Saturn Airways, Inc., Petitioner, v. Civil Aeronautics Board, Respondent,dan-air Services, Ltd., et al., Intervenors. Lynn Michelletschirhart and Paul Jeffrey Tschirhart, Petitioners, v. Civil Aeronautics Board, Respondent, Americans for Chartertravel et al., Intervenors.national Air Carrier Association, Inc., et al., Petitioners, v. Civil Aeronautics Board, Respondent, Dan-air Services, Ltd.,et al., Intervenors.transworld Airlines, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, Lynn M. Tschirhart Etal., Intervenors.pan American World Airways Inc., Petitioner, v. Civil Aeronautics Board, Respondent, National Air Carrierassociation, Inc., et al., Intervenors.american Airlines, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, National Air Carrierassociation, Inc., et al., Intervenors.american Society of Travel Agents, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, National Air Carrierassociation, Inc. and Overseas National Airways,inc., Saturn Airways, Inc., et al., Intervenors.master Executive Council of the Air Line Pilots in Theemploy of United Air Lines, Inc., Petitioner, v. Civil Aeronautics Board, Respondent, National Air Carrierassociation, Inc., et al., Intervenors, 483 F.2d 1284 (D.C. Cir. 1973)

Paul Y. Seligson, Washington, D.C., was on the brief for petitioners in No. 72-1905.

Charles A. Hobbs and Paul S. Quinn, Washington, D.C., were on the brief for petitioners in No. 72-2127.

Richard F. Watt, Chicago, Ill., was on the brief for petitioners in No. 72-2129.

Lester M. Bridgeman and Jeffrey M. Lang, Washington, D.C., were on the brief for intervenor, Dan-Air Services, Ltd., in Nos. 72-1904, 72-1908, 72-2042 and 72-2043.

Benny L. Kass, Washington, D.C., was on the brief for intervenor, Americans for Charter Travel, in Nos. 72-1904, 72-1905, 72-1908, 72-2042, 72-2043 and 72-2044.

Theodore I. Seamon, Joseph D. Sullivan and Lawrence D. Wasko, Washington, D.C., were on the brief for intervenor, Capitol International Airways, Inc., in Nos. 72-1904, 72-1905, 72-1908, 72-2042, 72-2043, 72-2044, 72-2127 and 72-2129.

Sanford Peyser, New York City, filed a brief on behalf of Louis J. Lefkowitz, Atty. Gen., of the State of New York, as amicus curiae urging affirmance.

Howard E. Shapiro, Atty., Department of Justice, entered an appearance for the United States of America.

John W. Simpson, Koteen & Burt, Washington, D. C., entered an appearance for intervenor, McCulloch International Airlines, Inc., in No. 72-1904.

Edmund E. Harvey, New York City, entered an appearance for intervenors, Braniff Airways, Inc. et. al., in Nos. 72-2042, 72-2043 and 72-2044.

Before TAMM and ROBB, Circuit Judges, and DAVIES,^*  Senior United States District Judge for the District of North Dakota.

TAMM, Circuit Judge:

"This case presents essentially a question of statutory construction. It grows out of the protracted and absorbing battle over the years between the regularly scheduled airlines and the so-called 'supplemental' airlines." Almost seven years ago we introduced our opinion in American Airlines, Inc. v. CAB, 125 U.S.App. D.C. 6, 365 F.2d 939, 940 (1966), with those two sentences; we find them an equally appropriate preface to today's decision. The passage of time has soured rather than mellowed the pugnacious disposition of the scheduled and supplemental airlines, and we are once again called upon to exercise our judgment concerning the "liberalization" (if that beleaguered term is indeed appropos) of regulations governing the jurisdiction of supplemental air carriers to provide "charter trips . . . in air transportation." 49 U.S.C. § 1301(34) (1970).

