World Airways, Inc. v. Pan American World Airways, Inc. – Oral Argument – April 29, 1968

Media for World Airways, Inc. v. Pan American World Airways, Inc.

Audio Transcription for Oral Argument – April 30, 1968 in World Airways, Inc. v. Pan American World Airways, Inc.

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Earl Warren:

Number 800, World Airways, Incorporated, et al. versus Pan American World Airways, Incorporated.

Number 946, Civil Aeronautics Board versus Pan American World Airways, Incorporated, et al.

And Number 969, American Society of Travel Agents, Incorporated versus Pan American World Airways, Incorporated, et al. Mr. Wozencraft.

Frank M. Wozencraft:

Mr. Chief Justice and may it please the Court.

I’m appearing on behalf of the Civil Aeronautics Board, petitioner in number 946.

The petitioner in the other two cases was consolidated here for oral argument.

Our six supplemental air carriers in number 800, and the American Society of Travel Agents in number 969, and the argument on their behalf will be presented by Mr. Jerrold Scoutt, with whom I will share petitioner’s time.

In all three cases, the respondents are Pan American, TWA, and American Airlines, regularly schedule trunk carriers.

These cases are here on certiorari to the United States Court of Appeals for the Second Circuit.

That Court struck down and has begun the CAB statutory authority.

Several related orders which certified supplemental air carriers to engage in inclusive tour charters involving foreign transportation.

This decision is in direct conflict with the prior decision of the U.S.Court of Appeals for the District of Columbia Circuit which had affirmed CAB orders, authorizing inclusive tour charters in the domestic market.

American Airlines versus CAB which is reported at 365 F.2d 939, and is included as an Appendix to the petition for the supplemental carriers.

These two decisions were based on the same provisions of a 1962 statute, amending the Federal Aviation Act, Sections 401 subsection (d) and (e) and 101(32) and (33) of that Act.

They involved orders issued in the same proceeding, the supplemental air service proceeding which had begun in 1963.

They we’re not these — orders were not separated on appeal because the domestic orders did not require presidential approval.

And that to the domestic orders were appealed by the trunk lines, and upheld by the D.C. Circuit.

The orders involving foreign transportation, received the necessary presidential approval in September of 1966 along with additional orders, issued in the Trans-Atlantic proceeding of the Board, in which the inclusive tour phase had been reopened in 1965.

After the hearing examiner’s report in the supplemental proceeding, the trunk lines did not ask this Court to review the District of Columbia decision which became final.

Instead, they appealed to the Second Circuit from the CAB orders involving foreign tours.

Thus while only foreign tourists were involved in this case, this Court’s decision on the merits, well obviously, controlled domestic tours as well.

Moreover, a decision limiting the Board’s power here could also cast a serious cloud on a 1965 decision by a different panel of the District of Columbia Court of Appeals, the so-called Split Charter Decision.

American Airlines versus CAB which is recorded at 348 F.2d, 349.

That case held that the Board had authority under the 1962 Amendments to define Charter so as to permit the supplementals to split the charter of one plane between two groups.

And the Court of Appeals for the District of Columbia relied on that case and cited it and quoted from it, in reaching his decision here.

In my statement, I will attempt to discuss the principal issue in this case, the essential facts, and the background and history of the 1962 Amendments through the conference report stage where it was presented to the Congress in the form in which it was enacted.

Mr. Scoutt will deal with certain statements made by members of Congress when the conference committee report reached the floor.

He will also discuss the general role of the supplemental carriers in the air transportation industry, and certain procedural objections of respondent to some of Board’s orders which were not reached below.

In our view, the principal issue here is one of the Board’s expressed authority under the 1962 statute, to permit charter trips by supplemental air carriers, is restricted by the Act’s legislative history to exclude charters to tour operators who organize group tours including more than just air transportation.

A respondent’s brief seeks at its beginning to shift the emphasis to whether inclusive tour arrangements can be considered as charters.

Frank M. Wozencraft:

But the inclusive tours authorized by the CAB under the contested orders are clearly based on a contract between a carrier and a tour operator acting as principal not agent, which is a charter within every accepted meaning of the term.

The tour operator is an independent contractor.

He pays a single price to the aircraft on a time, trip, or mileage basis.

The economic risk is entirely his no matter how many or how few passengers are actually carried, he pays, and the supplemental carrier receives the same lump sum price for the charter.

In our view, this concept comes squarely within the authority of the Board under the 1962 Amendments.

That legislation climaxed years of controversy as to the place of the nonscheduled or supplemental carriers as they’re now called in the transportation industry.

Its basic purpose was to establish a stable and useful role for that creative segment of the industry, without jeopardizing the regularly scheduled carriers.

In our brief at pages 9 through 12 discusses that history as to the opinions of both the Court of Appeals for the Second Circuit in the Court of Appeals for the District of Columbia.

Byron R. White:

The travel agent does not persist to trips to the members of the public —

Frank M. Wozencraft:

He can offer them to anybody he wishes, Mr. Justice.

Byron R. White:

All covers (Voice Overlap) no preexisting connection between those who apply is necessary.

Frank M. Wozencraft:

Correct, sir.

This is a difference between this and another provision whereby the supplemental carriers themselves can charter the plane to groups where there is a preexisting connection.

In the case of the tour operator, however, no such connection is required but he cannot split a charter with any other tour operator.

He has to take the whole plane.

And the group is formed by the choice of the itinerary which he offers.

Affinity in the view of the Board is provided by the fact that these people are all signing up for the same itinerary.

And in doing that they accept of course, considerable rigidities as the Board and Courts recognized.

Potter Stewart:

Is the charter that the agent can negotiate with the carrier be limited just to air transportation?

Frank M. Wozencraft:

No, it may not.

Let me say this, Sir.

It may as far as the contract with the supplemental carrier is concerned.

But the Board requires a prior authorization of each of these chartered trips.

And the tour operator must submit a filing to the Board along with the airline.

Abe Fortas:

What does he include along with the air transportation?

Frank M. Wozencraft:

He must include at least hotel reservations and ground transportation.

In practice, there are usually a great many other items included.

It also as always around trip situation, it comes on back to where it started I believe.

And so you have a package tour, it’s the customary vernacular I believe in the travel agent.

There’s this where people sign up for a particular package.

Frank M. Wozencraft:

It is not simply point-to-point transportation.

The man who go and takes that trip must go on that particular plane, at that particular time.

He does not have his choice of the schedule of the air carriers as a member of the public dealing directly with the airlines would have.

Now these 1962 Amendments attempted to accomplish the role that the supplemental carriers should have in this industry by authorizing them to engage in chartered trips.

And according to statute now, charter trips in air transportation to supplement the schedule of service.

It did not authorize them to provide individually ticketed point-to-point transportation.

In previous days before these amendments, the supplemental carriers have been authorized to run a limited number of regular point-to-point trips a month and this statute, terminated their authority to do that with a two-year interim delay period for them to phase out on it, but it left them with full authority to conduct chartered services as authorized by the Board.

Now in our view, this provides a classic example of a kind of situation in which an administrative agency like the CAB is best equipped to operate.

Recently as this past January in Horton versus Kentucky Utilities, this Court reemphasized the established rule within questions of statutory interpretation involving agency authority.

The agency’s own determination should be set aside only where it lacks reasonable support in relation to the statutory purpose.

We also cited page 23 of our brief, the several other cases that reflect in recent times as long established doctrine.

