Opinion ID: 294004
Heading Depth: 1
Heading Rank: 5

Heading: sufficiency of the board's findings

Text: 38 What we have said in the preceding sections serves to delimit the contours of our inquiry into the adequacy of the Board's findings. First, our sanction of the interim approval procedure, and the rationale underlying it, suggest that the assessment of the Board's findings should be bifurcated, with different standards applied to the findings relating to full and interim approval. That is, the fact that interim approval is useful primarily in situations in which the Board needs to act expeditiously in order to preserve certainty in the industry, but lacks sufficient information to determine authoritatively whether the agreement as a whole will serve the public interest, indicates that our review of the findings supporting the interim approval should be relatively limited. Since the Board in electing to order an interim approval is essentially saying that the agreement, or a portion of it, has both good and bad features on its face, and that examination of further data gleaned from practical experience is necessary to an enlightened determination of the public interest, a reviewing court can do little more than ask whether this conclusion is reasonable and based upon substantial evidence. As we noted in section III of this opinion, a significant aspect of the reasonableness of a decision to grant interim approval is the extent and duration of the harm likely to be inflicted upon the opponents of the agreement, in relation to the potential public benefits flowing from approval. 39 Our discussion in section IV concerning the inherent substantive importance and complexity of antitrust issues also affects the nature of our review of the findings needed to support full approval in the face of nonfrivolous allegations that the agreement will have significant anticompetitive effects. Since we have repeatedly stated that these issues are particularly suited to resolution by evidentiary hearing, it must follow that disposition of antitrust questions by other means creates a greater likelihood of administrative error, and invites a more skeptical judicial scrutiny. While the exigencies of an agency's regulatory obligations or the peculiar nature of a given factual situation may dictate that antitrust questions be treated in a manner divergent from the norm, there can be no doubt that these issues are complex, requiring painstaking assessment of many relevant considerations, and that sound analysis must begin with an adequate factual input. To state the governing principle another way, we point out that judicial review is conducted on the basis of the record as a whole, so that rather conclusory findings can frequently be redeemed by resort to a detailed factual record; this is not often possible, however, when the fact-finding procedure employed is only marginally adequate in relation to the difficulty and importance of the questions presented. 40 Turning, then, to the findings contained in the April 30 order, we begin with the observation that [o]n review nothing is clearer than the principle that we examine the Board's reasons and not the subsequent rationalizations of its counsel. Trailways of New England, Inc. v. CAB, 412 F.2d 926, 931 (1st Cir. 1969). In discussing the CBIT fares, 11 the April 30 order points out that they are an entirely new concept of marketing, and that practical experience is needed to assess both their usefulness as a promotional tool and their economic impact on the supplemental carriers. (App. 258.) The order also accords some weight to the probability that the low level of the CBIT fares will enable many persons to travel by air who would not otherwise be able to use air transportation, and concludes that the public interest would best be served by limited approval pending an expedited investigation. ( Id. ) We conclude that this analysis is adequate, consistent with the rationale underlying interim approval, and supported by substantial evidence. 41 In dealing with the elimination of the round-trip discount, the April 30 order first takes note of the possibility that this increase could act as a subsidy for uneconomical fares in the competitive charter market. On the other hand, the decision points out, the currently available cost data showed a marked discrepancy in the rates of return experienced by the two major American scheduled carriers. The order notes that this uncertainty is compounded by the question of what impact increasing cost inflation is having on the scheduled carriers, and the existence in the record of data tending to indicate that the fare increase would be generally offset by the public's savings from the greater availability of excursion and individual inclusive tour fares. (App. 257-258.) We find that this analysis is also sufficient to support a grant of interim approval. 