On January 7, 1972, the Civil Aeronautics Board [hereinafter "Board"] published a Notice of Proposed Rule Making in the Federal Register, 37 Fed.Reg. 222 (1972), proposing and submitting for public comment a new set of regulations which provided for a new type of charter in air transportation, "Travel Group Charter" [hereinafter "TGC"].¹  As the TGC proposed regulations were somewhat revolutionary in concept-they relied upon travel factors rather than non-travel affinity to distinguish the charters from individually ticketed travel-they understandably elicited a deluge of analysis and discussion.²  On September 27, 1972, following oral argument and the reception and analysis of comments from interested parties, the Board by a 3-2 vote adopted the proposed regulations with some modification. 37 Fed.Reg. 20808 (1972). These consolidated appeals are taken by several interested parties and raise many different issues regarding the legality of various aspects of the Board's action. We find that the Board acted within the scope of its authority and was neither arbitrary, unreasonable, nor capricious in the promulgation of the TGC regulations, and consequently in all respects affirm the Board.

* Supplemental air carriers are those certificated by the Board pursuant to a finding of public convenience and necessity to engage solely in "supplemental air transportation," 49 U.S.C. § 1371(d) (3) (1970), which is basically defined as "charter trips . . . in air transportation." 49 U.S.C. § 1301(34) (1970). The act of Congress providing for such certification, passed in 1962,³  purposefully avoided a delineation of the term "charter trips," leaving the Board with the task of "evolv [ing] a definition in relation to such variable factors as changing needs and changing aircraft . . .." American Airlines, Inc. v. CAB, 121 U.S.App.D.C. 120, 348 F.2d 349, 354 (1965). In the past decade the Board has responded to the challenge in a painstaking, almost evolutionary process of developing comprehensive regulations which authorize various types of charter flights. See 14 C. F.R. Sec. 208.6. These include (1) "single-entity" charters, which involve engagement of an aircraft by one person for the transportation of others who pay nothing; (2) "affinity" charters, where groups having some community of interest apart from transportation, for example membership in a club, engage an aircraft for transportation to be paid for on a pro rata basis; (3) "inclusive tour charters," which involve the charter of an aircraft by an entrepreneur who offers space to the public as part of an all expense paid tour; and (4) "travel group charters," where individual travelers without a community of interest apart from transportation are organized by a third party and, subject to certain travel related restrictions, charter an aircraft on a pro rata basis.⁴ 

The supplemental air carriers, once known as "non-scheduled" or "irregular" air carriers, are meant to provide a supplementary service to that of the scheduled or trunkline carriers, who offer individually ticketed, regularly scheduled service to the general public.⁵  Since the supplementals are not subject to the economic rigors attendant upon a regularly scheduled, individually ticketed service, for they essentially fly when they desire and nearly always carry a full planeload of passengers, the air fares for comparable routes on charter flights can be significantly less than those offered by the scheduled air carriers.⁶  Congress in providing for certification of the supplementals recognized the potential problem of competition and the real possibility that if not carefully controlled they would supplant, rather than supplement, the regularly scheduled service. See generally American Airlines, Inc. v. CAB, supra, 365 F.2d at 944-945. Individually ticketed, regularly scheduled service is the mainstay of an efficient air transportation system, and a critical necessity in any sophisticated economy. Congress realized that it must be preserved. Accordingly, the legislative history⁷  and language of the statute itself⁸  manifest a congressional intent that although the Board should have the power of definition, it should never permit "individually ticketed service to be offered to the general public under the guise of charter." Sen.Rep.No.688, 87th Cong., 1st Sess. 13 (1961).

It is thus with each successive modification of the charter service regulations that the scheduled air carriers, asserting that the indistinct line between group (charter) and individually ticketed travel has been crossed, raise strong opposition to their implementation. The TGC regulations have proven to be no exception to that pattern of behavior. A brief summary of the past struggles between the supplemental and scheduled air carriers, who evidently view their respective positions as unalterably antagonistic, should serve to place this current litigation in proper perspective and render invaluable assistance in determining its outcome.

