Opinion ID: 277315
Heading Depth: 2
Heading Rank: 1

Heading: The Military Standby Tariff

Text: 45 In dismissing the complaints, the Board relied on its former decision which had approved the tariffs on a temporary basis. See American Airlines Military Fres, 38 C.A.B. 1038 (1963). It held that the interests of national defense, including the morale of the servicemen, the competition from surface carries which offer reduced rate transportation to military personnel, the need to increase the amount of military traffic carried by the airlines, the promotional aspects of the tariff, and the increased utilization of equipment with a resulting improved profit picture were all factors which rendered the circumstances and conditions essentially dissimilar. The Board further argues before us that the granting of a discount to the government is not unjustly discriminatory as the benefit of the reduced rates inure to the public. It contends therefore that the policy considerations which justify reduced rates for the United States, government also applies to these tariffs. 46 In support of its position, the Board relies on its decision in Certificated Air Carrier Military-Tender Investigation, 28 C.A.B. 902 (1959). There the Board approved tariffs which provided for a reduction of 10% On first class rates for military personnel traveling at government expense on either chartered or regularly scheduled flights. The Board rested its decision on the competitive necessity created by the reduced-rates offered by surface carriers, and the decreased costs involved in transporting groups of military personnel. These factors, it concluded, rendered the circumstances and conditions of service dissimilar. Since the Board resolved the issue in the manner it did, the decision does not support the more general assertion raised here that reduced rates may be offered to military personnel as a general rule. Rather, it would seem to indicate that reduced rates for servicemen must be justified on the same basis as other reduced rates, namely on the grounds that factors independent of their status as servicemen rendered the conditions of service dissimilar. 47 In addition, we do not believe the case stands for the proposition that reducedrates may be granted to the United States Government because it is the government, since the Board specifically rejected that argument in reaching its conclusion. 28 C.A.B. at 911. See also Slick Airways, Inc. v. United States, 292 F.2d 515, 154 Ct.Cl. 417 (1961); United States v. Associated Air Transp. Inc., 275 F.2d 827, 833 (5 Cir. 1960). But even assuming that reduced rates for the United States government might be justified under 404(b) purely on the basis of status, that does not serve to justify the tariffs here in question which are applicable to servicemen traveling at their own expense. The rationale which sanctions reduced rates for the government rests on the argument that the reduced rates lower the transportation costs of the government, and that that cost reduction inures to the public weal, see ICC v. Baltimore & O.R.R., 145 U.S. 263, 278, 12 S.Ct. 844 (1892). But here the cost of transportation is borne by the individual serviceman, and the government realizes no reduction in the cost of transportation. 48 However, we do not read the Board's order as basing its decision on either of these factors. Rather, we approve the Board's conclusion that the reduced rates were justified by competitive considerations and that the tariff adapted the air transportation industry to the needs of the national defense. 30 The Board noted that surface carriers give reduced rates to military personnel and that users of surface transportation at those rates were not subject to the inconveniences of standby service. It concluded that the tariffs were a reasonable means by which air carriers could effectively compete for military business. Further, reduced rates to servicemen traveling on furlough or leave enable them to spend less time in transit and thereby allow them to better utilize their furlough or leave time. The Board found on the basis of the assertions advanced by the Department of the Army that the reduced rates aided and increased the morale of the armed forces, thus contributing to the national defense. In so doing, the reduced rate tariffs permit the air carriers to better meet the needs of the national defense. Both competition and adapting the air transportation industry to the needs of national defense are considerations which may validly be weighed by the Board in determining whether a tariff is unjustly discriminatory, Certificated Air Carriers Military-Tender Investigation, supra; 102 of the FAA, 49 U.S.C. 1302 (1964), and we can not say that the Board abused its discretion in reaching the factual decision it did. American Trucking Ass'n v. FCC, 377 F.2d 121, D.C.Cir., Sept. 15, 1966, cert. den., 386 U.S. 943, 87 S.Ct. 973, 17 L.Ed.2d 874, (Feb. 27, 1967).