Now, the word charter which we’re talking about defining here has been in the Federal Aviation Act since it’s enactment in 1938.

It is never been defined in the Act itself, only by the Board.

And the determination as to what kinds of charters the supplemental airlines should be permitted to make, involves exceedingly intricate questions of economic facts and policies.

As the hearing examiners recommended opinion — this decision in his opinion and the opinions of both Courts, the Second Circuit and the District of Columbia Court both indicate.

And in fact as early as 1961, the Board added to the issues in its transatlantic proceeding, the question of whether the supplementals should be authorized to charter their aircraft to tour operators for all expense tours.

And they pointed out there in 1961 that that this was very different from individual ticketing. This appears at pages 644 through 646(a) of the record.

Now this authority was not granted by the Board in the initial orders in that proceeding.

They determine in their discretion not that they did not have authority to do so, but at the time considering the present uncertain financial condition of the trunk lines, this authority should not be granted.

The transition into jets from propeller aircraft had left the transatlantic carriers in a situation where their financial situation was not yet nearly as solidified as it later became.

But this issue again then became presented in the supplemental service proceeding which was initiated in 1963 under the amended act.

The examiner’s recommended decision after lengthy contested proceedings concluded that the supplemental should be authorized to charter aircraft, to tour operators for their use in package tours which as I mentioned before include hotel accommodations, ground transportation, and usually many other items.

The Board issued a careful opinion in the supplementary proceeding which considered and rejected the contentions of respondents brief, and accepted the examiner’s recommendations in almost every respect.

I invite the Court’s particular attention to the portion of the Board’s opinion beginning at page 336(a) of the appendix in the supplementary proceeding.

And again in the transatlantic proceeding which was decided later, the portion of the Board’s opinion beginning at 1063(a) of the record.

The Board concluded that inclusive tour charters and arrangements fall within the customary meaning of chartered trips.

It drew a clear distinction between scheduled point-to-point transportation and packaged tours where a tour operator organizes a group of people willing to accept certain rigidities and itinerary to achieve an overall saving and particularly in the situation with foreign tourists to avoid the trouble of making separate arrangements.

The Board found that such inclusive tour charters would meet a substantial public need for relatively low cost pleasure tours which was not then being satisfied.

And then it would do so without an adverse effect upon the scheduled service of the trunk lines.

The Board then issued regulations which Mr. Scoutt will discuss in more detail to assure that this authority could not be used as simply a disguise or a sham for individual ticketing point-to-point operations.

Frank M. Wozencraft:

They included such requirements as a minimum price of a 110% of the lowest schedule airline fare, a requirement of at least three stops and many other things which would make this kind of tour thoroughly impractical from the standpoint of the business traveler or one who is going for personal affairs to a particular point at a particular time.

Now the Board certified these supplemental carriers on a temporary basis.

It recognized that this was an experimental program as its opinions reflected drew upon British Air Tour experience.

It drew upon ICC experience in the motor carrier field.

And it assured the industry that if further regulations were needed, if there was more protection needed for the schedule carriers.

The regulations could be amended to provide it but it expressed every confidence that this could be achieved and that new markets, new interest of people that would otherwise not travel either because of the expense or because of their lack of sophistication and how to make arrangements for themselves would be generated by this innovative development.

It was innovative that is as far as the U.S. Air Transportation business was concerned.

As I say it was not innovated as far as either British Air Transportation or U.S. Surface Transportation, and they have been added as I mentioned before as early as 1961 to the list of questions to be considered by the Board.

Now turning now to the 1962 statute itself, there’s nothing on the fix of that statute that even suggests that the Board acted beyond its authority in authorizing this kind of supplemental program.

On the contrary, its authorization were and the words of the statute for charter, trips, and air transportation in both its opinion and its regulations.

The Board clearly limited its grants to inclusive tour charters which would supplement the schedule of service of the route carriers rather than disrupt or divert it.

The only question therefore is whether the legislative history of these 1962 Amendments limits a plain meaning of the statute.

The principal issue posed to Congress in 1962 was whether the supplemental should be restricted to charter service, or whether they should be permitted to engage in a limited amount of individually ticketed transportation as they had raised.

The Bill passed by the Senate would have allowed them both to engage in charter and in limited point-to-point service.

On point-to-point service, the CAB was required to prevent any significant diversion from a regular carrier.

No such limitations were required for charter service.

The Senate Bill defined charter service as the engaging of the entire capacity of an aircraft.

But the definition excluded individual ticketing but expressly included inclusive tour charters.

The senate committee report made it clear that it did not intend to permit individually ticketed service to be offered under the guise of a charter by either an air carrier or a travel agent.

It then noted however that an all expense pay group tour could be offered to individual members of the public and still conform to the traditional concept of charter.

The report stressed that if a travel agent charters an aircraft and offers the public a chance to participate as members of the group.

This is a very different sort of service from individually ticketed transportation.

The House Bill, unlike the Senate, did not allow the supplementals to engage in any individual ticketed point-to-point service, nor did it define chartered trips.

It simply defined supplemental air transportation as charter trips and air transportation to supplement the schedule of service offered by the regular carriers.

And this is the language that the Congress adopted when it enacted the 1962 Amendments.

It’s particularly important therefore to note the meaning here also of the house committee report on this Bill.

And it explained very carefully the reason for omitting a definition of the term charter even though the Senate Bill which had already been reported out by the committee and the senate reported and discussed all of these matters would have included such a definition.

The house omitted it because and I quote again authority to define charter services should be left as at present with the Board, subject to the limitations contained in the reported Bill.

This is a very difficult subject and any effort to freeze a definition of charter service in the law could well lead to complications.

The report made it very clear that the committee expected the CAB to use this flexible authority in a way which would protect the schedule of carriers against unfair or discriminatory competition from individually ticketed service.

Potter Stewart:

Whose report was that?

Frank M. Wozencraft:

That’s the report of the House Committee on Interstate Foreign Commerce.

Potter Stewart:

Who is the chairman of that?

Frank M. Wozencraft:

The chairman of the committee was Mr. Oren Harris of Arkansas.

Potter Stewart:

Who later remarked about that?

Frank M. Wozencraft:

Yes, sir, he later remarked on the floor.

This report made it clear — the report said nothing which would restrict the Board in anyone from authorizing any kind of charter services which it determined would result in unfair competition or a detriment to the schedule of carriers.

And when the two bills went to conference, the conference committee adopted the Court provisions of the House Bill.

This resulted of course in cutting out the senate definition of charter who had been utterly inconsistent with the idea of leaving flexibility to the Board to define the term, to go ahead and include any definition here.

It’s important I think to note though that with this whole inclusive tour charter completely called its attention, the committee report and the House Bill did nothing to exclude it.

Now since this report — since the conference report gave no explanation for its adoption of the House version on this point.

So I think the only fair conclusion is that it intended to adopt the meeting as expressed in the House report.

And that Bill unmistakably left the CAB, the flexible authority to define charters.

We have then the following situation.

Two bills came into the conference committee.

The Senate Bill, which would expressly authorize the CAB to grant certificates permitting inclusive tour charters, and the House Bill which would leave the CAB with flexibility to authorize inclusive tour charters.

It seems utterly anomalous to us, to assert that by choosing between these two provisions without — the conference committee somehow intended to deprive the CAB of authority which it would have had under either Bill.