In early 1964 the Board revised part 295 of its Economic Regulations and included what are known as "split charters" within the definition of charter flights. See ER-408, 29 Fed.Reg. 6005 (1964). Split charters, generally speaking, are the process whereby each of two unrelated but qualified charter groups with similar destinations charter one half of the same aircraft.⁹  Three scheduled air carriers petitioned in this court for review of that action, asserting that the Board lacked the statutory authority to define "charter trips" in such a manner-such charters were not authorized at the time of passage of the 1962 statutory revision-and that even if redefinition powers were found to exist, because of serious diversion of carriage from the scheduled services the Board abused its discretion in so acting. This court, speaking through Judge [now Chief Justice] Burger, disagreed, and in so doing laid the foundation for future decisions. American Airlines, Inc. v. CAB, 121 U. S.App.D.C. 120, 348 F.2d 349 (1965) [hereinafter "American Airlines I"]. The court stated:

We conclude Congress intended, although not without limits, that the Board should be free to evolve a definition in relation to such variable factors as changing needs and changing aircraft; whatever the limits on the Board's power of definition, those limits are not breached by a definition which permits two groups to charter one half an aircraft each . . .. We agree with the Board that the legislative history reveals that a prime concern of Congress was to maintain the integrity of the charter concept-to preserve the distinction between group and individually ticketed travel; within these limits it is for the Board to evolve reasonable definitions.

Id. at 354.¹⁰ 

Further scrutiny of the Board's authority was not long in coming, for on March 11, 1966, the Board issued certificates of authority granting certain supplemental airlines the right to operate "inclusive tour charters" in both domestic and transatlantic markets.¹¹  The regulations promulgated concurrent therewith defined an inclusive tour charter as a kind of all-expense paid tour, with restrictions such as a seven day minimum between departure and return, a minimum of three stops, and a requirement that the tour package price be no less than 110 percent of the lowest available fare charged by the scheduled air carriers for comparable individually ticketed travel.¹² 

The Board action was challenged by certain scheduled air carriers who sought review in this court as to the domestic charters, American Airlines, Inc. v. CAB, 125 U.S.App.D.C. 6, 365 F.2d 939 (1966) [hereinafter "American Airlines II"], and in the second circuit court of appeals as to the transatlantic charters. Pan American World Airways, Inc. v. CAB, 380 F.2d 770 (2d Cir. 1967), aff'd by an equally divided Court, 391 U.S. 461, 88 S. Ct. 1715, 20 L. Ed. 2d 748 (1968). Although American Airlines I had settled the question of the Board's basic power to evolve changing definitions of charter, the scheduled air carriers questioned whether the Board had exceeded the limits of this authority by failing to maintain the individually ticketed-group fair distinction that Congress desired. This line of attack required the courts to take a hard look at congressional intent in the passage of the 1962 legislation.

In American Airlines II this court stated what it found to be the three primary purposes of the 1962 legislation: (1) to eliminate irresponsible supplementals; (2) to stabilize the operating authority of the supplementals under certification, including authority to authorize charter trips on a broad enough basis so that the supplementals might remain economically viable organizations capable of meeting supplemental transportation needs and high safety standards; and (3) "to maintain the regulatory scheme of the Federal Aviation Act and the protection of the [scheduled] carriers . . . by eliminating unregulated individually ticketed point-to-point competition from the supplementals." 365 F.2d at 945-946 (footnote omitted). It was to the third of these purposes that the contradictory references in committee reports, hearing transcripts, and floor speeches of Congressmen were directed.¹³  The court felt, however, that much of the concern over the specific authorization of inclusive tour charters arose because of the abuses experienced when, prior to 1962, the Board had granted supplemental air carriers the right to conduct ten flights per month of scheduled, individually ticketed carriage. "Groups of carriers would combine their operations and provide daily services claiming at least color of authority under the ten-flight per month authorization." 365 F.2d at 945. The court then summarized the problem:

The question therefore arises as to whether authorization of inclusive tour charters will in fact bring about the individually ticketed abuses experienced under the ten-trip-per-month authority. . . . In order to insure that the supplementals were properly regulated in this respect, and to insure that the individual ticketing abuses would not occur, the Board issued stringent regulations at the time of its decision in the instant case to cover inclusive tour charters. The key to this case, we believe, is the fact that the Congress at the time it passed the legislation had no way of knowing specifically how the Board would regulate the actions of the supplementals with respect to inclusive tour charters.

365 F.2d at 946 (footnote omitted). Finding that the stringent regulations promulgated by the Board would in fact preclude the abuses both experienced in the past and foreseen by the legislators, we concluded that the inclusive tour charter regulations maintained the important distinction between group and individually ticketed travel, and therefore upheld the Board's action.

