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					                                           BEFORE THE
                                 DEPARTMENT OF TRANSPORTATION
                                    OFFICE OF THE SECRETARY
                                        WASHINGTON, D.C.


__________________________________________
                                          )
                                          )
      LOVE FIELD SERVICE                  )
                                          )                           DOCKET OST-98-4363
      INTERPRETATION PROCEEDING           )
                                          )
__________________________________________)



                                REPLY OF LEGEND AIRLINES, INC.



I.      INTRODUCTION

        In responding to this Procedural Order, American Airlines (“American”), Dallas/Fort

Worth Airport (“DFW”), and the City of Fort Worth (“the American parties”) have multiple

objectives. As they have shown from the day they began their 30-year odyssey to put Southwest

out of business, they understand that delaying any action that could allow new Love Field service

will add to the costs of their competitors and make it more difficult for anyone to initiate business.

As a multi-billion dollar company that has been provided valuable worldwide assets by the United

States government, American questions the authority and veracity of those government officials.1

American duplicitously argues that there is “no emergency” which warrants this proceeding, yet




1
 American’s new television ads repeat the theme that American already is pushing through newspaper and radio
ads: that Washington lawmakers are wrongly interfering in a local issue, and that Fort Worth and Dallas officials
should decide the fate of Love Field. (“Crandall drops through-ticketing opposition at Love,” Dallas Morning
News, December 3, 1997.)
says the issues involved are of “nationwide significance” in the very next sentence.2 (Comments

of American, p. 2). American criticizes the expediency of the Department of Transportation’s

(“Department”) interpretative proceeding, but rebukes Legend and other parties for trying to slow

the state court proceeding so as to be able to have the benefit of the Department’s decision.

        The conflicting arguments raised by American demonstrate that their only objective is to

manipulate the system and expand their control of the market. American is willing to expend

several million dollars a month to prevent Legend Airlines and Continental Express from

operating. They fully understand that Legend, as a start-up carrier, does not have the financing

to expend that amount of money and resources indefinitely and that, at some point, the predatory

scheduling action taken by American against Continental (LaGuardia-Houston flights) will

eventually impose a cost on Continental that will force that carrier to change its Love Field plans.

        An editorial in the Fort Worth Star-Telegram, dated September 25, 1998, explains the

delay strategy of the parties and the need to keep the issue in front of a Fort Worth judge who is

elected by the residents of a community in which American and DFW are the largest employers.

The editorial, in a newspaper in which the largest advertiser is American, stated:

                 Here’s to the chess master who thought so many moves ahead in
                 framing the lawsuit that Fort Worth filed to challenge efforts to
                 expand interstate commercial air passenger service at Dallas Love
                 Field.

                 That’s why Fort Worth’s lawsuit, filed in state District Judge Bob
                 McCoy’s court in Fort Worth, sought only a declaratory judgment
                 that Dallas has the authority to regulate air passenger service at
                 Love Field and the obligation to protect Dallas/Fort Worth Airport
                 from injurious competition at Love Field.

                 Had an injunction been sought to prevent Love Field expansion --
                 allowed by changes made by Congress in the Wright Amendment
2
  American also states that “the Department is obligated immediately to halt Continental’s regional jet operations
from Love Field” (page 76), although it claims that these issue are not within the Department’s authority.


                                                         2
               last fall -- then Dallas, the defendant, might have found solid
               grounds for demanding that the lawsuit be transferred to federal
               court.


       The editorial discusses how the Shelby Amendment allows expansion at Love Field and

that the effect of the court action is to enjoin services permitted by that federal law. Nevertheless,

in board rooms at DFW and Fort Worth, a celebration is in order because the state court has

already imposed new costs on Legend, Continental Express, and Dallas, has further delayed the

date of possible new competition, allowed discovery denied by the Department, and has allowed

American to expand its control over airline service in the entire area. Moreover, this state court

judge has effectively delegated to Fort Worth’s counsel the preparation of a summary judgment to

block scheduled airline service. Judge McCoy, who was recently asked who is the head of Civil

Aeronautics Board, has apparently decided that he is, along with other members being Dee Kelly,

Don Carty and Jeff Fegan.

       The American parties are evidently more interested in delaying and setting up a basis to

appeal the Department’s order than they are in responding to it.

II.    SUMMARY OF LEGEND’S POSITION

       In its comments, Legend presented answers to five of the six questions posed by the

Department in its Orders implementing these proceedings:

       1.      Neither a four-state perimeter rule nor a flexible, ad hoc control over Love Field

are justifiable by the legitimate needs of a multi-airport proprietor. The local controls are,

therefore, completely preempted by 49 U.S.C. § 41713(b)(1). National Helicopter Corp. v. City

of New York, 137 F.3d 81 (2d Cir. 1998).




                                                  3
        2.       The Shelby and Wright Amendments obviously and similarly preempt any local

action, including the proposed Love Field perimeter rule, that seeks to nullify those Acts of

Congress. California Fed. Sav. & Loan Ass’n v. Guerra, 479 U.S. 272 (1987).

        3.       The Department’s prior decisions regarding the commuter airline exemption of the

Wright and Shelby Amendments are correct, and 56-seat aircraft may provide unlimited service

from Love Field. See Continental Air Lines v. Department of Transportation, 843 F.2d 1444,

1454 (D.C. Cir. 1988).

        4.       The Wright Amendment permits unlimited operations by 56-seat aircraft, with no

restrictions on through ticketing, interlining, or ticket sales.

        5.       The Department has the authority to apply its expertise to the issues in this

proceeding, and the Fort Worth parties’ race to the Tarrant County courthouse do not deprive the

Department of jurisdiction over federal aviation matters. See New England Legal Foundation v.

Mass. Port Auth., 883 F.2d 157 (1st Cir. 1989).

        In addition, Legend has shown that:

        1.) the controls over operations, routes, and services at Love Field are exclusively
        federal;

        2.) Dallas’ extremely limited proprietary powers over Love Field do not permit
        local regulation except in extremely narrow circumstances and under strict
        requirements of the Airline Deregulation Act and the Commerce Clause; if the
        restrictions imposed by the Wright Amendment were locally imposed, they would
        be unreasonable, arbitrary and discriminatory;

        3.) Dallas’ proprietary powers certainly do not permit DFW to determine the
        routes and types of planes that can be operated at Love Field;

        4) The Department has clearly affirmed Legend’s authority to use any size
        aircraft with 56 seats or less and that regional jets are permitted under the Wright
        Amendment.3
3
 In a “Joint and Agreed Motion of Petitioner and Respondent To Dismiss Petition for Review” (Astrea Aviation v.
Department of Transportation, No. 96-60802, November 5, 1997) the parties stated:


                                                       4
         The American parties have opposed the City of Dallas, Southwest, and Legend on each of

these issues. Resorting principally to disingenuous arguments and misleading or untrue factual

statements, these three parties contend that the Department of Transportation has no authority,

special expertise, or jurisdiction over these matters and must defer to the Tarrant County court.4

In any event, they say, the pre-eminent power in the federal aviation system is the proprietary

power of the airport owner (even one such as the City of Dallas that does not claim to have

exercised such power), and its allies. The American parties contend that an airport owner can do

whatever it wants, whenever it wants, without government interference.5 The primary purpose of

the Deregulation Act, according to the American group, was to keep                          meddlesome federal

agencies off the backs of the entities that own and control the airports. Moreover, if there are

questions concerning rulings on such issues, the American parties should be decided by a local

state judge.

         The filings submitted by the American parties to the Department are loaded with irrelevant

material. They reflect an unprincipled approach that is obviously designed merely to delay these

proceedings.      While the Department considers the American parties’ warped legal analyses,

twisted techniques of statutory interpretation, and mountainous irrelevant exhibits, the American


                  Pursuant to the Act, the Petitioner, or any other air carrier, may pursuant to
                  29(a)(2) of the International Air Transportation Act of 1979, operate jet
                  aircraft reconfigured to accommodate 56 or fewer passengers, except for
                  aircraft exceeding 300,000 pounds gross weight, from Love Field to any
                  destination.
4
  They claim that an elected state court judge with no experience in aviation or transportation should rule on issues
involving safety, congestion, the development of DFW, impact on international routes, and prohibit interstate
commerce. They are also asking the state court to review the procedures and validity of Department orders and
interpretation. They are asking this judge to decide whether the Department can fairly rule on these issues and on
issues he has already decided. If not, they have asked him to hold that these issues belong before him..




                                                          5
parties continue to run roughshod over the aviation system in Texas. These tactics should not be

countenanced or rewarded by the Department. For the reasons set forth below, and those in

Legend’s Comments, the Department should issue an Interpretive Order with all due haste and

take every additional measure available to re-establish federal controls and the rule of law over the

federal aviation system. Too much is at stake!