When the committee history is this clear cut when no amendments were made following the conference committee report, it’s difficult to see how comments made individual congressmen, when there’s no showing of who was on the authority here can be permitted to contravene in this history under any accepted theory of legislative interpretation.

The Board should not be thus deprived of authority which it feels it must have, if it is to be able to meet the changing needs and conditions of this rapidly evolving industry and carry out the policies entrusted to it by Section 102 of the Federal Aviation Act.

I will now yield to Mr. Scoutt.

Hugo L. Black:

May I ask you before you sit down.

Frank M. Wozencraft:

Yes sir.

Hugo L. Black:

Who is opposed?

Frank M. Wozencraft:

Pan American, TWA, and American Airlines, the respondents in this case, all oppose this.

Hugo L. Black:

And who’s in favor of this?

Frank M. Wozencraft:

Civil Aeronautics Board, the Supplemental Air Carriers, and the American Society of Travel Agents.

We might say everybody except the trunk airlines who are respondents or the other trunk airlines, I’m sure there’s some other trunk airlines who were parties to the domestic proceeding and are not parties here who have more than passing interest in the decision of this Court.

Hugo L. Black:

The travel agents are assumed for it.

Frank M. Wozencraft:

They are for it.

Yes sir.

Frank M. Wozencraft:

Thank you.

Earl Warren:

Mr. Scoutt.

Jerrold Scoutt, Jr.:

Mr. Chief Justice and May it please the Court.

As a preference to my argument, I would like to say a few words about the petitioners for whom I’m speaking.

The American Society of Travel Agents is the principal trade organization for the travel agents who operate some 2600 agencies throughout United States and Canada.

The six supplemental petitioners hold certificates to engage in interstate and foreign air transportation.

They largely operate jet aircraft.

They operate under the same safety standards as to the scheduled airlines in performing charter service.

And they are members of a group of supplemental carriers that totals 13.

These 13 are the remnants or the survivors of a group that at one time numbered almost 150.

These carriers are probably better known by their former name as non-scheduled or non-scheds but at least they officially require their present name as supplementals in 1955.

One of the important characteristics of this group, which I don’t think has been mentioned yet, is that they have played a very creative role in the development of air transportation.

This will appear in the senate report which has been attached to the legislative materials which accompany our brief.

That Senate report gives these companies credit for developing the military contract business, credit for developing the charter business, credit for developing all cargo service, and credit for first promoting and developing the Air-coach business.

In other words, this small group of carriers which never has accounted for more than 3% of the industry’s total revenues have produced innovations and competition which have literally reshaped the entire industry.

Now it was partly, I believe in recognition of this contribution that Congress decided that they should be given a permanent and a stable role in air transportation.

And the principal question as to whether or not, the Board in implementing that decision has exceeded its powers depends on the treatment that you will accord, the statements that were made by six congressmen on the floor of Congress.

And it’s to that issue that I should now like to turn.

Hugo L. Black:

Are these all nonscheduled?

Jerrold Scoutt, Jr.:

Yes, Your Honor, these are all nonscheduled airlines.

Hugo L. Black:

They carry the same type of plane?

Jerrold Scoutt, Jr.:

They all operate jet aircraft at this time and they operate as I said under the same safety standards as to the scheduled airlines.

Yes sir.

The six congressmen who spoke on the floor of Congress were these, Senators Thurman, Scott, and Cotton, Congressman Harris of Arkansas, Congressman Williams of Mississippi, and Congressman Collier of Illinois.

This entire legislative history with which we are now concerned, you of course realize has been examined on three separate occasions in lower courts.

Two of those courts in looking at the same legislative history, have said that Congress intended to leave to the agency the job of defining the term charter.

But the Court of Appeals for the Second Circuit treated these statements as constituting a binding congressional declaration which withdrew from the Civil Aeronautics Board, the power to make this decision.

Now that conclusion is the thrust really of the argument that I would like to consider.

And there are three points that I would like to develop.

The first is this.

Jerrold Scoutt, Jr.:

We do not believe that the floor statements provide any reasonable explanation for the conference committee action or the silence of its report on the subject of all expense tours.

You recall that the conference committee adopted without change and without comment, the House Bill.

And the report that accompanied the House Bill, said that the job of defining charter should be left to the agency.

We are now asked to believe that what the conferees had in mind was a really a caveat.

That the agency was not to define the term charter, to include a particular kind of charter, that something was reserved from this delegation of power.

Now if indeed, the conferees were concerned about this matter.

If they were as concerned as the six congressmen, all of whom incidentally were members of this 17-member conference committee.

If they were as concerned as the six congressmen, why wasn’t there one sentence in the conference report on the subject of all expense tours?

It seems totally unrealistic to us to believe that a concerned majority of the conference committee would have cast to the subsequent floor debates to make known its view on withholding the opportunity from the CAB to certificate inclusive tour charters.

Rather we think that the most plausible explanation for the senate and floor statements is simply this.

That a few days before the floor debates, a staff member of the Civil Aeronautics Board in the transatlantic proceeding, filed a brief in which he recommended all expense tour authority be granted to the supplemental airlines.

And that we suggest that these floor statements are a manufactured response to that recommendation.

That they were designed to influence either the agency or subsequent Court action, and indeed Senator Thurman statement on this matter, recites the fact that the Board had just — a staff of the Board had just shortly before made what he called an intolerable suggestion.

Potter Stewart:

The record showed through the statement something like that —

Jerrold Scoutt, Jr.:

Two of the statements, Mr. Justice, are identical.

The statement of Mr. Harris and Mr. Collier are verbatim, word for word.

The other statements are similar although they’re not identical.

Potter Stewart:

The record doesn’t show as compared to the (Inaudible).

Jerrold Scoutt, Jr.:

No, the record does not although the record does show that the representatives of the scheduled airline industry very actively participated in the hearings in this case.

Byron R. White:

Yes, but as far as the record shows, the statement could have been paired by either Mr. Harris or Mr. Collier.

Jerrold Scoutt, Jr.:

Yes, that’s perfectly true.

Byron R. White:

And then as far as the record shows that it might have been precisely what the airlines thought he was doing when he reported out the Bill in the House.

Jerrold Scoutt, Jr.:

That suggestion is made in the brief of the respondents.

That was the way it happened.

Byron R. White:

Can you tell me anything in the record to the contrary?

Jerrold Scoutt, Jr.:

No, there is nothing in the record to the contrary.

Byron R. White:

Well now, what makes Mr. Harris’ statement as chairman of the House Committee in presenting a conference report, anything suspect as what at least he had in mind?

Jerrold Scoutt, Jr.:

Nothing at all.

I think that undoubtedly, this is —

Byron R. White:

Was this entitled anyway?

Jerrold Scoutt, Jr.:

I think it’s entitled to consideration as you look at the entire fabric of the legislative history.

I don’t think it is entitled to controlling consideration.

And I think it along with the others, led the Court below to believe they were dealing with what they called a binding congressional declaration.

I certainly concede it is relevant.

It’s important to look at it.

But I think it has to be tested and judged in terms of the full pattern and history of what Congress was trying to accomplish and what Congress was trying to prevent.

Byron R. White:

Mr. Harris has pretty clearly said on the floor on the House that he didn’t think that the Bill would authorize all expense tours.

Jerrold Scoutt, Jr.:

Yes sir, there’s no doubt about that.

My first point, Mr. Justice is simply, that if the committee had felt the way Mr. Harris felt, they certainly would have put something in the committee report to this effect, because the committee was adopting word for word the House Bill.

