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City of New Haven v. Civil Aeronautics Board

decided: March 3, 1980.

CITY OF NEW HAVEN, CONNECTICUT, PETITIONER,
v.
CIVIL AERONAUTICS BOARD, RESPONDENT, EASTERN AIR LINES, INC., ALLEGHENY AIRLINES, INC., INTERVENORS.



Petition for review of an order of the Civil Aeronautics Board which declined to prohibit intervenor air carriers from suspending service to New Haven, Connecticut. Denied.

Before Gurfein,*fn* Van Graafeiland and Kearse, Circuit Judges.

Author: Kearse

In 1978, after four decades in which the domestic air transportation industry was subject to comprehensive economic regulation by the Civil Aeronautics Board (the "Board" or "CAB"), Congress passed the "Airline Deregulation Act" (the "Deregulation Act" or "1978 amendments"), amending the Federal Aviation Act of 1958, 49 U.S.C. § 1301 et seq. (1976), (the "Act"). The Deregulation Act was designed "to encourage, develop, and attain an air transportation system which relies on competitive market forces to determine the quality, variety, and price of air services . . .." P.L. 95-504, 92 Stat. 1705, 1705 (1978). Effective October 24, 1978, the Deregulation Act substantially altered the Board's role in regulating such matters as airline fares and routes.

In December 1978, relying on provisions of the Deregulation Act, Eastern Air Lines and the Allegheny Airlines gave notices that 90 days hence they would terminate their service at New Haven, Connecticut. The City of New Haven sought unsuccessfully to have the Board order Eastern and Allegheny to continue providing such service. The Board determined (Order No. 79-3-98, dated March 15, 1979 (hereinafter "March order")) that as a result of the Deregulation Act, prior restraints on unilateral termination of service by an airline had been substantially removed and that an airline could terminate service at a community merely by giving 90 days' notice of its intent to do so, provided that it did not thereby deprive that community of "essential air transportation." The Board found, pursuant to § 419(a)(10) of the Deregulation Act, that in light of other air service currently offered at New Haven, the proposed suspensions did not "reasonably appear( ) to deprive" New Haven of "essential air transportation."

New Haven has petitioned this Court to review the CAB order refusing to prohibit Eastern and Allegheny from terminating service to New Haven. It challenges the substantive determinations of the March order and the procedures used by the Board. Finding none of New Haven's arguments persuasive, we deny the petition.

I. Background of the Deregulation Act

From 1938, when the first comprehensive statute governing regulation of civil aviation was passed,*fn1 until 1978, the domestic air transportation industry was subject to stringent control by the CAB. The principal airlines i. e., major airlines, or "trunk" carriers, such as United Air Lines, American Airlines, and Eastern, and regional airlines, or "local service" carriers, such as Allegheny, Ozark Air Lines and Hughes Airwest operated pursuant to certificates of "public convenience and necessity." The Board could permit a certificated carrier to enter a new market only if the carrier showed that the service it proposed was "required" by the public convenience and necessity. Market exit was similarly restricted. Under § 401(g), a carrier's certificate could be amended to permit the carrier to terminate service at a given point upon a showing that the amendment was required by the public convenience and necessity.*fn2 Alternatively, § 401(j) provided that a carrier could "abandon" a route or part thereof upon showing that the abandonment was required by the public interest.*fn3 Finally, in the markets they were serving, the carriers were required by § 404(a)(1) to provide "safe and adequate service."*fn4

The Deregulation Act was designed to phase out government regulation of the industry, while protecting, by federal subsidy if necessary, smaller communities from such withdrawals of services as would result in their loss of "essential air transportation."*fn5 Section 419(a) of the Deregulation Act required the CAB to determine by October 24, 1979, what constituted "essential air transportation" for each community served by no more than one certificated air carrier;*fn6 the Deregulation Act established as the minimum that could be determined by the Board, two daily round-trips five days per week, or the carrier schedules for 1977, whichever was less.