III.     DISCUSSION

         A.       The supposed Love Field perimeter rule, which has never been
                  enacted by anyone with any proprietary interest in Love Field, is
                  preempted by federal law.

         As noted in Legend’s Comments, there has never been a locally enacted perimeter rule in

Dallas or even an agreement to create one. The Joint Bond Ordinance only requires the “phase-

out” of Love Field. It contains no perimeter restriction on operations. Similarly, the DFW

construction contract (generally referred to by American) contains no provisions related to any

routes or services offered at Love Field. Dallas and Southwest agree. See Dallas Comments,

p. 28 (Fort Worth intends to force Dallas to impose and enforce a “perimeter rule demanded by

Fort Worth” but never agreed to by Dallas); Southwest Comments, p. 24 (it is unclear whether

the “local agreement” limits service to the State of Texas “or was somehow transmogrified

through a process we do not understand to include both Texas and its four contiguous states, as

Fort Worth now contends.”)

         The American parties insist that there exist locally imposed enforceable restrictions on

Love Field. The Comment briefs are, however, comically inconsistent with each other, and they

barely even attempt to articulate the bounds of this vaporous perimeter rule. American seems to


5
  If the American parties are correct in the ability of the local parties to overturn the Wright Amendment, their
next action could be to limit all flights to the state of Texas. But then again, if they can do that, why did they have
to litigate against Southwest?


                                                           6
argue that the Love Field perimeter is flexible, as long as the airport is limited to “short-haul

operations.” American Comments, p. 29. The DFW Board, on the other hand, asserts that Dallas

has implemented a hard-and-fast rule banning all interstate operations. See DFW Comments,

p. 16.

         Fort Worth avoids the specifics asked in the question, and instead provides various

examples of proprietary powers, concluding that proprietary powers can be exercised to

“accomplish a limited state objective.” Fort Worth chooses not to address whether the scope of

proprietary powers (which have been upheld in a limited number of cases) is so broad as to permit

the type of restrictions they want at Love Field. The reason, very simply, is they cannot. In its

hometown court, Fort Worth has obtained a TRO and preliminary injunction against Continental

Express because Continental’s Cleveland service would violate “a perimeter rule at Love Field

which confines interstate traffic to Texas and the four contiguous states.”6,            7
                                                                                             This failure by the

American parties to honestly discuss the perimeter rule is not due to sloppiness or an inadvertent

admission. Rather, the American group is trying to “hide the ball.” The American parties have

repeatedly failed to produce any such agreement. By refusing to discuss the actual facts and

issues, and to stick to “one” position, they seek to inhibit the Department’s review of the issues.

         The Department should not be deterred by the American parties’ sleight of hand regarding

the nature of the supposed perimeter rule. It does not matter whether Fort Worth seeks a five-

state perimeter rule or a broad right to shift traffic between DFW and Love Field.                           All

6
  Fort Worth’s Brief in Support of its Temporary Injunction and Temporary Restraining Order, Fort Worth v.
Dallas, No. 48-171109-97, p. 8. Fort Worth has also persuaded the Texas Supreme Court that there exists an
agreement between Dallas and Fort Worth to “allow ‘turn around flights’ to states adjacent to Texas from Love
Field.” In re Continental Airlines, No. 98-0598 (Texas, Sept. 24, 1998).
7
  Or, as Dee Kelly explained the court’s action, “Continental is a marginal player at D/FW. They don’t care about
D/FW,” he said. “Their big concern is their hub at Houston Intercontinental. Their plan is obvious: They want to
weaken D/FW and strengthen Intercontinental at Houston. We have one of the best airports in the world, and they



                                                       7
articulations of the supposed locally imposed perimeter rule, particularly those in the Tarrant

County case, are arbitrary and discriminatory, and are the type of locally imposed restrictions that

have been vehemently opposed by these same American parties. If locally imposed, they would

violate the Deregulation Act, Commerce Clause, and the Airport & Airway Improvement Act.

        The restrictions on scheduled operations at Love Field were imposed by the Wright

Amendment, as modified by the Shelby Amendment. The only reason why this rule has survived

is because it is imposed by federal law. In this connection, it is interesting that throughout the

history of the litigation brought against Southwest Airlines to stop it from operating at Love

Field, this local control over the airport was never raised by the American parties. Moreover, it is

difficult to ascertain exactly what the American parties define as the locally imposed rules

controlling Love Field operations. For example, although the American parties have argued that

through ticketing at Love Field is not permissible under the Wright Amendment (the Department

has also held that through ticketing is not permitted), and that the Shelby Amendment is not

applicable since it has not been agreed to by the local parties, they have decided not to challenge

or even question Southwest’s new through service to Jackson and Birmingham.8 If the Shelby


want to level the playing field.” (Fort Worth Star-Telegram, June 26, 1998.) Imagine the power of three flights a
day to Cleveland.
8
  On November 7, 1997, Fort Worth’s counsel, Dee Kelly, served requests for admissions to the City of Dallas
seeking acknowledgment that the cities of Fort Worth and Dallas had, in connection with the sale of Dallas-Fort
Worth Regional Airport bonds, issued an official statement dated May 29, 1997, as attached as Exhibit 3 to their
request. That official statement contains the following definition of permissible Love Field services at p. 34:

                 A carrier providing service to Love Field to a point in one of the four
                 contiguous states is not forbidden from providing service from that point to
                 other points in other states beyond, but it could not do so in a continuation of
                 the same flight to or from Love Field, or on the same aircraft coming from or
                 going to Love Field, and it could not advertise or promote its service to points
                 in states beyond. While it could not sell through tickets, publish through
                 schedules or offer through fares between Love Field and points beyond the
                 contiguous states, its usual ticketing, scheduling and rate making practices
                 would not otherwise be effected.



                                                         8
Amendment does not control Love Field operations, then Southwest must stop its through

ticketing to Birmingham and Jackson.



        Under this definition, Southwest could not operate its newly introduced connecting services to Jackson
and Birmingham.

         A modified version of Love Field authority derives from the 1998 Appropriations Act (Shelby
Amendment) and the operations of Southwest Airlines to which American has never objected. As a result of the
Shelby Amendment, Southwest now offers continuation of flights to and from Love Field to points beyond the
contiguous states. Southwest advertises, promotes, and publishes schedules and fares for such service, noting that
“Service on these routes was not previously possible, because flights from Lubbock, Amarillo and Midland-Odessa
stopped at Love Field.” Since the American parties have not challenged Southwest’s service, its definition of local
Love Field restrictions appears to vary with the wind or its assessment of competitive impact.

        In 1997, Congress adopted an amendment sponsored by Senator Richard Shelby of Alabama
        (the “Shelby Amendment”), which expanded the permissible geographic scope of service from
        Love Field to include the States of Alabama, Mississippi, and Kansas. The Shelby Amendment
        also modified the Wright Amendment to define the term “passenger capacity 56 passengers or
        less” as including any aircraft of 300,000 pounds or less gross weight, “if the total number of
        passenger seats installed on the aircraft does not exceed 56.” Public Law 105-66, §337.)
        Recognizing the Shelby Amendment to be the law of the land, on or about November 11, 1997,
        Southwest began offering for sale through and connecting service between Love Field and both
        Jackson, Mississippi and Birmingham, Alabama. In addition, the Shelby Amendment has
        allowed Southwest, for the first time, to offer for sale service between Lubbock, Texas and
        Birmingham; between Amarillo, Texas and both Jackson and Birmingham; and between
        Midland-Odessa, Texas and Birmingham. This service was not previously available because the
        flights serving Lubbock, Amarillo, and Midland-Odessa all stopped at Love Field, meaning
        through and connecting service could not be offered beyond Texas and the contiguous states.
        The relief requested by Fort Worth in the Fort Worth lawsuit would declare that this service
        must stop.

Brief of Southwest Airlines, U.S. District Court for the Northern District of Texas, March 27, 1998.

        The benefits of expanded Love Field service are clear. As Southwest noted in its press statement when it
launched service permitted by the Shelby Amendment:

        Following enactment of the new law by the Congress, Southwest introduced connecting
        service between Love Field and both Jackson, Mississippi and Birmingham, Alabama on
        November 11, 1997. With Southwest’s new service, unrestricted fares in those markets
        were more than cut in half, dropping from $324 to $149 in the Dallas-Jackson market, and
        from $480 to $189 between Dallas and Birmingham.

        “Our ability to serve markets from Love Field is not just an issue of local concern, it is a
        matter of national concern,” Kelleher added. “For example, when Southwest added Jackson
        and Birmingham as destinations from Love Field, it also allowed us to offer service for the
        first time from Lubbock, Amarillo, and Midland-Odessa to Birmingham, and from Amarillo
        to Jackson.” Service on those routes was not previously possible, because flights from
        Lubbock, Amarillo and Midland-Odessa stopped at Love Field.