And the report that accompanied the House Bill said that the definition of charter should be left to the CAB.

Now if Mr. Harris didn’t want someone to draw the conclusion that the Board was free to define this term, it seems to me he would have urged the committee to say something about it.

Byron R. White:

Well, it might have been that the committee was – the Board might have been left free to define the term within some limits but I would suppose Mr. Harris was saying that the Board wasn’t free to include all expense tours, that’s what he said very clearly.

Jerrold Scoutt, Jr.:

But I believe that is true that at the time this legislation was being considered, the Board did have authority to authorize inclusive tour charters.

In October of 1961, that’s roughly eight months before this legislation was enacted, the Board had placed this issue in the transatlantic investigation.

The Senate report recites that all expense tours are part of the traditional charter concept.

Something like this almost identical to it had been followed in the United Kingdom for years.

And something reasonably similar to it had been followed at the Interstate Commerce Commission for a number of years.

So that there should have been no surprise to Mr. Harris that this was a possibility and that had his committee felt the way he felt, it seems to me we would have seen something in the report.

The second objection that we have to the use that has been made by the Court below of the floor statements is that they cannot be reconciled with either of the statute or with the house report.

That report is we’ve just been discussing says the definition should be left to the agency.

But the use, to which the Court below puts these statements, is to limit that delegation of power.

It is if you please to freeze a restriction on the charter definition by saying it does not include inclusive tour charter type authority.

Now in this kind of a conflict, we think the house report should be given a greater weight.

As I’ve said before we certainly recognize that this Court has frequently looked to debates as aids in statutory construction, that we can find no case except the case here on review where those debates had been used to introduce an ambiguity and to vary what we think to be the clear language of the report.

Byron R. White:

What was the case before this amendment which authorized the Board to – where the Board was upheld in the Court on all inclusive tours as part of the charter service.

Jerrold Scoutt, Jr.:

Yes, that was the case in the District of Columbia Circuit.

The citation is 365 F.2d 939.

Byron R. White:

Is that the split —

Jerrold Scoutt, Jr.:

That is the domestic inclusive tour but I call it the domestic inclusive tour, the Split Charter Case is 348 F.2d, 349.

Potter Stewart:

Yes, but was this before this amendment?

Jerrold Scoutt, Jr.:

No, these all followed the (Voice Overlap)

Potter Stewart:

I know.

So is there any case which sustains your statement that the Board at authority before these amendments to include in a chartered service all expense tours.

Jerrold Scoutt, Jr.:

No, sir.

I think all we have —

Byron R. White:

But why did you suggest before these amendments the Board had such authority to define charter service?

Jerrold Scoutt, Jr.:

Well, perhaps I should say more accurately the Board asserted that it had that authority.

Byron R. White:

Well that’s different.

Jerrold Scoutt, Jr.:

And it asserted it in several different ways, the most obvious being placing the matter at issue in the transatlantic investigation.

Abe Fortas:

Do I correctly understand you to say that the conference committee adopted that house committee’s report?

Jerrold Scoutt, Jr.:

No, they adopted the House Bill without a comment.

Abe Fortas:

I thought you said that it adopted the committee report?

Jerrold Scoutt, Jr.:

No, I make the transition.

I didn’t make that clear.

I’m sorry that I presume they must have accepted the house explanation as evidenced in its report.

Abe Fortas:

Well, didn’t the conference committee file a report of its own?

Jerrold Scoutt, Jr.:

It filed a report but it was a silent on the subject.

Abe Fortas:

It didn’t say anything at all.

Jerrold Scoutt, Jr.:

It didn’t say anything on this matter.

Abe Fortas:

So what it did was to adopt the house language but it did not include the language that you’re allowing in the House report?

Jerrold Scoutt, Jr.:

That’s true.

The only thing, Mr. Justice that the conference committee report does do that is relevant to this issue is to comment on charter authority that it was considering for the old cargo airlines.

This was a matter that was also involved in this particular legislative review, and in amending the statute to make it clear that the cargo airlines should have the right to conduct passenger charters.

The conference committee does say that this authority should be granted.

The dimensions of the charter authority should be defined by the Civil Aeronautics Board under such regulations as would enable them to accomplish their statutory objectives.

Now in doing that, it seems to what’s quite clearly that they are continuing this concept of administrative flexibility with the term charter.

Now that arises under a different provision of the statute but it’s the same (Voice Overlap).

Abe Fortas:

Can I ask you one other question.

The scheduled air carriers do conduct some sort of — do advertise some sort of all expense tours, is that right?

Jerrold Scoutt, Jr.:

That is correct.

Abe Fortas:

Is there a specific language in the Act giving the CAB power to authorize that?

Jerrold Scoutt, Jr.:

The inclusive tours conducted by the schedule airlines are probably not conducted as charters.

They’re conducted under their individually ticketed authority.

Abe Fortas:

I understand that.

But is there any language in the Civil Aeronautic side that relates to that activity of the scheduled carriers?

Jerrold Scoutt, Jr.:

Not specifically, no.

The Section 401(e)(6) does give the Board the authority to authorize the scheduled carriers to conduct charters.

But that term is not defined in the statute.

Abe Fortas:

But the trips to which I’m referring are not chartered but the airline does send you a package, doesn’t it — (Voice Overlap) package.

Jerrold Scoutt, Jr.:

Yes, they certainly do that and to that extent they are conducting an operation that is very similar to what we’re describing here.

Abe Fortas:

Without — Do they file tariffs or no –?

Jerrold Scoutt, Jr.:

Yes, there is a tariff that would be filed.

Abe Fortas:

Does the CAB have any jurisdiction with respect to the non-transportation end of that activity.

Jerrold Scoutt, Jr.:

No, it does not.

And as a matter of fact, it has no jurisdiction on the reasonableness of rates and foreign air transportation, only in the interstate markets.

Abe Fortas:

And we’re talking here only about foreign.

Jerrold Scoutt, Jr.:

And we’re talking about foreign here.

Potter Stewart:

Mr. Scoutt, Mr. Harris was one of the house conferees?

Jerrold Scoutt, Jr.:

Yes, all six members who spoke on the floor, whose statements I’ve been discussing were members of the 17-member Conference Committee.

Potter Stewart:

Doesn’t that suggest — because we don’t have any conference minutes in this ?

Jerrold Scoutt, Jr.:

No, we do not.

Potter Stewart:

I suppose it is possible, is it not — the views that were expressed by those six will reflect the discussion that they had in the conference?

Jerrold Scoutt, Jr.:

We can only speculate about that.

And my only three arguments about it, my first one is that if they really felt strongly about it, why didn’t they say something in the conference report?

It was easy to do.

And they didn’t.

And we think that the silence of that report really is a very significant fact in interpreting the legislation.

The third point, if I may proceed that constitutes our objection to the use that has been made of the floor debates is that they are not entitled too much weight because the tours that were authorized by the Board were not the kind of tours to which these congressman objected.

It’s clear from the statements that were made on the floor of the House and the floor of the Senate, that what the congressmen were concerned about was phony tours.

They were concerned about these airlines offering a passenger a hamburger, and a taxi ride and calling it a tour.

Jerrold Scoutt, Jr.:

They were concerned about tours that would permit cut rate transportation.

They were concerned about tours that would be subterfuges.

And three or four of them in actually use that term.

