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09/22/60 Southeastern Aviation, Inc v. Civil Aeronautics Board;

September 22, 1960

SOUTHEASTERN AVIATION, INC

v.

CIVIL AERONAUTICS BOARD; LAKE CENTRAL AIRLINES, INC., SOUTHERN AIRWAYS, INC., TENNESSEE AERONAUTICS



Before BAZELON, BASTIAN and BURGER, Circuit Judges.

UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT. 1960.CDC.156

COMMISSION, Intervenors

September 22, 1960.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE BURGER

BURGER, C. J.: Petitioner, Southeastern Aviation, Inc., ("Southeast") is a local intra-state airline certificated by the State of Tennessee. It is wholly owned and controlled by a trucking line, Mason and Dixon Lines, Inc. Intervenor, Southern Airways, Inc., is a federally certificated airline with extensive routes serving the southeastern part of the country. Southeast seeks review of an order of the Civil Aeronautics Board *fn1 to the extent that it grants Southern certain routes in Tennessee which Southeast actively sought.

The proceedings under review grew out of an application by Southern for new routes in Tennessee, Alabama and Georgia as extensions of its existing system. Consolidation of various competitive applications followed, including one by petitioner for federal certification substantially along the lines of its existing state certified service. Extensive hearings were held, after which the Hearing Examiner determined that petitioner Southeast be awarded two federally certificated routes in Tennessee subject to certain conditions: (a) No federal subsidy be given Southeast, and (b) that Mason and Dixon Lines, Inc., divest itself of control of the airline. The Examiner further found that Southern was not an applicant for these routes since it had not actively prosecuted its application.

Upon review by the Civil Aeronautics Board, the Examiner's decision was reversed. *fn2 Petitioner's application was rejected in toto, and Southern was awarded a route in Tennessee parallel to Southeast's state certificated service at 5 points: Tri-Cities, Knoxville, Chattanooga, Shelbyville/Tullahoma, and Nashville. The Board reasoned (1) that public convenience and necessity require the establishment of federally certificated air service in Tennessee; (2) that Southern was an applicant for the route since it had clearly indicated a willingness to serve the area if the Board found such service necessary; (3) that comparative consideration of both applicants with regard to financing, service and cost of operations indicated Southern would "provide greater overall public benefits"; (4) that while either airline would need and be eligible for federal subsidy, air service would be provided by Southern "at considerably less cost to the government." It further found that Southeast did not demonstrate that the public interest required air service controlled by a surface carrier, and absent such a showing, it agreed with the Examiner's action requiring Mason and Dixon Lines, Inc. to divest itself of control of Southeast under National Air Freight Forwarding Corp. v. Civil Aeronautics Board, 90 U.S. App. D.C. 330, 197 F.2d 384 (1952); see American Trucking Ass'ns v. United States, 355 U.S. 141 (1957); United States v. Rock Island Motor Transit Co ., 340 U.S. 419 (1951).

Southeast appeals the Board decision upon four grounds:

(a) The Board did not find the existing Southeast state certified service inadequate nor did it specifically find that Tennessee could support two parallel state and federal routes. Absent such preliminary findings, it could not certify a federal route that would destroy adequate service now being rendered under state authority.

(b) The Board erred in arbitrarily demanding Mason and Dixon Lines, Inc., divest itself of control of Southeast.

(c) The Board improperly reversed the Examiner's finding that Southeast was "fit, willing and able" to provide service.

(d) The Board denied Southeast a full and fair hearing and due process of law.

(1.)

Southeast's primary argument is that the Board cannot certify Southern without first determining that the existing state certified service is inadequate, and that Tennessee could support two carriers on parallel routes. Essentially, this argument is directed at whether the "public ...


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