                                                         9
        Some of the confusing and conflicting statements made by representatives of the American

parties in state court include:

                “The contract between the two cities is what this lawsuit is all about
                . . . this contract has not been preempted and cannot be preempted
                by federal law.”

                “The commuter exception to the Wright Amendment does not
                preempt the covenants or the proprietary powers of Dallas to
                maintain the four-state perimeter rule at Love Field.”

                “Neither the Wright Amendment or the Shelby Amendment has
                preempted the proprietary rights of the City of Dallas to manage its
                own airport.”

                Now, even if the Wright Amendment was deemed to modify the
                covenants, and the covenants were never modified, its still would
                not preempt the proprietary power of Dallas.”

                There’s simply no legal impediment to Dallas exercising its
                proprietary rights, proprietary powers to maintain the existing four-
                state perimeter rule.”
                                                  (Dee Kelly, representing Fort Worth)

                “There is nothing in the Wright Amendment or the Shelby
                Amendment that states that the proprietors of an airport cannot
                enact a more restrictive perimeter rule than that contained within
                the amendments themselves. There is no language in the Wright or
                Shelby Amendments forbidding more restrictive terms by
                agreement of the parties.”
                                  (R.H. Wallace, representing DFW Airport Board)

                “Continental’s actions violate the covenants and the existing four-
                state perimeter rule at Love Field.”
                                                (Dee Kelly, representing Fort Worth)

                “The question at the hearing on this temporary injunction for the
                court to resolve is whether or not the DFW Airport Board is
                entitled to preserve the status quo . . . And preserving the status
                quo here means enjoining Continental Airlines, Inc. and Continental
                Express, Inc. from conducting direct interstate flights between
                Dallas and Cleveland.”
                                   (R.H. Wallace, representing DFW Airport Board)




                                                 10
               “The commuter exception to the Wright Amendment does not
               authorize Continental flights to Cleveland. All the commuter
               exception did was to authorize the CAB to certificate commuter
               airlines with 56 seats or less. It did not, by any stretch, authorize
               long-haul jet service from Love Field.”
                                                (Dee Kelly, representing Fort Worth)

               “What they (opposing counsel) try to argue is that because of the
               Wright Amendment and Shelby Amendments, those have somehow
               preempted the Use Agreement . . . The Wright Amendment doesn’t
               grant any airline the right to do anything.”
                     (R.H. Wallace, representing DFW Airport Board of Directors)

       Perhaps the best response to the contradictory and rapidly changing positions of the

American parties was stated by counsel for Continental:

               “The question then has to be raised is why is it that it is all right for
               us to fly under the Wright Amendment -- under portions of the
               Wright Amendment but not all of it.”
                                (Randy Wilson, representing Continental Airlines)

       Is it a contract? Where does the four-state perimeter rule come from if not Section (c) of

the Wright Amendment? Apparently the American parties believe they can even reduce the four-

state perimeter to impose a two-state or one-state perimeter rule that would force Southwest to

cancel existing operations.

       To add confusion to the ever-changing position of the American parties, on December 3,

1997, American’s former chairman, Bob Crandall, stated:

               . . . the airline no longer opposes ‘through ticketing’ from Dallas
               Love Field.

               Through ticketing would let Love Field travelers buy tickets to
               airports throughout the United States, although the passengers
               would still have to make at least one stop inside Texas or states
               adjoining.

               Asked about through ticketing, a practice American has previously
               opposed from Love Field, Mr. Crandall said the airline doesn’t care




                                                  11
                 about passengers willing to make one or more stops in Little Rock,
                 Ark., Albuquerque, N.M., or other cities inside the restricted area.

        Therefore, under this American “alternative,” through ticketing is okay under the Wright

Amendment (although not through the states added by the Shelby Amendment).9 So which is it?

Does the Wright Amendment apply with or without through ticketing, or does the Shelby

Amendment apply? According to the American parties, it depends who is asking and who

benefits. Apparently, Crandall, Carty and American believe that they will decide what limitations

exist on Love Field operations.

        As noted in the Comments of Legend, Dallas, Southwest, and Continental Express, the

preemption provision of the Deregulation Act sweeps wide, while proprietary powers are tightly

circumscribed. See, e.g., National Helicopter Corp. v. City of New York, 137 F.3d 81 (2d Cir.

1998); Centennial Express Airlines v. Arapahoe County Public Airport Authority, FAA Docket

No. 16-98-05, Director’s Determination (1998). Any local restriction on routes or services is

invalid unless it is narrowly tailored to meet specific, demonstrated needs of the landlord, such as

addressing noise and groundside congestion problems. See, e.g., Western Air Lines v. Port Auth.

of N.Y. and N.J., 817 F.2d 952, 957 (S.D.N.Y. 1986) (expressly noting that a multi-airport

proprietor may “allocate air traffic” as a means of advancing its proprietary interest in addressing

noise or ground congestion problems.)



9
  Contrast this Crandall position on through ticketing and the American parties’ acquiescence to Southwest’s
through ticketing to Birmingham and Jackson to their challenge of Continental’s through ticketing with 50-seat
regional jets:
                  Continental’s through ticketed, through service from Love Field to points
                  outside Texas in two aircraft -- one fewer than 56 seats and one with more --
                  clearly violates the Wright Amendment. If the Department is to comply with
                  its mandate in paragraph (a) of the Wright Amendment, the Department is
                  obligated immediately to halt Continental’s regional jet operations from Love
                  Field.
                               (Comments of American Airlines, Inc., Docket OST-98-4363, p. 76.)


                                                       12
       The American parties argue that federal preemption is virtually nonexistent in aviation

matters. In violation of their ethical obligations to apprise the decision maker of all pertinent

authority, none of these parties cite, discuss, or distinguish the two most recent and persuasive

authorities on local regulation of air services: National Helicopter and Centennial Express.

These two cases present indistinguishable circumstances and indicate that the American parties’

attempts to exert local control over Love Field operations are contrary to federal law. As noted

by the Court of Appeals, “The proprietor exception, allowing reasonable regulations to fix noise

levels at and around an airport at an acceptable amount, gives no authority to local officials to

assign or restrict routes.” National Helicopter, 137 F.3d at 92.

       Instead of discussing National Helicopter, the American parties rely on an odd collection

of miscellaneous legal principles to establish that the proprietary powers of an airport landlord

stand preeminent, without federal oversight or interference. American, for example, cites a

Solicitor General’s brief on a failed petition for certiorari (p. 24), the FAA’s 1981 perimeter rule

for Washington National (p.26), 1981 letters from the Secretary of Transportation to U.S.

Congressmen (p. 27), and a 1981 appellate brief in City of Houston v. FAA, 679 F.2d 1184 (5th

Cir. 1982). Fort Worth and DFW pin their arguments on Western Airlines (upholding the

LaGuardia perimeter rule), City of Houston (upholding the Washington National perimeter rule),

and Arapahoe Co. Pub. Airport Auth. v. Centennial Express Airlines, Inc., 956 P.2d 587 (Colo.

1998). They do not acknowledge that the Department has already decided that Arapahoe Co.

was wrongly decided. See Centennial Express.

       The American parties also rely heavily on legislative history -- ranging from the statements

by Congressman Wright to committee reports -- to support the notion that Congress enacted the

Wright Amendment as a means of establishing Love Field as a short-haul airport. The Wright and


                                                13
Shelby Amendments clearly articulate how Love Field operations are to be constrained, any

discussion of why the restrictions are in place can only be misleading. When statutes contain

particular, detailed instructions regarding conduct, there is little need to consult statements made

by legislators to divine Congress’ intent. See Davis County Solid Waste Management v. U.S.

E.P.A., 101 F.3d 1395, 1405 (D.C. Cir. 1996).          Moreover, the Department addressed this

argument and subsequently dismissed it.

               It follows, then, that Petitioners can derive no support from
               Congressman Wright’s statements that the legislation was intended
               to reexpress the right of local authorities under the Deregulation
               Act to prohibit service inconsistent with regional airport plans. In
               fact, the Love Field Amendment does nothing of the sort. Rather,
               Congress authorized interstate service over the objections of the
               local authorities.

(Brief of U.S. Department of Transportation, Continental v. U.S. Department of Transportation,

page 44, 1986.)