The Deregulation Act substantially reduced barriers to entry of airlines into new markets, by, inter alia, allowing automatic entry in some circumstances, and replacing the former standard that the public interest "require" a service, with a more liberal policy under which the CAB must allow entry if it is not shown to be inconsistent with the public convenience and necessity. See, e. g., § 401(d)(1)(A), 49 U.S.C.A. § 1371(d)(1)(A) (Cum.Supp.1979). With respect to exit from a given market, § 401(j), dealing with abandonment of routes by the carrier, was replaced by a new provision which forbids a carrier to terminate all service to a point unless it has provided 90 days' notice to the Board and to the concerned state and local authorities.*fn7 Section 401(g), which permits certificate amendments upon a showing of public convenience and necessity, was not substantively changed.*fn8

II. The Present Controversy

Eastern Air Lines was certificated to provide air service to New Haven in 1946. Eastern formerly offered service between New Haven and Boston, Baltimore, Atlanta, and Jacksonville and Pensacola, Florida. In 1974, however, the Board granted Eastern authority to suspend service for a five-year period ending March 22, 1979. On December 21, 1978, Eastern filed notice with the Board "pursuant to § 401(j)(1)" of the Act that it intended "to suspend all service at New Haven" on March 22, 1979.*fn9 The proposed 1979 suspension would not have caused a reduction in actual service; rather, it would have relieved Eastern of the obligation to resume service at New Haven.

Allegheny Airlines was certificated to serve New Haven in 1959. At one time Allegheny offered service from New Haven to Boston and Washington. By 1978, however, Allegheny was providing service only between New Haven and Harrisburg, Pennsylvania, via New York, to the extent of two round-trip flights on weekdays and one round-trip flight a day on weekends, using 25-seat aircraft. On December 29, 1978, Allegheny filed a notice "under Sections 401(j)(1), 401(j) (2) and 419(a)(3)" of the Act that it intended to suspend all service at New Haven as of March 29, 1979.

When they filed their notices of intent to suspend service, Eastern and Allegheny were the only carriers certificated by the Board to provide air service at New Haven. Several non-certificated commuter airlines were also providing such service, however. Pilgrim Aviation and Airlines, Inc., ("Pilgrim"), using 19-seat aircraft, offered ten or more nonstop flights per weekday in each direction between New Haven and New York and six or more nonstop flights per day in each direction on weekends. Pilgrim also provided four round-trips each weekday and one round-trip per day on weekends between New Haven and Boston, and offered additional service between New Haven and New London, Connecticut. In addition, Business Aircraft Corporation and New Haven Airways, using six- and eight-seat aircraft, offered weekday flights to Albany, White Plains, and Islip, New York, Hartford and Bridgeport, Connecticut, Philadelphia and Baltimore.

On March 8, 1979 the Board announced that it would consider the notices of suspension filed by Eastern and Allegheny at a public meeting on March 15. On March 12 the City of New Haven, the New Haven Board of Airport Commissioners and the New Haven Economic Development Commission petitioned the Board to prohibit the proposed suspensions of service. The New Haven parties contended first, that §§ 401(g) and 404(a) of the Act prohibit carriers from suspending service merely on notice, and that prior Board approval upon a showing of "public convenience and necessity" is required; and second, they contended that § 419(a)(10) of the Act required the Board to block the instant suspensions because they would deprive New Haven of "essential air transportation."

The Board received the submissions of the New Haven parties but did not hold a hearing. In its March order, the Board rejected both of New Haven's positions. On the question of suspension of service on notice, the Board stated that it was "not persuaded" by New Haven's argument, but deferred "detailed" consideration of the question until its decision in another pending case.*fn10 The Board simply asserted:

For now it is sufficient to observe that the New Haven Parties (1) ignore the central change in section 401(j) of the new Act the elimination of the requirement of prior Board approval before a carrier may "abandon any route, or part thereof"; and (2) ignore the legislative history of the Senate version of the new termination/suspension provision (the primary predecessor of the final bill), which clearly indicates that the Senate intended to give carriers the flexibility to withdraw from points ...


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