OST-98-3817 / OST-98-3819 / American / Executive / Dallas Love Field / Joint Reply of American and Executive to Continental and Legend / June 2, 1998

Application of :

under 49 U.S.C. 40109 for exemption (Dallas Love Field condition)

Application of:

under 49 U.S.C. 40109 for exemption (Dallas Love Field condition)

On May 6, 1998, American Airlines, Inc. and Executive Airlines, Inc. d/b/a American Eagle filed applications asking the Department to update their certificates of public convenience and necessity to reflect a 1997 amendment to the Wright Amendment and to adopt the same type of general incorporation language that the Department has used in other recently issued certificates, including those of American Eagle Airlines, Inc. (Order 98-4-24, April 23, 1998) and Kiwi Airlines, Inc. (Order 98-4-31, April 27, 1998). This request was necessary only because American's and Executive's certificates copied parts of the original Wright Amendment verbatim rather than incorporating the Wright Amendment by reference.

In making this simple request, American stated that it has "no intention of operating aircraft in a manner that is inconsistent with local law or Dallas' proprietary powers, so long as Dallas enforces these laws on a non-discriminatory basis" (American Application, paras 13, 14). The prayer for relief only asks for language that incorporates the Wright Amendment by reference. Nothing could be simpler. The language requested by American and Executive does not interpret the Wright Amendment or decide any issues of Federal preemption, proprietary powers, and Federalism that are being litigated in the Texas courts. These issues—all of which are critically important to the cities of Fort Worth and Dallas, DEW International Airport, and the airlines serving DEW—cannot be properly decided within the context of American's and Executive's pending applications.

Surprisingly, this straightforward request has drawn answers from Continental Airlines, Inc. and Legend Airlines, Inc.—both of whom are adverse to American and Fort Worth in pending lawsuits. Continental's and Legend's answers misconstrue the application and the impact of an order granting the requested relief.

Continental argues that the Wright Amendment's commuter exception allows regional jets to operate from Love Field without restriction. /1 This argument is irrelevant to the pending applications since the general incorporation language that American and Executive have requested says nothing about whether regional jets can fly unrestricted by the Wright Amendment. It simply states that American must operate consistent with the Wright Amendment. If there is disagreement as to what the Wright Amendment allows, that dispute can be addressed in an appropriate proceeding. /2

Continental's arguments regarding the commuter exception are not only out of place in this proceeding; they are wrong. Like any statute, the intent of the Wright Amendment must be ascertained within its historical context. MCI Telecommunications Corp. v. AT&T, 512 U.S. 218, 228 (1994); Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 608 (1979). As the Department recently noted in defending its 1997 interpretation of the Wright Amendment:

1/ In addition to disregarding the intent of the commuter exception, Continental incorrectly assumes that Executive's certificate already incorporates the Wright Amendment's commuter exception. In fact, it does not. This is yet another reason why the certificates of American and Executive need to be updated. Whatever the scope of the commuter exception, both American and Executive have the right to provide service thereunder.

2/ Continental also argues that the certificates of other airlines should also be amended. American has no objection to the amendment of any certificate in the same manner as requested herein.

Brief of the United States Department of Transportation before the Fifth Circuit in Astraea Aviation v. DOT, Cause No. 96-60802, at 20-21, 24 (1997).

Continental ignores this history and the intent of the Wright Amendment. Instead, it improperly relies on Continental Airlines Inc. v. DOT, 843 F.2d 1444 (D.C. Cir. 1988) to support its interpretation. In that case, the Department held that the certification type of an airline did not determine whether it could operate under the commuter exception. In so concluding, the Department emphasized that the commuter exception permitted only "short-haul" operations. The Department reasoned that when Congress specified 56-seat aircraft—which at that time meant only turboprop service—it reasonably assumed it was limiting the range of service offered under the commuter exception. Order 85-12-81 (December 31, 1985). Defending this order on appeal, the Department explicitly distinguished jet service from the turboprop aircraft that Congress envisioned would operate under the commuter exception (Attachment l).

On appeal, the D. C. Circuit agreed, noting that "the purpose of the Love Field Amendment was to limit the airport's operations to 'short-haul service."' Continental Airlines, 843 F.2d 1453-54. This conclusion is consistent with other appellate court decisions addressing the Wright Amendment. Cramer v. Skinner, 931 F.2d 1020, 1034 n.19 (5th Cir.), cert denied, 502 U.S. 907 (1991) ("Congress enacted the Love Field Amendment to discourage the use of Love Field for long distance flights"). There is no contrary authority. Continental's assumption that it can operate unrestricted long-haul service from Love Field using jet aircraft is simply not supported by the law.

Legend's answer is nothing short of frivolous. It argues that American's application should be denied because American did not discuss its DFW Use Agreement. American did not discuss its Use Agreement because that agreement has relevance to the certificate that the Department will issue to American. Apparently, Legend believes that the Department's certificates of public convenience and necessity should reflect every exercise of local proprietary powers and every contractual obligation that, even arguably, impact on a carrier's right to operate. By this reasoning, every certificate should reflect the LaGuardia and DCA perimeter rules; the slot rules at DCA, O'Hare, White Plains, and Orange County; aircraft size restrictions at facilities such as Kansas City's downtown airport; and innumerable other instances in which an airport has exercised the local proprietary powers expressly preserved by the Airline Deregulation Act. Legend's position is baseless, and has no support in DOT precedent.

Moreover, Legend's argument rests on a spurious reading of American's DFW Use Agreement, which in fact provides that American will operate at DFW to the extent required by the Dallas and Fort Worth Concurrent Bond Ordinance. If, as Legend alleges, the Bond Ordinance is no longer effective, then the Use Agreement—which merely refers to the Bond Ordinance—cannot operate as a bar. Likewise, if, as American and Fort Worth contend, the Bond Ordinance is a valid exercise of proprietary powers, no airline—whether it is a DFW signatory or not—can operate from Love Field in a manner that is inconsistent with the Bond Ordinance.

In any event, DFW International Airport is more than capable of enforcing the contractual obligations of its signatory airlines. DFW does not need to rely on Legend to assert and protect its contractual rights within a ministerial administrative proceeding that merely asks the Department to update language in American's and Executive's certificates.

The remainder of Legend answer is based on its apparent inability to comprehend American's application and American's position in the lawsuits pending in Texas. Yet, paragraphs 13 and 14 of American's application plainly reconcile American's application with its litigation position. As stated, American believes that Dallas properly exercised its proprietary powers in enacting the Bond Ordinance. American has no intention of operating inconsistently with the Bond Ordinance so long as the Bond Ordinance is enforced evenly and fairly. However, if the Bond Ordinance is not enforced by the courts or by Dallas, American intends to compete at Love Field. There is no inconsistency in this position. All airlines should have the right to compete at Love Field or DFW, consistent with Federal laws and the proprietary powers of Dallas and Fort Worth. Although Legend wishes it were otherwise, there is no double standard as to who can operate at Love Field; all airlines have the right to compete at Love Field consistent with applicable local and Federal laws. Dallas and Fort Worth—and/or the Texas courts—will define the local laws and their enforceability. American's application merely asks that its Federal certification accurately reflect Federal law. American will, at all times, operate in accordance with both Federal and local laws.

The Department should promptly amend the Dallas Love Field condition in American's and Executive's certificates to conform with applicable Federal law.

Respectfully submitted,

R. BRUCE WARK

Senior Attorney American Airlines, Inc.

CARL B. NELSON, JR.

Associate General Counsel American Airlines, Inc.

June 2, 1998