       As discussed at length in Legend’s earlier filing (as well as in Southwest’s filing), the

original purpose of the Wright Amendment was to close Love Field and eliminate Southwest as a

competitor by forcing it to operate at DFW. After failing to achieve that primary objective, the

Wright Amendment compromise allowed Southwest to continue its existing service to the five-

state area. There was no discussion of it as a perimeter rule nor was there any debate about it

being a short-haul airport. Of course, Congress could have made sure that the only service

permitted was within the perimeter rule, with no service beyond those points, by excluding the 56-

seat provision; however, that provision was inserted. Nevertheless, by allowing any size jets to

operate within the five-state area and limiting beyond service to aircraft with no more than 56

seats, Congress’ action ensured that Love Field would remain as an airport with a primary focus

on short-haul traffic. First, limiting any air carrier to operate with no more than 56 passengers is


                                                14
an enormous penalty for any air carrier to accept. No such limitation exists at any other airport in

the United States. Not until 1998, when Continental Express had regional jets with 50 seats and

Legend proposed operations under the Shelby Amendment, did any carrier attempt to operate

under this extremely limiting provision. Second, considering that Southwest and any carrier

wishing to operate jets within the seven-state Shelby Amendment area can operate any size jets,

the number of passengers boarded for those operations will always be significantly greater than

passengers boarded on Legend’s 56-seat aircraft or Continental’s 50-seat aircraft. Based upon

these seat restrictions, gate limitations at Love Field, and Legend’s projections, operations beyond

the seven-state area will not exceed 5% of total Love Field boardings nor will they exceed more

than   0.5% of the total DFW/Love Field boardings.           As American adds to its fleet and

construction continues at DFW, that percentage will be even smaller.

       Although the Shelby Amendment clarified the size of aircraft that can be utilized beyond

the seven-state area, it did not increase the number of seats permitted on those aircraft.

Therefore, Love Field will continue as an airport in which the primary number of operations and

passengers boarded will be destined for short-haul markets. However, since the American parties

(see Bob Crandall’s statement) are now claiming that through ticketing is permissible, the

implementation of through ticketing by Southwest will have a larger impact on changing the

short-haul nature of Love Field than will Legend’s limited operations.

       In contrast to the approach of the American parties, the comments of Dallas and

Southwest properly integrate the holdings of the two perimeter rules that have been upheld, along

with the numerous attempts to impose local restrictions that have been overruled. See Dallas

Comments, pp. 20-28. As noted by Southwest (pp. 24-25), the proposed perimeter rule is invalid

because (a) it burdens interstate commerce, (b) it does not advance an appropriate proprietary


                                                15
interest, (c) it is arbitrary and unreasonable, and (d) it is unjustly discriminatory. Remarkably, the

American-dominated parties do not even attempt to discuss why their proposed perimeter rule is

reasonable.

        American’s arguments regarding Dallas’ proprietary rights are deficient also because

there is no factual basis for the contention that Dallas is a proprietor of DFW. Status as a

proprietor depends upon ownership and control of aviation activities at the facility. Centennial

Express, p. 30. Although Dallas may appoint 7/11 of the DFW Board members, it has no right to

control DFW’s operations.10

        The American parties simply contend, without citation to authority, that a proprietor has a

right to do whatever it wants, as long as there is another airport nearby to receive all air traffic

without discrimination. See DFW Comments, p. 29. Imagine the impact on commerce if this

same principle applied throughout the country and airports were free to shift traffic at will to

other airports. This principle is fundamentally wrong because it ignores the strict requirement

that any “restrictions on rates, routes and services” must be “reasonable, non-arbitrary and non-

discriminatory.” Centennial Express, p. 28, citing British Airways BD v. Port Authority of New

York, 558 F.2d 75 (1977). Although the American parties claim that their rights flow naturally

from the perimeter rules at LaGuardia Airport and Washington National, those rules are markedly

different and a review of those rules show why the already imposed Wright Amendment would be

“unreasonable, arbitrary, and discriminatory.” For comparison:


                         Love Field                       National                  LaGuardia

        Mileage          not specific but                 1250 miles                1500 miles
                         flights as short as              (about to                 with exceptions
10
  The DFW Board’s lawsuits against the City of Dallas make any notion that Dallas controls the DFW Board
implausible.


                                                     16
              333 nonstop miles                change again)
              blocked -- Service
              not permitted to:
              Wichita - 333 miles
              Jackson - 397 miles
              Memphis - 423 miles
              Kansas - 460 miles


Aircraft      56-seat limit for flights        NONE                  NONE
Limitations   outside of Texas and
              border states




Amendments NONE                                Perimeter             NONE
                                               rule changed
                                               from 650 to
                                               1,000 to 1,250
                                               and changes in
                                               definitions of
                                               commuter carrier


Proprietor    City of Dallas                   Metropolitan          Port Authority
                                               Washington Airports   of New York/
                                               Authority - also      New Jersey - also
                                               controls Dulles       controls Newark
                                               Airport               Airport and Kennedy
                                                                     Airport



Operational NONE                               Maximum               Maximum
Restrictions                                   hourly limits         hourly limits
                                               set by FAA            set by FAA


Runway        None - used by                   Limited by FAA to     Limited by FAA to
Limitations   largest aircraft in              Narrowbodies,         3-engine jets,
              world including                  757s                  DC-10s, 767s
              Air Force One



                                          17
        Other        Ban on through                          NONE                      NONE
        Restrictions ticketing, advertising
                     of fares.

        Basis for         Protecting largest airport         Protecting                Airport limitations
        Restriction       in country and one of              airport with              and protecting
                          largest carriers                   significantly             airport with
                                                             smaller number            significantly
                                                             of operations             smaller number
                                                             (Dulles)                  of operations
                                                                                       (JFK)


There is little question that a local proprietor, if it actually attempted to control operations with

rules similar to the restrictions imposed by the Wright Amendment, would be found to be

engaging in unreasonable, arbitrary and discriminatory activity.11

        The American parties’ recent conversion to advocating “proprietary rights” for Dallas is

remarkable in light of American’s strenuous past efforts to defeat the (much more reasonable)

perimeter rule at Washington National. In a 1981 appellate brief, for example, American stated:

                 Does Love Field Have a Perimeter Rule?

                 No!

                 The perimeter rule [at National] is unique. No similar regulation
                 applies to any other airport in the United States.


11
   Although the Wright Amendment has been modified by the Shelby Amendment, the American parties deny that
the Shelby Amendment applies to Love Field since they haven’t agreed to federal law. See Don Carty’s July 6 letter
to employees, in which he states:
                  Last fall, at the urging of a Senator from Alabama, Congress modified the
                  Wright Amendment to permit service from Love to three more states
                  (Alabama, Mississippi, and Kansas), and to allow commuter service from
                  Love using large jet aircraft reconfigured with 56 seats or less. But neither
                  Dallas nor Fort Worth has approved this modification, and they must do so
                  before it can take effect and modify the 1968 bond ordinance.
This was similar to the position taken in 1981 by Bob Crandall when he advised the FAA that American would not
comply with the National Airport perimeter rule.
This comparison assumes that the American parties are correct and that Love Field restrictions imposed by the
Wright Amendment were actually imposed locally, although a local “perimeter” restriction similar to the Wright
Amendment would be “unreasonable, arbitrary, and discriminatory.”


                                                       18
               Should Proprietors Impose Perimeter Rules

               No!

               The perimeter rule is not required for operational or geographic
               reasons. The airplanes that serve National are capable of providing
               nonstop service to points well beyond the 1,000 mile limit.

(Brief for Petitioner American Airlines, American Airlines, Inc. v. FAA, United States Court of

Appeals for the Fifth Circuit (No. 80-2251), page 4, January 22, 1981.) In the same brief,

American noted:

               The Port Preference Clause is the antecedent of the anti-
               discrimination provisions of the Federal Aviation Act and the
               Interstate Commerce Act. As such, the principles of the Port
               Preference Clause are fundamental and of continuing importance.
               The perimeter rule should therefore be declared unconstitutional. . .


               By drawing a circle with a 1,000 mile radius around National the
               perimeter rule clearly discriminates against the states outside the
               perimeter in favor of the states within the perimeter.

Id., page 8-9, 14.

       One of American’s chief allies in Congress, Senator John Tower, advised the FAA that

the National perimeter rule was irrational:

               National Airport represents a unique national asset that should be
               shared equitably and nondiscriminatorily by every state and every
               city in this nation. National is the only airport providing “close-in”
               service to the nation’s capital. Access to National Airport must be
               available to all cities in this country on a fair, equal and non-
               discriminatory basis. Rather than limiting the availability of non-
               stop service to only a few cities which by mere geographic
               happenstance are located within an arbitrarily-determined
               perimeter. . .
                                               * * *
               The perimeter rule is anticompetitive, impedes air commerce,
               inconveniences the travelling public, and artificially creates
               economic inefficiencies. (emphasis added)
                                               * * *


                                                19
              Moreover, the imposition of a prohibition by the federal
              government against the operation by all air carriers of service is a
              fundamental violation of Congress’ aviation policies as set forth
              in the Airline Deregulation Act of 1978 which requires the
              federal government to place “maximum reliance on competitive
              market forces . . . to provide the needed air transportation
              system.” (emphasis added)
                                            * * *
              There is simply no rational basis for permitting some cities, such as
              Miami or Minneapolis/St. Paul, to receive nonstop service to
              National while prohibiting other cities, such as Houston and
              Dallas/Ft. Worth, from receiving nonstop service to National.
                                            * * *
              Moreover, there will be no significant deterioration of service at
              Dulles Airport.