What they were concerned about, I think this is obvious from reading the statements, is that these charter airlines by means of this tour authority would be placed in direct competition with the scheduled carriers for individually ticketed point-to-point transportation.

That was the thrust of it.

Let me digress here just one moment to make a point that I think needs clarification.

Passengers on a charter flight are issued tickets.

The ticket will identify the passenger, it will identify the airline, the destination, the time of departure, and in case of international flights, will specify the limitations under the Warsaw Convention.

The fact that the passenger has a ticket doesn’t make him an individually ticketed passenger in the sense we’re using this term.

When we’re talking about individually ticketed service of the type operated by the airlines, we are basically talking about point-to-point competition, about going out to the Washington Airport and buying a ticket to San Francisco.

That’s the kind of service that the Congress was trying to protect.

Now whether the inclusive tour authority which was authorized by the Civil Aeronautics Board was indeed a charter or whether it was a disguise for this point-to-point transportation about which the Congress may spoke is not a matter of the label that you apply to this thing, but rather it depends on the substance of the arrangement.

And we think that if you will look at the examiner’s report, if you will look at the Board’s decision, you will see that they have gone through a very careful analysis to balance the interest of the scheduled airlines on one side who needed protection in this point-to-point market, and the interest of the public on the other hand in desiring the benefits of low cost group pleasure transportation.

And I suggest that you consider also part 378 which is the Board’s regulation that defines these tours.

And the significant characteristics of this regulation are these.

An inclusive tour must cost 10% more than the individual ticket between the points in question.

Nobody going from here to San Francisco is going to pay 10% more to ride on a supplemental airlines inclusive tour.

They simply are not competitive for this type of business.

These tours must be round trip.

They involve a minimum of seven days duration.

They require three overnight stops at three different locations.

And they can only be sold by tour operators that are thoroughly regulated by the Board.

Whenever a tour operator wants to conduct the tour, he has to put together his entire plan of operation, file it with the Civil Aeronautics Board 90 days in advance of the first flight, serve copies on all of the scheduled airlines that might have an interest in the case and await their comments.

The entire package or the entire program has been outlined in the Board’s rule making — under its rule making authority and can be revised if it fails to meet its expectations.

As Mr. Wozencraft indicated, it’s a temporary program in any event.

Thurgood Marshall:

Outside of this matter of getting it, is there any other way in which the person desires and can get the kind of service?

Jerrold Scoutt, Jr.:

No, Your Honor, there is none.

The scheduled carriers do not have authority to charter aircraft to tour operators.

This particular type of authority is reserved exclusively for the supplemental airlines.

If a person wants a package tour and wants to buy it from Pan American for example, the cost of that tour would be constructed on the basis of the individually priced ticket that Pan American has authorized to sell.

Jerrold Scoutt, Jr.:

It could not be packaged on the basis of a charter price which almost inevitably would be substantially lower.

Hugo L. Black:

Did I gather from what you’ve said, these inclusive of charter flights, they have strong similarities to the method of transportation on boats that has been in existence for a long period of time.

Jerrold Scoutt, Jr.:

Yes, I think that is true.

The final point to which I should like to make a few comments concerns the procedural questions which have been raised by the respondents.

There are three of them.

First, they claim that the certificates of two carriers were amended without hearing as required by your decision in the Delta case, and secondly they claim that when the Board took official notice of certain materials that should have accorded them the right to rebut or explain these materials.

The simple answer to these arguments is that they were not raised before the Civil Aeronautics Board and your consideration of them is barred by Section 1006(e) of the Federal Aviation Act.

The third procedural question they raised is this; that the record before the Board in 1963 as supplemented by the material of which the Board took official notice was not an adequate basis for the decision in the transatlantic case in 1966.

In other words, they’re saying that the Board abused its discretion by not reopening the hearing.

Our answers to this are two fold.

First of all, we think the agency must have broad discretion in deciding whether or not the record is adequate.

And secondly, all of the arguments raised by the respondent carriers as to the need for a rehearing were very carefully covered by the Board in its decision.

You will see these arguments summarized on page 81 of respondent’s brief.

They talk about certain international problems which are really policy questions, not evidentiary matters.

They talk about the role of the travel agent.

This was settled by the rule making proceeding in Part 378, and didn’t require further hearings.

And finally, they talk about the financial condition of the industry both scheduled carriers and the supplemental airlines.

And this is discussed in detail on the basis of officially noticed material filed in large part by the respondents themselves, and set forth in detail in the opinion.

I’d like to remind you that they did not file a petition for reconsideration of that order.

They did not specify in what respects they found that officially noticed material to be inadequate and in this —

Abe Fortas:

This is — excuse me, sir.

You have a real problem here don’t you?

The chairman of the House Committee, page 232(b) of the Appendix to your brief.

And he said, the Senate — this is Congressman Harris, Chairman of the committee.

The Senate conferees having receded from insistence on the all expense paid tour exception.

Now, that’s a flat statement isn’t it by him.

That the senate conferees receded from their insistence on the all expense paid tour exception.

And it’s pretty hard, isn’t it to get away from the conclusion that in the mind of the chairman of the house committee, the authorization given did not include authorization to permit these all expense tours.

What do you do with that apart from saying he didn’t really mean it or it is the voice maybe the voice of — so on and so?

Byron R. White:

And when you do that, include to explain why is — there was acknowledgement on the same thing on the senate side from Scott and Cotton —

Jerrold Scoutt, Jr.:

Very similar statements were made —

Byron R. White:

–agreeing with Mr. Harris?

Jerrold Scoutt, Jr.:

— on the senate side, that’s right.

My answer to that is this.

Whether the Senate Bill had been enacted or the House Bill had been enacted, in our view, the Civil Aeronautics Board would still have had the power to authorize inclusive tour charters under the definition of either Bill.

And so when the Senate?

Abe Fortas:

But then he says not.

He says that it’s in effect as I read this he’s saying that — or restated, he is saying?

This Bill does not authorize all expense tours.

Then that’s about what this amounts to as I read it.

He’s saying that the Bill of the House is now considering after the conference, does not authorize the all expense tours.

Is there anyway getting away from that really?

Jerrold Scoutt, Jr.:

Well, I have no doubt that that accurately expresses Mr. Harris’ viewpoint and of course the viewpoint of the other five who spoke on the subject.

The quarrel is this doesn’t constitute a binding congressional declaration.

Abe Fortas:

They were all members of the Congress.

Jerrold Scoutt, Jr.:

They were all members of the Congress committee that —

Abe Fortas:

Well, that’s quite contrary to all the learnings in the book isn’t it?

It’s the way you find that legislative intent.

Jerrold Scoutt, Jr.:

Well certainly you can look to these statements but we think you also must look to what the Congress was trying to do, what the purposes of the legislation were, what the evils were, and what the other gentlemen thought about the subject, most of the same six you recall spoke almost as vehemently against the split charter concept, which of course, has been reviewed and approved by the lower court as being within the competence of the Civil Aeronautics Board.

Potter Stewart:

Yes but Mr. Monroni (ph) explained that he wanted that (Voice Overlap)

Jerrold Scoutt, Jr.:

It wasn’t explained —

Byron R. White:

They wanted some flexibility so they could approve split charter?

Jerrold Scoutt, Jr.:

Yes.

Potter Stewart:

But the final vote in both houses Mr. Scoutt, certainly —

Jerrold Scoutt, Jr.:

Excuse me.

I didn’t get it.

