Court Opinion

ID: 8929274
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:56:50.064694+00
Date Added: 2024-06-11T17:09:28.783812
License: Public Domain

HEANEY, Circuit Judge,
dissenting.
I dissent. The record in this case reveals that the present system of airline ticket marketing and distribution has worked well for over forty years. The travel agents have been competent and responsible. They make transportation planning and ticket purchase convenient and are easily accessible in every community across the country. The travel agent system has also served the airlines well. Perhaps more importantly, the agency system presently allows new and emerging air carriers to participate in an in-place marketing system for their service. These new entrants are thus better able to compete in more areas against the larger and more powerful air carriers which could market their services without the current agency system. The system also insures that foreign carriers are able to compete effectively in the United States market.
The record also shows that the Board’s decision will inevitably put thousands of small travel agents out of business. The Board’s decision to allow corporate Business Travel Departments (BTDs) to be recognized as travel agents, and its decision to allow large agents such as American Express to introduce automatic ticketing machines, will allow certain entities to skim the cream from the top of the business. Business travelers who ordinarily do not need extensive travel planning assistance, and others with simple travel needs, will turn to BTDs or automatic ticket machines. This leaves to the other smaller travel agencies the more difficult, time-consuming transactions which return less, if any, profit. Thus, many small agents probably will not survive when deprived of the simple, high-profit transactions. This will likely result in the loss of existing travel agent service for smaller communities across the country. And because the Board’s order threatens the viability of the area settlement plan and other facets of the inter-airline system by removing antitrust immunity, it will place smaller domestic and international airlines at a distinct competitive disadvantage.
All of these harmful consequences to the existing air travel marketing and distribution system would have to be tolerated if the Board’s manipulation of the system were consistent with the Federal Aviation Act and Airline Deregulation Act. In my view, however, the Board failed to engage in the public interest balancing analysis of the proposed agreements required by section 412, and consequently failed to grant antitrust immunity to the agreements under section 414. Thus, I would reverse the Board’s order.
The majority opinion proceeds on the premise that the Board’s order is the inevitable result of the Airline Deregulation Act, which “represents a fundamental change in the perspective of the federal government toward the airline industry.” See supra p. *13211307. Fundamental as this change may be, it did not concern the travel agent system. Congress made it clear that it did not intend to deregulate all aspects of the industry. See, e.g., H.Rep. No. 95-1211, 95th Cong., 2d Sess. 4, reprinted in 1978 U.S. Code Cong. & Ad.News 3737, 3739-40 (“While the committee has by no means concluded that total deregulation is desirable, we are persuaded that it is time for a moderate, controlled release of some regulatory fetters.”); id. at 5-6, 1978 U.S.Code Cong. & Ad.News at 3741 (“[The statute’s revised policy statement] directs the Board to stress competition, low-fare service, entry by new carriers, and avoidance of industry concentration.”).
When it came to considering the inter-airline marketing agreements, Congress preserved a structure of regulatory review. It considered and rejected proposals to remove antitrust immunity. See Regulatory Reform in Air Transportation: Hearings Before the Subcomm. on Aviation, Senate Committee on Commerce, Science and Transportation, 95th Cong., 1st Sess. 206 (1977) (Testimony of John E. Robson, Chairman, CAB). It also considered and rejected a proposal to require de novo antitrust review of such agreements. See Oversight of Civil Aeronautics Board Practices and Procedures: Hearings Before the Subcomm. on Administrative Practice and Procedure of the Senate Committee on the Judiciary, 94th Cong., 1st Sess. 1738-40, 1750-52 (1975) (Testimony of Donald I. Baker, Dep. Asst. Attorney General, Department of Justice). Instead, Congress selectively prohibited certain agreements regarding capacity level and price fixing. See 49 U.S.C. § 1382 (a)(2)(A)(iii). All other agreements it made subject to Board review in order to receive antitrust immunity. The legislative history indicates that Congress was aware of the travel agent inter-airline agreements now before the Court, and expected these agreements to be placed on the antitrust public interest balance. S.Rep. No. 95-631, 95th Cong., 2d Sess. 82 (1978) {“The bill requires that other agreements meet a public interest balancing test similar to that required under section 408 before antitrust immunity is conferred. The public interest balancing test would apply, for example, to those agreements covering baggage, ticketing, and travel agent arrangements.”) (emphasis added). Thus, Congress did not intend that the inter-airline marketing agreements and travel agent system be subjected to the deregula-tory changes affecting fare and route determinations. Moreover, I conclude from the legislative history that Congress intended continued antitrust immunity for these agreements so long as they serve the public interest — precisely because the existing system promotes easy entry by new carriers, avoidance of industry concentration, and Congress’s other deregulation goals.
Congress’s desire to preserve regulatory public interest analysis of these agreements for the purpose of granting antitrust immunity is defeated in this case by the Board’s decision to excise anticompetitive provisions from the agreements in order to avoid such an analysis. As noted in the majority opinion, section 412 of the Airline Deregulation Act provides that the Board:
shall by order approve any contract, agreement, or request * * * that it does not find to be adverse to the public interest, or in violation of this chapter, except that—
(i) the Board may not approve or, after periodic review, continue its approval of any such contract, agreement, or request * * * which substantially reduces or eliminates competition, unless it finds that the contract, agreement, or request is necessary to meet a serious transportation need or to secure important public benefits, including international comity or foreign policy considerations, and it does not find that such need can be met or such benefits can be secured by reasonably available alternative means having materially less anticompetitive effects[.]
49 U.S.C. § 1382(a)(2)(A).
The plain language of the statute directs the Board to evaluate proposed agreements *1322in their entirety; it mentions nothing which would suggest that the Board is to dissect proposed agreements and analyze certain provisions in isolation. The fact that these agreements have operated for many years as an integrated system also suggests that if Congress desired that the Board engage in piecemeal review it would have said so explicitly in the statute.
The majority opinion asserts that the Board’s excision of anticompetitive provisions is consistent with past Board practice and is supported by court decisions. Several cases have supported the Board’s power to condition its approval of an agreement on the incorporation of certain amendments. See, e.g., Frontier Airlines, Inc. v. C.A.B., 621 F.2d 369, 371-72 (10th Cir. 1980); National Air Carrier Association v. C.A.B., 436 F.2d 185, 190-91 (D.C.Cir. 1970). But none of the cited decisions support the Board’s practice in this case. National Air Carrier, for example, only held that the Board could approve an agreement for less than the full term proposed. 436 F.2d at 190-91. Frontier Airlines simply held that the Board had the power to require a carrier to provide temporary backup service to certain smaller communities— as a logical corollary of its statutory power to order a carrier to continue existing service to those communities. 621 F.2d at 371-72.
Thus, in both National Air Carrier and Frontier Airlines, the Board’s authority was inherent in the power granted to it by Congress, and its action promoted the policy intended by Congress in enacting the pertinent statutes. Here, however, the Board’s action directly contravenes Congress’s clear intention that the anticompeti-tive aspects of the inter-airline agreements be weighed against transportation needs and other public benefits, and then analyzed in relation to any less anticompetitive alternatives. The Board’s action is contrary to, rather than inherent in, the authority given to it by Congress under section 412.
It is readily apparent that the Board excised the anticompetitive provisions in an effort to manipulate the review process, avoiding the public interest balance and consequently avoiding a grant of antitrust immunity. I would remand the matter to the Justice Department, which now performs the Board’s review function, with directions to engage in the balancing process required by section 412.
Accordingly, I would reverse the order of the Board.