(Letter from Senator John Tower to FAA, May 19, 1981.)

       Congressman Wright made a similar plea on behalf of American:

              I surely have no objection to the FAA paying heed to the legitimate
              concerns of its friends on the Hill. In fact, I would like to think that
              I might qualify as such a friend.
                                             * * *
              But the point is that Dallas-Fort Worth, the hub for both American
              and Braniff, is outside the magic circle. This leaves these two
              airlines -- important constituents of mine, you know -- standing
              forlornly on the outside looking in, like hungry kids gazing through
              a candy store window.
                                             * * *
              American and Braniff are going to be subjected to grave
              competitive disadvantage in providing one-stop service to the West
              Coast, not to mention service to DFW and to Houston themselves.
                                             * * *
              I think you will recognize how seriously this would handicap these
              companies and the many thousands of my constituents who work
              for them.

(Letter from Congressman Jim Wright to the Secretary of Transportation, September 18, 1981.)

       American, of course, took a more confrontational approach:

                     The FAA has no statutory authority to impose a 650-mile
              perimeter rule at Washington National Airport, or indeed to impose
              any perimeter rule that cannot be justified by operational or


                                                20
                 geographic considerations. Moreover, the 650-mile rule is arbitrary
                 and capricious, in violation of the Administrative Procedure Act
                 and the due process clause of the Constitution. It unreasonably
                 discriminates among air carriers by arbitrarily favoring those whose
                 primary traffic-exchange points or hubs are within the perimeter;
                 the rule, with its seven exceptions, has no rational basis; and it is
                 inappropriate to achieve the FAA’s announced goal of promoting
                 National as a short-haul airport.
                                                   * * *
                           . . . the FAA itself, in opposing a 500-mile perimeter rule
                 proposed by the Orange County Airport in California, recently
                 advised that such a limit is in conflict with the Airline Deregulation
                 Act of 1978 “since that Act places the responsibility for decisions
                 concerning air carrier service, in terms of routes and markets to be
                 served, on air carriers and the pressures of competitive market
                 forces.” See FAA letter to Board of Supervisors of Orange
                 County, May 1, 1981.
                                                   * * *
                 . . . in imposing a perimeter rule at National Airport on the basis of
                 these provisions, the FAA has used the general regulatory authority
                 of the Federal Government to achieve an essentially local,
                 proprietary end in response to local political pressure to restrict the
                 use of National Airport. No other airport proprietor in the United
                 States is afforded such license; indeed, as shown in Attachment 5,
                 the FAA is vigorously opposing the imposition of perimeter rules
                 by another airport. If such rules are not proper strategies for non-
                 Federal airports, they hardly become proper merely because the
                 FAA can cite generalized provisions of Federal statutes to support
                 its claim.12
                                                   * * *
                 There is no basis for discriminating between states within the
                 perimeter and those outside it, and there is no ground for
                 distinguishing between the seven named cities exempted from the
                 perimeter rule and Dallas/Ft. Worth, which meets the same
                 standard of historic nonstop service to National Airport.

Supplemental Brief for Petitioner American Airlines, Inc., American Airlines, Inc. v. Federal

Aviation Administration, et al., U.S. Court of Appeals for the Fifth Circuit, (No. 80-2251),

August 26, 1981.

12
  See British Airways Bd. v. Port Authority of New York, 558 F.2d 75, 84 (2d Cir. 1977), stating that an airport
proprietor has the power to issue reasonable, nonarbitrary and nondiscriminatory regulations with respect to noise




                                                       21
        The American parties’ suggestion that routes and services at Love Field are under the

control of some local party -- the DFW Board, the City of Dallas, the two cities together and

individually -- without regard to federal interests, is a recent invention. Whatever scheme they

would advocate today has no legal basis. It is simply a blatantly anticompetitive tactic to delay

the legitimate operations of Legend and Continental Express.

        Once again, American has contradicted its positions on Love Field service with its own

use of regional jets and with agreements it has made over the past decade as to use of commuter

aircraft at high density airports. In a September 8, 1998 press announcement, American’s wholly

owned commuter airline, American Eagle (“the world’s largest regional airline”), announced that

it placed an order for 75 ERJ-135 jets from Embraer Aircraft with an option for 75 additional

aircraft. Eagle President Dan Garton stated, “This will allow us to enhance customer service in a

big way. It will bolster our competitive position by helping us transition to a mostly jet fleet

within the next six years.”

        The ERJ has 37 seats and, according to the data attached to the press release, it has a

standard range of 1,350 nautical miles. Therefore, when flown from DFW, this long-haul

commuter aircraft will be able to reach any city in the United States. Apparently, American

Eagle will provide commuter service to its passengers with 37, 50, and 70-seat regional jets from

every airport it serves, including DFW, although it claims that none of these aircraft can be

utilized at Love Field (just a few miles away from DFW) because “commuter airlines” never offer

“long-haul service to any city in the United States.” As noted by these announcements, and the

statement by Bob Crandall that turboprops will disappear from the market, American believes that

no commuter aircraft can operate under the commuter provision of the Wright Amendment.


levels, but “[a]ny other conduct by an airport proprietor [restricting airport access] would frustrate the statutory


                                                        22
In its comments to this docket, American states:

             Whatever else might have been included in the meaning of
             “commuter airline,” there can be no question that “commuter
             airlines” never offered “longhaul service . . . to any city in the
             United States.”
(Comments of American Airlines, Inc., Docket OST-98-4363, p. 45.)

        That comment has been contradicted a number of times in comments submitted to the

FAA over a several-year period.

        Under American’s Love Field position (shared by their partners, DFW and Fort Worth),

larger turboprops or any size regional jet cannot be utilized to cities as far away as 333 miles from

Love Field. They take this position although American now operates 110-seat jets at O’Hare

after convincing the Department that such jets are “commuter” operations, and can now operate

regional jets to the other high density airports to fulfill a Congressional mandate to increase

commuter service for small communities, at one airport in the country. Of course, what American

doesn’t acknowledge is that, according to Bob Crandall, turboprop aircraft “will essentially

vanish.” (Washington Post Weekly Edition, June 23, 1997, p. 19.)

        American Airlines comments on 110-seat jets as commuter operations:             (Petition of

American Airlines, Inc. for Rulemaking to Amend the High Density Traffic Airport Rule, FAA

Docket 26339, September 6, 1990):

•   the size of an aircraft operating between O’Hare and another city is in large part dictated by a
    rule first issued in 1968 and not by passenger demand or market forces.

•   while carriers at hubs across the United States are expanding and introducing new equipment,
    American’s O’Hare operation has been frozen in the past -- limited by economic regulations
    issued approximately a decade ago.

•   the average seating capacity of aircraft used by American throughout its system has increased
    during the past several years and will continue to grow over the next decade. This is


scheme and unconstitutionally burden the commerce Congress sought to foster.”


                                                      23
     consistent with industry-wide numbers. FAA’s 1990 Aviation Forecast (FAA APO-90-1,
     March 1990) predicts that the average air carrier aircraft in the domestic fleet will exceed 180
     seats by 2001. The FAA forecast further projects that the average seats per aircraft in the
     commuter industry will grow at a rate more than twice that of the fleet, reflecting the
     continued introduction of larger aircraft. To meet this demand, American has been replacing
     aircraft in both its commuter and air carrier fleets with larger aircraft. (American’s commuter
     fleet now includes 37-, 50- and 70-seat regional jets.

                         AMERICAN ORDERS 25 MORE BOEING 737s
                                           (May 15, 1998).
                    American Airlines announced today that it has exercised rights
                 under its long-term agreement with Boeing to purchase 25 more
                 737-800 aircraft, bringing the total number of firm 737 orders to
                 100.13

                     AMERICAN EAGLE TO EXPAND REGIONAL JET
                                          SERVICE
                                        (April 4, 1998)
                    American Eagle ordered 67 regional jets last June -- 42 of the
                 50-passenger ERJ-145s and 25 of the 70-passenger Canadian CRJ-
                 700s.

                     AMERICAN CONFIRMS ADDITIONAL BOEING 777
                                                ORDER
                                            (April 1, 1998)
                     American Airlines announced today that following authorization
                 from its board of directors, it has reached agreement with Boeing
                 for the delivery of eight additional Boeing 777-2001 GW aircraft in
                 1999, 2000, 2001, increasing the number of firm 777-2001 GW
                 orders from 11 to 19.

•    It is clear that commuter service cannot be defined in terms of the size of a city or the
     type of aircraft flown to that city.

•    Certainly, distance from Chicago cannot be a measurement of whether a city can be served
     with a commuter-type aircraft rather than a jet.