Potter Stewart:

–the final vote in both houses on this legislation was taken after as I read this now.

Conferees on both sides, six in the house and three as I think isn’t it (Voice Overlap) in the senate, said virtually the same thing, didn’t they?

Jerrold Scoutt, Jr.:

Yes, they virtually said that.

Potter Stewart:

Ordinarily, wouldn’t one infer that the final votes then were based upon that understanding of what it was the houses were passing?

Jerrold Scoutt, Jr.:

Well Mr. Justice, we don’t even know who was on the floor when these matters were being considered.

We do — and being debated.

For example in the Senate, the conference report is approved without a roll call out and in the house following the floor statements.

Mr. Collier, who made one of them, observed there was not a quorum preset person and they had asked for a call of the absent members.

So we really don’t —

Potter Stewart:

But the vote was taken after the quorum (Voice Overlap)

Jerrold Scoutt, Jr.:

After the quorum can be —

Potter Stewart:

Would you feel differently that they actually said to the committee report?

Jerrold Scoutt, Jr.:

Yes, I would feel much differently.

Potter Stewart:

Even though six people said normally?

Jerrold Scoutt, Jr.:

Well the same six did not constitute the majority of the conference committee.

And it would have been so simple, had the committee felt this way to add one sentence in the conference committee report to this effect.

It’s just unrealistic for me to believe that in the face of a contrary interpretation as of the time the conference committee must have considered this —

(Inaudible)

Jerrold Scoutt, Jr.:

There is nothing in the record that specifies when they met.

The report -?

Byron R. White:

Their reporting was a legislative action in one day?

Jerrold Scoutt, Jr.:

Their report is dated the 28th of June.

These debates took place on the 29th.

Byron R. White:

But these reports actually came out of the quorum and pass it?

Jerrold Scoutt, Jr.:

Yes sir.

It did.

And as I said I think the reason for the debates was because of the Board action in the Transatlantic Case.

Earl Warren:

Mr. Neaher.

Edward R. Neaher:

Mr. Chief Justice and May it please the Court.

I think it is clear from the arguments, a counsel for the Board and for the supplementals that what they are trying to say is that the Bill on its face and these committee reports clearly support the Board’s authority to permit or authorize these inclusive tours.

And for that reason, they say, you should pay no attention to what was said in the debates.

That was essentially, I would say from my reading of the District of Columbia Circuit’s opinion, the basis on which that Court proceeded to arrive at a different result than did the Court of Appeals for the Second Circuit that the Bill and the reports were clear on their face in favor of this.

We analyzed the bill and we analyzed those reports, and we can reach a very contrary conclusion for these reasons.

Take the bill on its face.

Edward R. Neaher:

It makes no mention of inclusive tours at all.

It speaks of chartered trips, a term not otherwise defined.

But the purpose of the bill was to create for the first time, a lawful basis for the operation of what has now come to be known as supplemental air carriers.

And supplemental air carriers were to engage in supplemental air transportation.

Abe Fortas:

And where does the authority for scheduled carriers to engage in all expense trip activities come from?

Edward R. Neaher:

The only authority if you can call it that is the fact that ever since the Act was adopted in 1938.

There has been a provision known as 401 (e) which said that certificated carriers under the Act could under regulations of the Board engage in off route, chartered trips and other special services.

I think the Court is well aware of the fact that the 1938 Act set up an aviation system in this country, founded on the principle that all air carriers engaged in common transportation, common carriage would be certificated, and this with designed routes, fair structures and so forth.

Charter operations were something aside from scheduled transportation.

And what Congress wanted to make clear was that it would recognize the right of a certificated carrier to depart from its route services and engage in a form of charter transportation or other special services without being in violation of the Act so long as what was done was done for pursuant of Board regulation — (Voice Overlap).

Abe Fortas:

That’s fine.

Now in the legislation on the nonscheduled carriers or supplemental carriers as they’re now called, does that authorize them to engage in charter service?

What is the precise language?

Edward R. Neaher:

No, Mr. Justice, we say it does not.

Abe Fortas:

What is the precise language for the supplemental carriers?

Is any language that’s comparable to the language you just read to me with respect to the scheduled carriers?

Edward R. Neaher:

Only the 1962 Act.

Abe Fortas:

Would you be kind enough to read the phrase.

Edward R. Neaher:

Yes, the 1962 Act as amended — yes, I’m a little confused here.

The only provision in the 1962 Act says this, ?

Supplemental air transportation means charter trips in air transportation other than the transportation mail by aircraft rendered pursuant to a certificate of public convenience and necessity issued pursuant to Section 401(b)(3) of this Act to supplement the scheduled service authorized by certificates of public convenience and necessity issued pursuant to Sections 401.

Abe Fortas:

Then why isn’t the history, the administrative history of the word charter with respect to the scheduled carriers pertinent here?

That is to say if the word charter in connection with scheduled carriers was construed as years went by to permit them to engage in the business of all expense tours.

Why should the word charter here — let me put it this way.

Isn’t that relevant to the construction of the word charter as used in the 62 Act?

Edward R. Neaher:

I will try to answer it in this manner.

First, one has to bear in mind that only the certificated carriers enjoy the privilege of individually soliciting and ticketing members of the public for air transportation.

Secondly, the supplemental carrier so-called before they became such — were known as non-scheds and regulars, never had that authority at all from 1938 up to 62.

Abe Fortas:

I understand that but suppose we get beyond that point.

Suppose we say that the charter service being fringed by the supplemental carriers is not subject to condemnation on the grounds — that it is a point-to-point or individually ticketed service.

Abe Fortas:

And then we get to the naked question of what does the term charter mean?

Edward R. Neaher:

Well the term —

Abe Fortas:

Isn’t the question I’m asking you is why isn’t the administrative, the practical interpretation of that word in the case of the certificated carriers relevant to the interpretation of the word in the 1962 Act with respect to the supplemental carriers?

Edward R. Neaher:

Well, I think the most direct answer I can give Mr. Justice is this — right up to this very moment, charter trips under Section 401(e) off route does not include the right to individually solicit even for the certificated carriers does not include the right to individually solicit or ticket the general public.

Historically in air transportation, the term charter had a well understood meaning.

It meant not simply the lease of an aircraft for air transportation purposes, but it meant that when the so-called chartered aircraft was used for charter purposes, excluded was any patronage for that charter being derived from solicitation of the general public in individual ticketing of the general public or the use of travel agents to fill that airplane.

Charter groups were not groups formed for travel.

They had to be groups that preexisted that utilized the aircraft in effect as a charter it does for its own purposes and not as is done here by a travel agent who in turn walks right outside and says, I have an airplane.

You buy a ticket for me and fill that airplane.

That is not charter.

That concept of charter would practically destroy charter as a legal concept in air transportation because it would mean that supplemental air carriers would enjoy the very same individual ticketing privilege of the general public that only the certificated carriers are supposed to have under their certificates which incidentally supplementals could have if they wanted to apply for certificates and were prepared to assume the financial burdens as well as the benefits of that kind of certification.

Byron R. White:

Do you think the supplemental certification can claim a charter that includes not only the charter plane of the travel agent and he is soliciting the general public from themselves —

Edward R. Neaher:

Well, Mr. Justice, that’s an interesting comment because we think they would not take that position and we think it’s strange that they do not.

We would think —

(Inaudible)

Edward R. Neaher:

Well, I wanted to say that in the supplementals brief to the court below, they attached their brief to the District of Columbia Circuit.