42 The findings relating to the fares approved for the full term of the agreement are much more cryptic and conclusory. In discussing the Incentive Group fares, the order characterizes them as new and troublesome because of their discriminatory aspects, and then simply concludes without explanation (App. 262): 43 The Board would have no difficulty if the resolution is broadened to correspond with group travel fare provisions applicable via the North/Central Pacific which provides that the travel group may be formed for own use of one person, including an individual person or legal entity. 44 The treatment of the GIT and Affinity Group fares is even more summary, for, aside from the initial description of them, the only portion of the order which could be considered a relevant finding is the pro forma declaration that [t]he Board has considered all of the allegations raised by the parties, including those not specifically adverted to herein, as well as all matters bearing upon the agreements, and concludes that they are consistent with the public interest and should be approved. (App. 263.) There is absolutely no attempt to relate these fares to the current or projected market situation, and no indication of how their anticompetitive aspects may be outweighed by public benefits; yet, as we noted above, the Board's most recent prior assessment of a group fare cited by any of the parties resulted in the conclusion that the fare's anticompetitive potential demanded suspension and investigation of the tariffs. Group Inclusive Tour Basing Fares to Hawaii, Order No. 68-12-144 (Dec. 20, 1968). An agency may modify or even reverse its past policies    but the confidence of a reviewing court that these adjustments are made in accordance with the requirements of law is not enhanced when the prior precedents are not discussed, the swerves and reversals are not identified, and the entire matter is brushed off once over lightly. Marine Space Enclosures, Inc. v. FMC, supra, 137 U.S.App.D.C. at 17, 420 F.2d at 585. 45 The Board asserts that these group fares are time-honored elements of the fare structure, and that it should not be required to engage in a meaningless and repetitious exploration of ground it has covered long ago. However, a perusal of the Board's prior orders dealing with similar fares — none of which is relied upon in the April 30 order — indicates that this argument oversimplifies the problem considerably. In 1962, when the IATA carriers introduced affinity group fares into the North Atlantic market over the protests of the supplementals, the Board approved the agreement in an order which included detailed findings 12 and careful analysis of both the discriminatory aspects inherent in the fares and the fares' impact on the relative market positions of the supplementals and IATA carriers. IATA Group Fares Agreements, 36 C.A.B. 33 (1962). That the analysis should proceed along these generally bifurcated lines is suggested not only by general antitrust principles, but also by the primary reasons which the Board has advanced for allowing supplemental carriers to enter the North Atlantic market: (1) providing a mix of transportation services through different kinds of fares, together with assuring sufficient aircraft capacity to accommodate peak season traffic; and (2) creating a spur to improved service and prices for the traveling public through competition. See generally Transatlantic Charter Investigation, 40 C.A.B. 233 (1964). 46 The first of these inquiries — whether the fares themselves are so inherently discriminatory as to merit condemnation under the public interest standard — is certainly an area in which it is proper and desirable for the Board to employ the expertise which it has gained in past investigations of identical or similar fares. This kind of expertise may well be applicable to the group fares presently in issue, although the Board's more recent decisions do not point overwhelmingly to a finding that these fares are nondiscriminatory. Thus, in IATA Agreements Relating to Fares via the North Atlantic, Order No. E-24,823 (1967), the Board stated that the extent [to which] the new group fares will be used and their effects on the overall fare structure are by no means clear at this time. (Slip op. at 5.) There the Board reasoned that [t]he tie-in feature [of the group inclusive tour fares] with the purchase of ground accommodations does not seem to be an unreasonable one in view of the considerable discount these fares provide from normal and other fares. ( Id. ; emphasis added.) In the present fare agreement, the IATA carriers have admittedly strengthened the tie-in features of the GIT fares ( see, e. g., App. 29-30), and have increased the fare levels, yet the April 30 order makes no attempt to relate these changes to the other elements of the new fare package. In its treatment of the question of discriminatory effect in the 1967 order, the Board also placed considerable reliance on the fact that the group inclusive tour-basing fares were available to all persons, stating: There are no restrictions based on the characteristics of status of the user, i. e., occupation, club membership, etc. (IATA Agreements, supra, slip op. at 5.) Here, the Board