•    The use of jets certificated for 110 seats or less would be fully consistent with the rationale
     contained in Amendment 93-56 for raising the commuter slot definition to 75 seats. These
     aircraft (Fokker-100s) would have a positive impact on the regional airline industry and
     service to small communities -- service would improve.


13
  According to the May 28, 1998 USA Today, “Jet orders: Pie-in-the-sky hopes?”: “American Airlines will add a
new Boeing 737 a month between January 2000 and January 2002. That’s in addition to 103 Boeing planes
between this year and 2004.”


                                                      24
•   In a deregulated environment, American is attempting to provide competitive services at the
    one hub in the United States with slot and aircraft size limitations against a carrier which has
    been guaranteed dominance at that same hub and against carriers at other hubs which are free
    to add flights or increase the size of aircraft.


               An airport’s EPS is set after an analysis of conditions likely to
               occur at the airport based on the expected aircraft type mix, arrival
               mix and runway usage. The aircraft type mix and runway usage
               determinations are based on the following three categories of
               aircraft: small (less than 12,500 pounds), large (between 12,500
               and 300,000 pounds), and heavy (more than 300,000), and is not
               related to the number of certificated seats on an aircraft or the slot
               definitions included in the HDR.
                                              * * *
               In determining the number of aircraft that can be operated at
               O’Hare under the EPS approved for the airport, all aircraft between
               12,500 and 300,000 pounds are considered to be identical.
                                              * * *
               On February 7, 1989, American responded to these questions
               (Docket 25758) and suggested that the distinction between air
               carrier and commuter slots should be eliminated.
                                              * * *
               . . . when United Express submitted its petition for rulemaking to
               allow utilization of larger aircraft in the commuter slot category,
               American once again submitted comments urging that air carrier
               and commuter slot pools be combined.
                                             * * *
              In issuing Amendment 93-46 in 1984, the Department stated that the
              rule recognized “a change in character of commuter and air carrier
              operations.” Time has not stood still over the past six years. Since
              1984:

              -- billions of dollars have been invested in new quiet, fuel efficient
              aircraft, both for air carrier and commuter operations;

              -- as part of hub and spoke systems, carriers have been able to
              initiate service to small and medium-sized cities including some
              markets which had not previously been able to justify jet service;

              The question is not whether the industry will modernize and expand,
              but whether the HDR will continue to prohibit the introduction of
              new technology and other changes at Chicago’s O’Hare Airport --
              the only hub airport that is subject to FAA’s high density
              restrictions.



                                                25
       From Petition of American Airlines, Inc. to Suspend the Effectiveness of Certain Slot

Allocations and to Modify Subparts K and S of Part 93 of the Federal Aviation Regulations

(February 18, 1992):

              Considering the horrendous times facing the aviation industry, it is
              essential that the Department take every opportunity to lessen
              restrictions which limit growth, new jobs and economic
              opportunities for the carriers and the communities we serve. The
              Department has such an opportunity at this time and can provide
              immediate economic benefits by implementing the proposals in this
              petition.
                                             * * *
              . . . (2) the distinction between commuter and air carrier slots
              at O’Hare be eliminated. . .
                                             * * *
              The FAA has long objected to artificial operating restrictions --
              such as airport curfews -- imposed by local governments, fearing
              the undue compression of air carrier schedules within minutes of
              the end of the curfew period. The O’Hare 30/60 minute slot quotas
              produce the same result. (Footnote: The agency should initiate
              proceedings to eliminate the entire high density rule. American
              believes that the agency should consider that approach as it
              completes action on this petition.)
                                             * * *
              The FAA Should Eliminate The Unnecessary Distinction
              Between Air Carrier and Commuter Slots, Or In The
              Alternative, Allow Additional Commuter Slots To Be Operated
              With Small Jets

              The FAA’s artificially created differentiation between air carrier and
              commuter slots makes scheduling and marketing decisions
              significantly more difficult, and reduces opportunities to serve small
              communities.

              To alleviate this problem, the FAA should eliminate the distinction
              between the two classes of slots and recognize that for operational
              and marketing reasons no justification for the distinction exists (for
              all the reasons set forth in American’s Rulemaking Petition of
              September 6, 1991, Docket 26339).
                                            * * *




                                               26
              Allowing an increase in the number of small jets that can be
              substituted for commuter aircraft operations will bring immediate
              and substantial economic benefit to American and cities and states
              throughout the country.


       From Comments of American Airlines, Inc. to Docket 25758 (Notice of Proposed

Rulemaking 88-17 High Density Traffic Airport Slot Allocation and Transfer Methods) (February

7, 1989):


              (1) Elimination of the differentiation between air carrier and
              commuter slots.
              Since its inception in 1969, the High Density Rule has created
              separate slot categories for air carriers and commuters, or “air
              taxis” as they were known at that time. This distinction was clearly
              not established for air traffic control reasons. It simply reflected the
              prevailing operations at the airports in question, and was
              presumably designed to ensure that small and medium-sized
              communities would not be deprived of service as a result of the
              operation of the rule.

              In 1981, slots were taken away from air carriers and given to
              commuters at Washington National. A few years later, significant
              increases were made in commuter slot allocations at O’Hare,
              LaGuardia and Kennedy while air carrier allocations remained
              constant. The basis for those changes was a recognition of the
              changing demand for air carrier and commuter services.


       From Motion by American Airlines, Inc. to Allow Immediate Use of Jet Authority

(Docket 26788, Petition of American Airlines, Inc. to Suspend the Effectiveness of Certain Slot

Allocations and to Modify Subparts K and S of Part 93 of the Federal Aviation Regulations)

(August 19, 1992):

              (Footnote 5, p. 11): Delta, in its comments, suggests that the FAA
              use the high density rule to force service to short-haul markets.
              Therefore, Delta would force American to cancel flights to cities
              such as Raleigh/Durham, Nashville, and Memphis. Delta fails to


                                                27
               mention that it operates eight roundtrips to Atlanta from Cincinnati
               or that it does not serve Sioux Falls, Fargo, or Cedar Rapids and
               serves Fort Wayne and Madison with turboprops. Apparently,
               Delta believes that residents of these cities should not have jet
               service.
                                              * * *
               While American is prevented from expanding at O’Hare by the high
               density rule, there are no limitations on the size of aircraft or
               number of frequencies used by our competitors at all other hubs.



       From Additional Comments of American Airlines, Inc., Docket 26788 (Petition of

American Airlines, Inc. to Suspend the Effectiveness of Certain Slot Allocations and to Modify

Subparts K and S of Part 93 of the Federal Aviation Regulations) (June 1, 1992):


               . . . There is no greater obstacle to growth than the 23-year-old
               high density rule which has frozen air carrier operations at O’Hare
               since 1969.
                                               * * *
               When the September 6, 1990 petition was filed, we stated that jobs
               would be created if the rules were amended as proposed. The use
               of larger aircraft and institution of new markets has had a positive
               economic impact. The benefits have been greater than expected
               and include:

               -- Over 550 jobs have already been created as a result of new
               service and use of F-100s.
                                          * * *
               There is simply no reason for distinctions to exist between
               commuter and air carrier slots. Separate slot categories
               amount to economic regulation; they are not needed for air
               traffic management.

       American has best made the argument why any size jet is appropriate for “commuter” and

that the distinction no longer exists. At the high density airports, carriers can fly any distance in

any size aircraft. At Love Field, according to the American parties, they can’t even fly 330 miles!

       B.      The Shelby and Wright Amendments preempt the proposed Love
               Field perimeter rule.


                                                 28
         Whenever a state action would stand as an obstacle to the accomplishment and execution

of the purposes and objectives of Congress, that action is preempted. See California Fed. Sav.

and Loan Ass’n v. Guerra, 479 U.S. 272, 281 (1987); National Helicopter, 137 F.3d at 88 (“The

Supremacy Clause of the United States Constitution invalidates state and local laws that ‘interfere

with or are contrary to the laws of Congress.’”) This principle is not just theoretical in this case.

The Wright Amendment placed restrictions on Love Field operations, and the Shelby Amendment

accomplished a partial relaxation of those restrictions. After the Shelby Amendment was enacted,

for example, an airline such as Southwest could fly non-stop from Love Field to any destination in

Alabama, Kansas, and Mississippi. Realizing that the Shelby Amendment opened doors that

American wanted closed, the American parties filed suit14 in Tarrant County court immediately

following the enactment of the Shelby Amendment. The goal of the lawsuits was to prevent

operations under the Shelby Amendment.15 A clearer and more obvious attempt to frustrate

Congressional purpose is difficult to imagine.


