Alaskan North Slope. Wien Air Alaska, Inc. (Wien) has intervened on behalf of the CAB, and Alaska Airlines Master Executive Council , an Alaska union representing airline pilots, has intervened on behalf of petitioners. Petitioners seek a remand to the Board with directions that a hearing be held on the withdrawal of ASA's authority to operate charters to the North Slope.

BACKGROUND

Parties

ASA is a commercial airline which operates scheduled flights between Seattle and Portland and points in Alaska, and scheduled and charter flights within Alaska. BP is an international oil firm responsible for the construction of oil production facilities in the western half of the oil fields in the Alaskan North Slope. MEC is a union representing pilots of ASA and did not participate in the proceedings before the CAB. Wien is a commercial airline engaged in scheduled and charter service within Alaska.

Regulation of Alaskan Air Carriers

Under the Federal Aviation Act (the Act) a certificated, regularly-scheduled carrier is authorized to provide charter service to points not named in its certificate subject to regulations prescribed by the CAB. Section 401(e)(6), 49 U.S.C. § 1371(e)(6). These regulations, set forth in 14 C.F.R. § 207 (Part 207), limit the amount of off-route charter service that may be offered. The limitation is intended to protect carriers with scheduled service from substantial diversion by off-route charter service offered by other carriers and to prevent certificated carriers from operating extensive charter operations at the expense of their scheduled service.

Part 207 also provides that no carrier except an "Alaskan air carrier" may perform any charter trip within the state of Alaska. 14 C.F.R. 207.2, 207.7. An "Alaskan air carrier" is defined in Part 292 of the CAB's regulations, adopted pursuant to Section 416(a) of the Act, 49 U.S.C. § 1386(a), as one "which engages in air transportation (a) solely between points within the State of Alaska, or (b) solely between points within the State of Alaska and points in Canada . . . ." 14 C.F.R. 292.1. When originally adopted, Part 292 restricted all off-route charters by Alaskan air carriers to services which were "casual, occasional, or infrequent" and not "made in such manner as to result in establishing a regular or scheduled service ".

Prior to 1951, ASA qualified as an Alaskan air carrier since its authority was confined to intra-Alaska operations. In that year, however, it was granted authority to operate between Alaska and Portland/Seattle, United States-Alaska Service Case, 14 C.A.B. 122 (1951), thereby ending its status as an Alaskan air carrier. But the CAB, pursuant to Section 416(b) of the Act, 49 U.S.C. § 1386(b), granted ASA an exemption from the provisions of § 292.1 to the extent that they "would otherwise prevent" ASA "from being classified as [an] Alaskan Air Carrier . . . with respect to . . . [its] operations wholly within . . . Alaska." 14 C.A.B. at 123. Without this exemption ASA would have been precluded from operating any off-route charters within Alaska. This exemption has remained in effect and is the source of the authority whose scope is at issue in this appeal. *fn2 In effect the exemption permits ASA to conduct interstate, intra-state, and charter operations.

Until 1959, ASA's charter operations were limited by the terms of part 292 to "casual, occasional, or infrequent" services. Part 292 was amended in 1959 to relax the casual service restriction and make it applicable only to off-route charters "to and from points outside Alaska . . . ." 14 C.F.R. § 292.2. This allowed Alaskan air carriers to conduct virtually unlimited intra-state charter service.

In 1971, following extensive hearings, the CAB reshuffled air routes in Alaska. Alaska Service Investigation, Order 71-12-45 (1971), aff'd sub nom. Western Airlines v. C.A.B., 161 U.S. App. D.C. 319, 495 F.2d 145 (1974). The CAB awarded ASA a new Seattle to Anchorage route, suspending Pan American's and Western Airlines' certificates to serve Ketchikan and Juneau, and thereby giving ASA a monopoly of scheduled service between those two cities and the lower 48 states. The CAB also awarded Wien a certificate of public convenience and necessity, pursuant to 49 U.S.C. 1371(d), to conduct scheduled service between Anchorage/Fairbanks and Prudhoe Bay on the North Slope. *fn3

BP began its oil operations on the North Slope in 1969 and since then has been a user of Wien's scheduled air service to Fairbanks and Anchorage. Early in 1974 BP began to intensify its development activities on the North Slope, building a huge personnel center and diverse production facilities, and increasing the number and length of its employees' work shifts. *fn4 As a result, BP was required to make greater use of transportation between the North Slope and Anchorage/Fairbanks.

Believing that the service provided by Wien was insufficient to meet its needs, BP requested ASA to establish a charter service. On February 3, 1975, ASA and BP agreed to a month-to-month renewable contract by which ASA provided service with a Boeing 727 jet aircraft between Fairbanks/Anchorage and Prudhoe Bay. ASA was providing five charters per week when, on August 29, 1975, the CAB issued its final order denying ASA authority to continue the charter arrangement with BP. As a result of this decision, ASA has closed down its Anchorage-based pilot facilities, transferred that base to Seattle and laid off five pilots who were employed in the charter operation. *fn5 Subsequently, ASA has " ...


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