has approved without analysis two fares, the incentive group and affinity group fares, which ostensibly fit within these proscribed classes. Finally, in the 1967 order the Board reasoned that [i]n the long run, additional volumes of traffic [generated by the group inclusive fares] will afford a broader base over which to spread costs and should enhance the possibility of lower normal fares. ( Id. ) This rationale seems to have lost some persuasiveness in view of the fare increases sought in the present case, although we realize that other factors could have overborne any such price-lowering effect; the essential point, however, is that the April 30 order does not address itself to these problems, and in consequence we have no rational basis for choosing among the conflicting inferences. It is also significant that, so far as we have been able to determine, Board approval of these kinds of group fares has not yet withstood review by the courts, and that questions of discrimination deserve close judicial scrutiny predicated upon a careful administrative analysis. As the First Circuit has observed, not only is the right to be treated fairly and nondiscriminatorily by a common carrier an expression of the pervasive precept of fairness between government and governed that runs through American jurisprudence, it is one derived from the common law of common carriers. Trailways of New England, Inc. v. CAB, 412 F.2d 926, 931 (1969); see also id. at 932-936; Transcontinental Bus System, Inc. v. CAB, 383 F.2d 466, 485 (5th Cir. 1967), cert. denied, 390 U.S. 920, 88 S.Ct. 850, 19 L. Ed.2d 979 (1968): The rule of equality is the very core and essence of the fare structure in the transportation industry, and it should not be rendered a meaningless phrase by the use of spurious justifications for unjustly discriminatory fares. 47 With respect to the second line of antitrust inquiry — the impact of the fare changes on the current market structure — the lack of analysis in the April 30 order is even more troublesome. The record contains numerous suggestions that competitive relationships within the industry and the market could change rapidly and substantially as a result of the increased capacity of the new 747 aircraft, yet the April 30 order mentions this technological impact only in describing changes in the fare schedules which establish new seating configurations. (App. 257.) A similar situation ostensibly existed when jet airplanes first replaced the smaller piston aircraft in the North Atlantic market, and, when the IATA carriers changed their fare structure in this context, the Board carefully examined the available economic data in light of the changing conditions, making detailed findings and estimates. ( See note 12, supra. ) The Board suggests that, at least in regard to the GIT fares, concern about anticompetitive effects is unwarranted because these fares were raised rather than lowered by the IATA resolution. However, petitioners assert in their brief that most of the supplementals' civil charter business falls into three fare categories: (1) pro rata charters, in which an organization charters an aircraft for the use of its members, who then divide the cost among them; (2) single entity charters, in which a business or other organization charters an aircraft at its own cost; and (3) inclusive tour charters, in which a tour operator charters the aircraft for use in a package tour which is marketed to the general public. (Brief for the Petitioners at 7.) Thus, depending upon the degree of cross-elasticity of demand which exists among the various kinds of fares presently in issue — a factor which is not adequately treated in the record or the April 30 order — it may be that the GIT fare constitutes a monopoly market for the IATA carriers in the same sense that regularly-scheduled service does; thus, the attempt to raise these fares, in conjunction with the decision to enter the bulk inclusive tour market for the first time with fares that are allegedly unreasonably low, would seem to give rise to the same kinds of dangers that led the Board to schedule a further investigation of the elimination of the round-trip discount. 48 Furthermore, we cannot find redeeming support for the Board's conclusions on the three group fares by resorting to the record as a whole. The record on appeal consists primarily of unenlightening fare tables, uncollated economic data, and unresolved arguments and counterarguments; it raises more questions than it answers. In short, the Board's treatment of the three group fares has crossed the line from the tolerably terse to the intolerably mute. WAIT Radio v. FCC, 135 U.S. App.D.C. 317, 321, 418 F.2d 1153, 1157 (1969). A more lucid and careful explication of the relevant factors is needed before an agreement can be immunized from the operation of the antitrust laws for a period of two years, in the face of substantial antitrust questions. Accordingly, we reverse the Board's April 30 order with respect to the Affinity Group, Incentive Group, and Group Inclusive Tour fares.