And in that brief, they make this statement.

The supplemental airline may hold out nothing — no.

Thus a supplemental airline may not offer to sell individual transportation to anyone anywhere.

And that’s what we say is what is wrong with inclusive tours.

Abe Fortas:

But is it necessary to include there, saying that they can get (Inaudible) certification.

Edward R. Neaher:

Other than Board regulations which now exist which do not provide for that, the Board Regulations adopted under this authority provide only that tour operators in conjunction with the supplemental air carriers may do this soliciting and ticketing even though the tickets they do issue to the public are tickets of these supplemental carriers and it’s the carriers who control the plane and whose personnel fly that plane.

Abe Fortas:

Could that charter — make a charter deal with the office and this would be the officers you see for all expense tour for 100 people.

Edward R. Neaher:

They certainly could, Your Honor.

Abe Fortas:

And no doubt about that.

Edward R. Neaher:

No doubt about that.

Abe Fortas:

Do you think they could go ahead and arrange for the hotel and travel and visit to nightclubs, they don’t mean that, whatever else is involved.

Edward R. Neaher:

They could do a lot.

Yes, indeed.

These inclusive tours as it is made clear in our brief by the way is sometimes used interchangeably with the time all expense paid tour.

Edward R. Neaher:

The inclusive tour is something considerably less than that we believe.

Abe Fortas:

So you don’t really literally interpret what Congressman Harris said on the floor to exclude all expense tours, do you?

Edward R. Neaher:

On an individually ticketed basis, yes.

Abe Fortas:

I’m not talking about that.

Edward R. Neaher:

Oh no!

Abe Fortas:

About his words, he didn’t say on an individually ticketed basis or otherwise.

Edward R. Neaher:

No, Your Honor, I certainly —

Abe Fortas:

No, you don’t rely on that.

Edward R. Neaher:

No.

As a matter of fact Your Honor, I had right here at the head of my notes to point out at the outset that although it is TWA, Pan America, and American who are opposing what the Board has done here, I do want to make it clear that we are not trying to undermine the economic stability of these supplementals and foreclose them from the chart of business at all.

We are talking about what I would call five little words, five little words in parenthesis, inserted in their certificates along with the general grant of charter authority, these five words saying including inclusive tour charter.

(Inaudible)

Edward R. Neaher:

Right, Right.

But they say — the Board says in accepted meaning, what we say simply means individually ticketed travel which violates the basic structure of this 1962 Act which Congress meticulously worked out if that Act was the handy work of primarily the House committee headed up by Chairman Harris.

The Board had submitted a bill.

The supplementals had submitted the bill.

The Senate worked on a bill.

The Bill that emerged from the conference committee was the House bill.

And I want to point out one significant statement since what we are talking about here is the Bill on its face and whether these committee reports do support the position of the Board.

The committee report —

Byron R. White:

So are you suggesting that under your position,(Inaudible)

Edward R. Neaher:

I believe so to this extent.

I’m not familiar with the mechanics when —

Byron R. White:

(Inaudible)

Edward R. Neaher:

It would not — in other words, it would not be (Voice Overlap) it would be to members of the Elks.

I’m distinguishing the general public at large from the membership of organizations which represent the normal and usual type of charter activity.

Byron R. White:

(Inaudible) can deal with individual members of those (Voice Overlap)

Edward R. Neaher:

Oh no!

Not with individual — I’m sorry I misunderstood.

Not with individual members of those organizations but with the organization.

Byron R. White:

So they couldn’t have to make each deal with the organization.

Edward R. Neaher:

That is right.

It could make — it could make the same deal with General Motors operating to give its distributors or its employees an all expense tours as a reward or a bonus or something like that.

The essential objective of Congress in the 1962 legislation was to sharply differentiate between supplemental air transportation defined as charter trips on the one hand and individually ticketed services on the other.

Now throughout here, the government and the supplementals have tried to give individually ticketed services, some sort of a special meaning, meaning only point-to-point route type services so-called.

Well the first answer to that is, when the non-scheds had no routes, had no legitimate authority prior to 1962, they operated so-called point-to-point services on an individually ticketed basis.

And in fact, in the big problem with the non-scheds that was dealt within this legislation was the problem of trying to keep the supplementals from transporting people with such frequency and regularity often through pooling their separate flights and the like.

That their charter operations were counted along with their so-called individually ticketed operations to determine whether or not they were evading the statutory prohibition against such regularity and so forth as to demand that they’d be fully certificated under Section 401.

Hugo L. Black:

Is that the basic thing —

Edward R. Neaher:

That is right.

The overall purpose of the statute, we say that Congress had a definite objective in mind which was to keep the supplementals away from direct approach and by direct, I also mean through travel agents, directly offering services to the general public as distinguished from charterable groups.

Hugo L. Black:

Did it appear there that they will get back to regular schedule service (Inaudible)?

Edward R. Neaher:

I can only say that I know from the legislative history that that was the fear of Congress.

That Congress recognized that for some ever since World War II, when large aircraft after the war came into use large aircraft and trained flight personnel.

That it was no longer dealing with these small air carriers but it was dealing with the new potent group of air carriers who were not certificated and who through one device or another were encroaching on the certificated carriers operations whether by charter or by individual ticketing.

As these supplementals however went along through the 50s, their charter operations became of more importance to them largely because first of all, they were charter operators for the government, for the military.

They also carried organization and so forth, all of this it is true under regulations, devised by the Board not so much to define charter trips but to see to it that they didn’t encroach on the certificated carriers’ routes and invade their markets of individually ticketing and so forth.

The Board made various attempts however because of the enforcement problems.

First, to give them an exemption authority, that was declared illegal by the Court in 1956.

Then it worked on the matter a little while longer and then came up with a limited certificate authority.

That was declared illegal by the Court in 1959.

So when the supplementals talk about a preexisting authority of the Board to deal with this problem, they are talking about a nonexistent authority.

Abe Fortas:

Could I put a case to you, because I’m a little barefooted how anything can be phrased here or stated to carrier on what you have in mind, let me ask you this.

Let’s suppose that a travel agent went to a supplemental carrier, and said, I want to charter a plane for all expense tours, such and such, and such, and such places.

And the supplemental carrier says okay.

And it turns out that the travel agent has raised in the supplemental tour for the Washington D.C. Ski Club which is composed of some people who have got together and they decided that they make up to Friday of 120 people or whatever it is to tour some skiers.

Now on what side of the line does that fall with respect to the statutory authorities?

Edward R. Neaher:

If that ski club qualifies —

Abe Fortas:

Well, that’s a ski club and that’s all there is with the people who like to ski (Voice Overlap)

Edward R. Neaher:

If the ski club qualifies under the existing Board regulations as a charterable group, there’s absolutely no question —

Abe Fortas:

Do the regulations now talk about whose charterable and who’s not?

Edward R. Neaher:

Oh yes, very detailed regulation.

Abe Fortas:

Is the ski club charterable?

Edward R. Neaher:

Well, any group that has preexisted that isn’t formed for the purpose of the travel.

That’s where the rub is.

A group formed for the purpose of the travel is not really a bona fide group.

Abe Fortas:

I see.

That’s where you draw the line.

Edward R. Neaher:

Right.

Hugo L. Black:

I have had some letters from lawyers association (Inaudible) inviting me to join the charter.

Edward R. Neaher:

So have I Your Honor.

Hugo L. Black:

Around the world or around part of the world.