On September 27, 1966, two months following the issuance of American Airlines II, presidential approval was given to the transatlantic aspects of the inclusive tour charter authorizations. As we noted earlier, review was immediately sought in the second circuit court of appeals by certain scheduled airlines, challenging the Board's action in the international arena upon the same grounds that had earlier been contested in American Airlines II. The second circuit, although of course looking to the same legislative history that we had analyzed several months earlier, reached a contrary conclusion:

We . . . reject the argument that the legislators' concern was with abuses growing out of the Board's prior practice of allowing supplemental carriers to perform limited scheduled individually ticketed travel. Regardless of the extent to which there may have been legislative concern based on this prior experience, indeed whether or not the expression of concern was misguided or wholly unwarranted, it was in fact manifested in a congressional declaration binding on both the Board and this court, that was clearly intended to forbid the Board to authorize inclusive tours.

380 F.2d at 781.

The Supreme Court's effort to relieve this conflict between the circuits was far from totally successful, for its consideration of the Pan American decision resulted only in a per curiam affirmance by an equally divided court. World Airways, Inc. v. Pan American World Airways, Inc., 391 U.S. 461, 88 S. Ct. 1715, 20 L. Ed. 2d 748 (1968). Although an affirmance by an equally divided Supreme Court is not "entitled to precedential weight," Neil v. Biggers, 409 U.S. 188, 192, 93 S. Ct. 375, 34 L. Ed. 2d 401, (1972), its restricted effect was to affirm the second circuit's decision, and thus while domestic inclusive tours were allowed by this court's decision, transatlantic inclusive tours were forbidden. Accordingly, Congress quickly passed legislation which expressly included inclusive tour charters within the definition of supplemental air transportation. Act of September 26, 1968, Pub. L. No. 90-514, 82 Stat. 867, amending 49 U.S.C. § 1301(33) (1964) (codified at 49 U.S.C. § 1301(34) (1970)).¹⁴  We note that the Senate and House committee reports enunciated that the purpose of the new legislation was to "clarify" rather than add to the authority of the Board as originally granted in the 1962 legislation.¹⁵ 

II

We have analyzed the record in light of the history-both litigious and legislative-of charter air travel. We adhere to the analysis and conclusions of our American Airlines II decision, and find that in authorizing the TGCs the Board met its obligations to encourage " [t]he promotion of adequate, economical, and efficient service by air carriers at reasonable charges, without unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices," pursuant to the mandate of 49 U.S.C. § 1302(c) (1970), and to maintain the legislatively desired distinction between individually ticketed and group travel.

We want to stress two items that have particularly influenced us, and which we have drawn from our review of this case and other experiences with this type of litigation. First, the test we must apply is result oriented-one cannot really know how the public will react and how the TGCs will affect scheduled travel until they are tested in the crucible of the marketplace. This is a situation in which, in Judge Leventhal's words, "a month of experience will be worth a year of hearings." American Airlines, Inc. v. CAB, 123 U.S.App.D.C. 310, 359 F.2d 624, 633 (D.C. Cir.), cert. denied, 385 U.S. 843, 87 S. Ct. 73, 17 L. Ed. 2d 75 (1966). We can only look to the record, contradictory legislative history, and the purposes of the enabling legislation itself to determine if the Board's action is reasonable, and within its authority. We are loathe to be held out either as seers of the future or overseers of the air transportation system in this country. Secondly, the consistent lamentations and predictions of doom by diversion raised by the scheduled air carriers in the past have proved, to our way of thinking, to be considerably overstated. The actions of the Board in this area have provided for steady growth in both the scheduled and supplemental markets. and the public, as it should be, has been the primary beneficiary.¹⁶ 

