Opinion ID: 376827
Heading Depth: 1
Heading Rank: 1

Heading: Background of the Deregulation Act

Text: 4 From 1938, when the first comprehensive statute governing regulation of civil aviation was passed, 1 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. 2 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. 3 Finally, in the markets they were serving, the carriers were required by § 404(a)(1) to provide safe and adequate service. 4 5 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. 5 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; 6 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. 6 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. 7 Section 401(g), which permits certificate amendments upon a showing of public convenience and necessity, was not substantively changed. 8 II. The Present Controversy 7 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. 9 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. 8 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. 9 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. 10 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. 11 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. 10 The Board simply asserted: 12 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 without our permission if they provide the necessary notice and their withdrawal does not affect essential air transportation. 13 Moreover, our interpretation of the Act that notice and the essential air transportation obligations are the only prerequisites to suspending at a point is more clearly in harmony with the Congressional policy favoring maximum reliance on market forces and on actual and potential competition to provide needed transportation. 14 On New Haven's second point, the Board concluded that it was not required to block the suspensions of service at New Haven under § 419(a)(10), because it found that these suspensions would not deprive New Haven of essential air transportation. In making this determination, the Board relied principally on the service being provided by Pilgrim, finding that Pilgrim was fit, willing and able to provide essential air transportation and that Pilgrim met the safety requirements of the Federal Aviation Administration. The Board concluded: 15 We believe the level of air service being provided at New Haven by Pilgrim reasonably appears to meet the essential air transportation requirements of New Haven. This, as supplemented by the service of Business Aircraft and New Haven Airways, affords New Haven passengers access to points throughout the nation. In addition, we note that the level of service provided by Pilgrim is substantially above the legal minimum for essential air transportation defined in section 419(f)(1) of the Act. 16 Thus, the Board entered the March order declining to block the proposed suspensions of service, and Eastern and Allegheny suspended service as planned in March, 1979. Currently, the only service in and out of New Haven is that provided by the commuter airlines. Following the March suspensions, New Haven filed this petition for review, which was argued on October 3, 1979. 17 On October 24, 1979, the Board issued Order No. 79-10-134, in which it made its determination, pursuant to § 419(a)(2)(A) of the Act, of what constitutes essential air transportation for New Haven. The level set by the Board as essential is significantly below the level of service currently provided to New Haven by the commuter airlines serving it. The correctness of the October determination is not involved in this petition, although the Board contends that the fact of that determination moots New Haven's petition for review of the March order.