14
   In their comments, the American parties suggest that the Department should stay out of this issue because it is in
state court. What they fail to mention is that this litigation was filed the day after the bill passed even before it was
signed by the President. Their purpose was to delay. Filing in such a manner does not create jurisdiction in a state
court judge.
15
   American also paid for a number of ads claiming that dire consequences would result from the opening of Love
Field, using a number of third parties as fronts. The Love Field Citizens Action Committee (“Action Committee”),
for example, is supported by and under the direction of American. Many of the arguments made in its April 22,
1998 filing at DOT have also been made in radio, newspaper and bus ads paid for by American and under the
supposed name of the Action Committee. The following articles describe the American/Action Committee
relationship:
                  Russ Jewert, co-chairman of the Love Field Citizens Action Committee,
                  confirmed that “a substantial” portion of the week-long radio ad campaign was
                  covered by a contribution from American. [Star Telegram, October 15, 1997]

                  Even when it comes to the noise issue, there is reason to believe that American
                  Airlines is helping ferment neighborhood concern. Love Field Citizens Action
                  Committee is running ads on six radio stations at Love Field asking for
                  listeners to call their city council members to voice opposition to changes at
                  Love Field. And who paid for those costly ads? According to City Hall
                  documents, American Airlines picked up the $2,500 tab for the ads the


                                                           29
        DFW and Fort Worth insist, however, that the proposed Love Field perimeter rule (and

their Texas lawsuits) is fully consistent with the Wright and Shelby Amendments because those

acts of Congress do not require the owner of Love Field to do anything. According to Fort

Worth, the amendments “set forth what services may be certificated by the DOT, rather than

mandating what services must be allowed by the Cities.” (Fort Worth Comments, p. 32.)

(emphasis in original).16 In fact, says DFW, “the full purposes and objectives of Congress in

passing the Wright Amendment was to protect the Cities’ agreements from further interference

from federal regulatory agencies and airlines to further preserve all the proprietary powers of the

airport proprietor.” (DFW Comments, p. 32.)




                 committee is running on city-owned WRR-FM.            [Dallas Observer, October
                 16-22, 1997]

                 In radio commercials airing across town this week, a group opposed to lifting
                 restrictions at Love Field states that “hundreds of additional flights a day” (oh,
                 please) from Love will increase “pollution over our homes and schools.”

                 Strangely, the group gets financial support from American Airlines which, in
                 its unthinking zeal to protect its turf, perhaps has become the first airline in
                 history to pillory jet aircraft as dangerous health hazards to school children.
                 [Huntley Paton, Dallas Business Journal, October 17-23, 1997]

                 American also has donated an undisclosed amount of money to the Love Field
                 Citizens Action Committee, a neighborhood group that opposes new flights at
                 the local airport. The committee recently used an agency recommended by
                 American when it purchased radio ads promoting its views. [Dallas Morning
                 News, November 8, 1997]
16
   American’s Comments take a slightly different approach. American cites a bit of legislative history from the
Wright Amendment and argues that Congress’ principal intent was to defer to Dallas’ proprietary powers.
American Comments, p. 35. This circular argument completely ignores the primary purposes of both the Wright
and Shelby Amendments. Neither was enacted as a means of protecting proprietary powers. Rather, they
represent Congress’ determination of the acceptable restrictions that could be imposed on Love Field. The Wright
and Shelby Amendments would have been meaningless and flaccid expressions of Congressional hope if they were
enacted subject to the right of Dallas and DFW to disregard them.
American’s argument depends upon the validity of the Love Field perimeter rule as a valid exercise of Dallas’
proprietary powers. If the proposed rule is not permissible as an exercise of proprietary authority, then American
loses its claimed safe harbor from Wright and Shelby Amendment preemption.


                                                        30
         Noticeably absent from the American parties’ filings was how Southwest would be

impacted by the American parties’ statutory interpretation. They focus their offensive against

new and smaller carriers, hoping to achieve their goals without challenging Southwest, although

any ruling in state court will impact Southwest’s operations. They claim “three airlines” --

Legend, Astrea and Continental Express -- have unnamed plans to offer non-stop interstate jet

service from Love Field to destinations beyond the four contiguous states.                           (Fort Worth

Comments, p. 11.)         Southwest is as much a target as these three airlines.                    If the Shelby

Amendment is construed to prohibit Legend, Astrea and Continental Express from proposed

operations, Southwest will also be prohibited from its through ticketing service and any additional

nonstop interstate service.

         Of course, the Wright and Shelby Amendments say no such thing.                                 Under the

Deregulation Act, Love Field operations were unrestricted.17 The Wright Amendment contained

the only     limitation on Love Field operations, effectuated in the only permissible manner:

directions to the federal agencies. If the Wright Amendment were intended primarily to preserve

Dallas’ proprietary powers, it would certainly have contained language to that effect. It could

have, for example, simply stated, “Nothing in the Deregulation Act shall interfere with Dallas’

rights to dictate operations at Love Field;” or “Nothing in the Deregulation Act shall interfere

with the agreements and ordinances of the cities of Dallas and Fort Worth.”                           The Wright

Amendment does not, however, contain any language that can reasonably be construed as an

endorsement of local control. Rather, it represents a federally imposed restriction on the federal

authorities that have the sole responsibility for implementing federal aviation law.



17
  The ADA specifically and fully preempted local efforts to regulate Love Field (as with all other airports), except
for limited proprietary rights. See National Helicopter, 137 F.3d at 88.


                                                         31
       Fort Worth’s assignment of control to local authorities is even more ridiculous in light of

the Shelby Amendment. In that Act, Congress intended to increase the services provided at Love

Field in two ways. First, Congress redefined or clarified the 56-passenger limitation in direct

response to the Department’s prior interpretation of the Wright Amendment as applied to Legend.

The only reason for the change to § (a) of the Wright Amendment was to broaden the services by

56-seat aircraft at Love Field. In defining the size of jets that could be used under the 56-seat

authority of the Wright Amendment, the Shelby Amendment included the phrase “except aircraft

exceeding 300,000 pounds, reconfigured to accommodate 56 or fewer passengers if the total

number of passenger seats installed on the aircraft does not exceed 56.” This change clearly

overturned the Department’s interpretation of this provision, as acknowledged by the

Department. Moreover, the weight limits were placed in the bill at the insistence of the Texas

Members to put some limits on the size of aircraft that could operate under this expanded

authority. Even the American parties must recognize that regional jets, 737s, DC-9s, and even

DC-10s fit under the 300,000 limitation. Of course, this provision would not have been necessary

if the local parties had veto power over the bill. Second, Congress increased the service area to

include Alabama, Kansas, and Mississippi.           Residents of Mississippi and Alabama, and

communities throughout the Southwest, have already seen improved air services as a result of the

Shelby Amendment because Southwest has initiated flights to Alabama.

       If Fort Worth were now permitted to close down Southwest’s Birmingham and Jackson

service or to prevent nonstop service to those markets as an exercise of proprietary powers, they

would be directly interfering with Congress’ clear intent to increase Love Field services to those

and other markets. The American parties evidently agree that the Shelby Amendment undermines




                                               32
their case, because they have refused to even acknowledge the existence of Southwest’s new

service in their discussions of this issue.

        American does offer its typical doomsday presentation, suggesting that if the Department

rules that operations at Love Field are governed by the Wright and Shelby Amendments, then all

local agreements to address airport needs will be destroyed and that local governments will be

reluctant to work together to address regional needs. (See American’s Comments, p. 31.) The

comments cite the current situation in West Virginia. American asks how the local authorities are

to accomplish a local agreement. They then suggest that if the Department forbids agreements

among local airport owners to restrict airports, the FAA will have to reverse course immediately

in West Virginia. That argument has no merit.

        The FAA letter to the Chairman of the Central West Virginia Regional Airport Authority

(American Exhibit No. 12) states that the assumption was that the “new airport would be the only

provider of scheduled passenger service, consolidating the current service at Charleston and

Huntington. The airport at Charleston and Huntington, in this scheme would continue to provide

general aviation and corporate services.” (emphasis added).

        For a number of reasons, the Department’s ruling as to the issues in this Love Field

proceeding are unique and will not impact any other airport agreements. Surely even American

doesn’t believe that a Department ruling that federal law governs operations at Love Field will

impact rules applicable at LaGuardia or National Airport. Like the communities in West Virginia,

the Dallas/Fort Worth parties had various options to encourage the construction of a new airport.

In the Love Field case, the parties were unable to reach a local agreement that was not overturned

by the court system. The parties tried to close Love Field to interstate flights but lost. (See

discussion in Legend’s initial comments to this docket.) Therefore, the situation presented at


                                                33
Love Field is not at all similar to the current situation in West Virginia. In years of Dallas

litigation, the courts clearly stated that federal law and authority prevailed. Having failed to reach

a local agreement, the parties turned to Congress which imposed rules for Love Field operations

although not the ones sought by the American parties.