An elaboration of the intricacies of the TGC regulations would serve little purpose. We have studied them carefully and find that they maintain the necessary distinction between group and individually ticketed travel, and that they are the result of painstaking and reasoned analysis by the Board. We are impressed with the five "substantial and vital" differences between TGCs and conventional travel that have been stressed by the Board in its argument before us: (1) The TGC traveler is a party to the charter contract itself, incurring liability for the pro rata share of the charter cost and running the risk that his cost may increase depending upon the load factor ultimately achieved. (2) The travel group must be formed no less than three months prior to the scheduled departure time, or the trip must be cancelled. (3) The members of the group formed in # 2 above must have paid a deposit of 25 percent of the minimum pro rata charter price before the time for filing the list of tour members with the Board has elapsed, no more than four nor less than three months prior to the scheduled departure. This deposit is, subject to certain exceptions, nonrefundable. Payment of the balance must then be made not later than two months before departure. As of then the participant risks, again subject to certain exceptions, a 100 percent forfeiture should he desire to change his plans. (4) There is a risk of cancellation of the flight up to 45 days prior to scheduled departure because of defaults by fellow charter participants. (5) All TGC participants must go and return as a group, subject to predetermined, fixed restrictions as to the length of the trip.¹⁷ 

Perhaps the primary reason for the extensive opposition to the TGCs on the part of the scheduled air carriers is that the TGCs do not require non-travel related "affinity." Non-travel affinity, whereby members of an organization such as the Elks or Eagles Club are allowed to take advantage of charter fares through charters organized by their clubs, have proven to be discriminatory in application and difficult in enforcement.¹⁸  The Board correctly recognized that this non-travel "affinity" was not statutorily required, but only a vehicle to insure that charter travel did not become a guise for individually ticketed services. So long as such organizational membership is not necessary to insure the distinction-which can be and is maintained by travel related restrictions in both the inclusive tour and now in the TGC charters-it is not a sine qua non for legality.

Finally, we find nothing at fault with the Board's decision to forego an evidentiary hearing on the diversionary effects of the TGC authorizations. The Board stated that "insofar as the principal factual issues here involve largely unpredictable questions as to the traffic which these new rules will generate or cause to be diverted from scheduled carriers, they can best be resolved in light of experience gained through actual experimentation." 37 Fed.Reg. 20811 (1972). The TGC regulations and authorizations are temporary in nature, with a termination date set for December 31, 1975. 14 C.F.R. Sec. 372 A. 5. This is the best way to test the true effects of the TGCs, and the Board remains free at all times to adjust its regulations in the interim to adapt to unexpected results. The Board's experience with charter definitions in the past and the comments and oral arguments submitted to it led it to believe that this experimentation approach was the proper manner in which to proceed. We cannot fault such an approach.¹⁹  See American Airlines, Inc. v. CAB, supra, 359 F.2d at 633, and Delta Air Lines, Inc. v. CAB, 147 U.S.App.D.C. 272, 455 F.2d 1340, 1344 (1971).

III

Several supplemental air carriers and the National Air Carrier Association, Inc., a trade association of the supplementals, challenge the TGC regulations from an understandably different posture. They urge us not to set aside any specific section of the regulations under review, but rather to remand to the Board for the limited purpose of reconsidering its requirement that the TGCs be marketed exclusively by independent charter organizers.²⁰ 

The charter organizer is an "arranger." He initially obtains an option from the air carrier which obligates it to enter into a contract to provide carriage, said contract to be entered into with the organizer as agent for the group he subsequently forms. The organizer is given a substantial administrative burden of filing contracts, passenger lists, etcetera, with the Board, and it is through his organizational abilities and solicitation of the charter group that the charter will ultimately succeed or fail. His compensation is in the form of a service charge from the charter group, which is pro rated among its members. He must be completely independent of, and receive no compensation from any air carrier.²¹ 

The Board's reason for requiring an independent organizer is almost disarmingly simple-it is a further mechanism for separating the supplemental air carrier from the marketing of individual tickets to the general public. In light of Congress' specific prohibition in the inclusive tour market, 49 U.S.C. § 1301(34) (1970):

Nothing in this paragraph shall permit a supplemental air carrier to sell or offer for sale an inclusive tour . . . by selling . . . individual tickets directly to members of the general public, or to do so indirectly by controlling . . . a person authorized by the Board to make such sales.

We find this requirement to be eminently reasonable.²² 

Accordingly, the various Orders of the Civil Aeronautics Board authorizing Travel Group Charters and promulgating regulations concerning such, are

Affirmed.