Edward R. Neaher:

Yes.

Hugo L. Black:

They said, Since you’re a lawyer, we will take care on our chartered trip, is that all right?

Edward R. Neaher:

Well if you’re a member of the organization?

Hugo L. Black:

Well, I’d be a lawyer but I wouldn’t be a member of the local organization that’s getting up the trip.

Edward R. Neaher:

I would have a little difficulty if you weren’t a member of the organization.

After all the city Bar —

Hugo L. Black:

If it is the lawyer?

Edward R. Neaher:

Yeah, just the lawyer.

I don’t see how that could be legitimate because I would think that your only affinity or relationship with the group would be simply to go on the trip.

Hugo L. Black:

Well that would be a part of it, if I was.

Edward R. Neaher:

But for instance the association of the Bar in New York City frequently each year, charters a trip.

Hugo L. Black:

There must be some kind of an association.

It has an existence where it can decide that it wants to take so many people in its organization on a chartered trip, and it arranges, and it can then make the arrangements.

Edward R. Neaher:

That is right.

Hugo L. Black:

But they cannot do it unless they are members of that organization.

Edward R. Neaher:

That’s right.

Hugo L. Black:

What you’re afraid of is a individual purchase by the people who are going to travel.

Edward R. Neaher:

The opening up of the public at large to the solicitation and ticketing activities of the supplemental, we say such transportation is not supplemental to the transportation of the certificated services.

Edward R. Neaher:

It is not supplemental.

It’s substitutional.

Hugo L. Black:

What does this mean in the statute?

Supplemental and transportation is defined as charter trips in air transportation to supplement scheduled service which the regular route service is authorized to provide, is that right?

Edward R. Neaher:

Yes.

Hugo L. Black:

According to the statute?

Edward R. Neaher:

Those are the words of the statute, yes.

And your question, sir, I didn’t —

Hugo L. Black:

What do they mean?

Edward R. Neaher:

We say they mean this.

This is Chairman Harris giving his definition of charter in air transportation.

The law and I quote this.

It’s in our brief.

The law is well established that in air transportation charter means essentially the lease of the entire capacity of an aircraft for a period of time or a particular trip for the transportation of cargo or persons and baggage on a basis which does not include solicitation of the general public or any device where individually ticketed services would be offered or performed under the guise of charter.

Hugo L. Black:

What you say then is that it’s all right.

These services are to supplement the regular scheduled carriers.

It can only be done on a group basis.

Edward R. Neaher:

I do on the theory —

Hugo L. Black:

That’s the difference.

Edward R. Neaher:

That is the fundamental vital difference that the certificated carriers serve the general public at large and are alone permitted to individually solicit and ticket those people for carriage on their airplanes.

The supplemental carriers have been given another backyard.

That backyard is the field of charter trips only which throughout the whole period until these orders came down never meant other than charter of a group, and to this day, it still mean as far as the certificated carriers are concerned precisely that the —

(Inaudible)

Edward R. Neaher:

In what respect?

(Inaudible)

Edward R. Neaher:

I said if the —

(Inaudible)

Edward R. Neaher:

They said that they charter it to the Elks or the Masons or anyone Mr. Justice Harlan, under Board regulations, if there is a preexisting group which qualifies for charter transportation.

I don’t care what name you give it for what purpose it is formed.

I’m not saying that only commercial organizations or military organizations make charter planes.

Edward R. Neaher:

Social organizations may and do.

The General Motors does.

I suppose the — as a matter of fact, I think perhaps the most graphic illustration of this is found in the advertising of the — one of the supplemental carriers which we have included in this appendices to our brief.

This is an ad which appeared in the New York Times Magazine in December about renting a plane.

And it says, —

It’s simple.

We rent our planes directly through travel agents to fraternal and social clubs for business organizations just about everybody belongs to some organizations like rotary or the ladies auxiliary or a ski club or professional association.

Any group like these can use rental planes to get to conventions or vacations — these (affinity charter), now that term is derived from Board regulations which speak about a group being bona fide on an affinity basis.

The people are united in a common enjoyment, a common pursue, common pleasure, you name it, that’s bona fide.

We’re not trying to cut that out.

Abe Fortas:

You don’t agree that the Court of Appeals here has thrown out the elks with the individual passenger.

Edward R. Neaher:

We do not.

Abe Fortas:

The Court of Appeals opinion reserves a possibility that the supplemental carriers can make a deal with the (Inaudible) of the ski club or so on.

Edward R. Neaher:

The Court of Appeals focused on the individual ticketing aspect in its opinion and I remember this, it is clear, it was speaking about the split charter problem which came up as to whether the plane in effect would be divided among two groups rather than one group.

It is clear that the fact that the Board has the power to define charter to include split charters siding this case in 348 F.2d, a device permitting the Masons and Elks each to charter one half of the capacity of an aircraft, does not mean that the Board is free to adopt a definition that contravenes basic policies laid down in the Act, to permit the selling of individual tickets to the general public in direct competition with the regularly scheduled airlines regardless of whether such selling is done through the medium of a travel agent who has first chartered the plane does violate basic policies of the Act.

That is the narrow issue here, Your Honors.

Just those five little words including inclusive tour charter authority.

Hugo L. Black:

Do you force the Brother Rotarians to limit themselves to Brother Rotarians or do you let them take in some coordinates?

Edward R. Neaher:

Well if they want to unite on a split charter, I’m sure we couldn’t object to that.

I would expect that in these days of ecumenicism people should get together.

But that, I think the issue has been focused upon here that the basic evil which Congress was well aware of here was the past difficulties that the Board itself have to had in endeavoring to enforce the Act against the large and I think affluent group of un-certificated carriers who were continually doing what they could to siphon off passengers, individual passengers from the certificated airlines.

Hugo L. Black:

Suppose a travel agent proceeded in getting the 200 people who want to make a trip to Europe had no charter.

He had to get them to make the trip to Europe in certain places.

It asks for a chartered plane, could he get it?

Edward R. Neaher:

After it had already formed the group?

Hugo L. Black:

That’s right, already formed the group.

Edward R. Neaher:

In my judgment that group would not under Board regulations qualify as a group that would be bona fide.

In other words, it would have been a group formed for travel.

We are talking about here about groups in terms of groups that are groups not formed for travel although they are free —

Hugo L. Black:

That’s one other difference between that you say that they cannot — if they’d be a preexisting group, there must be a preexisting route?

Edward R. Neaher:

That’s right.

Hugo L. Black:

And that they cannot be in a new group formed for travel —

Edward R. Neaher:

Formed for travel —

Hugo L. Black:

Whatever it is to be formed if you’re going to make a trip because that binds them all doesn’t it, in a new group.

Edward R. Neaher:

Oh no, I don’t think it does.

I think anyone can form a group for any purpose today so long as the precise specific purpose of the formation is not in effect to form a group to take a charter.

You can form a group —

Hugo L. Black:

Now they form of a ski group as my brother Fortas could get that could go up to New England next winter.

And then they decide after that, they have a charter plane, can they do it?

Edward R. Neaher:

The only answer I can give is, if they have actually formed that group and it is a bona fide group under the Board of Regulations, they maybe eligible to workout a charter arrangement.

We are not trying to bar the groups that are formed without being formed specifically for the purpose of traveling on a particular charter or bit of transportation.

Earl Warren:

We’ll recess now Mr. Neaher.

Edward R. Neaher:

Thank you.