       The communities of West Virginia have similar choices. Parkersburg, Yeager, Charleston,

and Huntington can work together to:

       1.      create a single airport authority -- never done in Dallas/Fort Worth;
       2.      close existing airports -- not accomplished by American parties in
               Dallas/Fort Worth;
       3.      or turn to Congress to regulate -- which is what occurred in Dallas/Fort
               Worth.

       The West Virginia parties understand their options. Of course, the American parties may

believe they will also have veto power over any agreement reached in that state.


       1.      Fifty-six-seat aircraft may provide unlimited service from Love
               Field.

       As noted in Legend’s Comments, the Department has already decided that 56-seat aircraft

may serve all destinations from Love Field.           See Joint Agreed Motion of Petitioner and

Respondent to Dismiss Petition for Review, Astrea Aviation Services, Inc. v. Department of

Transportation, No 96-60806 (5th Cir., Nov. 5, 1997) (“Pursuant to the Act, the Petitioner, or

any other air carrier, may pursuant to 29(a)(2) of the International Air Transportation

Competition Act of 1979, operate jet aircraft reconfigured to accommodate 56 or fewer

passengers ... from Love Field to any destination.”)         Continental Express agrees with this

interpretation, noting that the Shelby Amendment was enacted during a dispute between the

Department and Legend.        As noted by Senator Shelby and the Department, the Shelby

Amendment overturned the Department’s interpretation limiting 56-seat jet service to regional jets


                                                 34
or other aircraft originally designed to hold no more than 56 seats.                  Congress refused to give

Dallas veto power over the provisions of the Shelby Amendment.18                         As a result, Congress

intended to permit unlimited service with 56-passenger planes (with the 300,000-pound limit),

without interference or veto power by Dallas-area entities.

         In opposition to literal interpretation of the Shelby Amendment, the American parties

claim that the Wright Amendment preserved Love Field as a short-haul airport. American’s

reliance on such legislative history cannot change the requirements of the Shelby Amendment for

two reasons.        The language of the Wright Amendment’s “commuter exemption” places

restrictions on passenger capacity and not on the designation of a flight as “short-haul,” “long-

haul,” “medium-haul,” or any other “haul.” As noted in Continental Air Lines, the specific

statutory requirements are far more reliable indicators of Congress’ intent than any articulation of

an Act’s “broad purposes” in the legislative history. See Continental Air Lines, 843 F.2d at 1451.

         In Continental Air Lines, the Department clarified its interpretation of the Wright

Amendment commuter exemption, stating:

                  Nor is there any basis for the argument that the Department’s
                  interpretation is inconsistent with Congressional intent that the
                  Love Field Amendment be a “compromise” between the DFW
                  parties, who sought to bar all interstate service at Love Field, and
                  Southwest and other carriers, who did not favor the imposition of
                  any barriers on Love Field service.

         The Department further stated:

                  Prior to the passage of the Deregulation Act, the CAB frequently
                  granted exemptions to commuter carriers to conduct operations
                  with large aircraft . . . [H]ad Congress intended to limit the


18
   In Fort Worth’s reply comments (p. 13), they cite language from the Senate bill referencing regional jets. That
language was later dropped in conference. As can be seen by a plain reading of the language, the regional jet
provision was only needed if the City of Dallas was given veto power over “Shelby Amendment authority.” Since
it was specifically decided not to include a veto provision, the reference to regional jets was moot and was dropped.


                                                         35
               exemption to carriers operating small aircraft exclusively, it could
               have done so explicitly, and it did not.

(Brief of the Department of Transportation, Continental Air Lines, at 47 and 65.)

       The history of the commuter exemption demonstrates Congress’ intent to make

distinctions based upon an aircraft’s “passenger capacity,” not upon its characterization as a

short-haul aircraft. The initial restrictions on Love Field in the Wright Amendment refer to

capacity, not routes or destinations.

               [E]ven if the intent of Congress had been to limit the size of aircraft
               and number of flights serving Love Field by forbidding access to all
               but short-haul, local traffic specialists, a class restriction on
               interlining carriers would not have been an effective means of doing
               so. It is a backward way of achieving Congress’ goal for Love Field
               restrictions, and Congress could have directly limited the type of
               aircraft, or the number of flights serving Love Field if that had been
               its purpose. (Id. at 46.)


       In the Shelby Amendment, Congress overturned a DOT interpretation (which was

supported, in part, by the Wright Amendment) and again referred only to passenger capacity. It

did not impose any route or distance restriction and did not make Love Field a “short-haul”

airport. The plain language of the Amendments thus defeats any contention that the commuter

exemption was intended to absolutely restrict Love Field to short-haul operations.

       As noted by the Department in written responses to questions from Senators, 56-

passenger airplanes have always been permitted to provide unlimited service under the Wright

Amendment:

               Question #6: Is there any aircraft with 56 seats that would meet
               DOT’s interpretation as to the size of aircraft that can be utilized
               under the Wright Amendment to serve the State of Kansas? Is it
               true that the only jets that can operate under DOT’s interpretation
               are foreign made and hold 50 or fewer seats?




                                                36
               Answer: We believe that the only jet aircraft currently meeting the
               Wright Amendment’s 56-passenger capacity standard are the
               recently developed regional jets manufactured in Canada and Brazil.
               When Congress enacted the Wright Amendment, even the smallest
               jet aircraft then available held over 70 seats. The Wright
               Amendment also allows the use of turboprop aircraft. These,
               coupled with the 50-seat regional jets, are the only aircraft that
               could be used for flights between Love Field and Kansas under the
               Wright Amendment.

Hearing Questions of Senator Brownback, Aviation Subcommittee Hearings on Barriers to

Entry, May 13, 1997.

       A second, and perhaps even more compelling, reason to disregard the American parties’

argument is that the 56-seat limitation does effectively make Love Field a short-haul airport. The

American-dominated parties ignore the fact that the 56-seat limitation is extremely restrictive.

Airline economics prohibit 56-seat operations from competing effectively on long-haul routes. As

long as the 56-passenger limitation exists, Love Field will essentially be a short-haul airport, and

Dallas’ proprietary powers are irrelevant.

       The American parties also argue that the proposed operations of Legend and Continental

Express are prohibited under the Wright and Shelby Amendments because their planes are too

large to be “commuter” flights. As they have questioned the validity of the General Counsel’s

letter to David Siegel, they apparently are ignoring all comments made in that letter. In particular,

the General Counsel stated, “the Shelby Amendment essentially overturned my opinion on the

issue of using reconfigured large aircraft and would seem to weaken arguments that Congress did

not intend to allow the use of jet aircraft for longhaul Love Field service.” The Department has

long held, however, that the term “commuter” does not connote any particular size restrictions.

In another written response to Senator Brownback, for example, the Department gave the

following testimony:


                                                 37
                    Question #5: At O’Hare Airport, I understand that you allow 110
                    seat aircraft to utilize commuter slots. I also understand that to
                    limit the size of the aircraft operating under this authority, you also
                    have a maximum weight limitation (126,000 pounds). Is there a
                    weight limitation in the Wright Amendment?

                    Answer: The Federal Aviation Administration’s slot rules allow
                    aircraft configured to hold no more than 100 seats to use commuter
                    slots at O’Hare.


           See also Respondent (DOT), Continental Airlines, Inc., et al. v. U.S. DOT, filed

September 11, 1986.19

           The American parties also contend that “commuter airline” was a term of art when the

Love Field Amendment was enacted and referred to “air taxi operators” providing scheduled

service. They argue that no carrier classified as a commuter operated large aircraft when the

Love Field Amendment became law. This argument is not correct. Prior to the passage of the

Deregulation Act, the CAB frequently granted exemptions to commuter carriers to conduct

operations with large aircraft. E.g. Provincetown Boston Airlines, Inc., Order 76-12-24 at 2, 4

(December 6, 1976); Rocky Mountain Airways, Inc., Order 78-8-102 at 3 (August 18, 1978). In

granting these exemptions, the Board consistently specified that the large aircraft operations did

not alter the carrier’s status as an air taxi operator (and hence, when scheduled, a commuter


19
     The DOT stated:
          Prior to the passage of the Deregulation Act, the CAB frequently granted exemptions to
          commuter carriers to conduct operations with large aircraft. E.g., Provincetown Boston
          Airlines, Inc. , Order 76-12-24 at 2,4 (December 6, 1976); Rocky Mountain Airways, Inc.,
          Order 78-8-102 at 3 (August 18, 1978). In granting these exemptions, the Board
          consistently specified that the large aircraft operations did not alter the carrier’s status as
          an air taxi operator (and hence, when scheduled, a commuter airline). . . . “commuter
          airline” included large aircraft operators. . . . had Congress intended to limit the
          exemption to carriers operating small aircraft exclusively, it could have done so explicitly,
          and it did not.

           . . . aircraft operations by large or small carriers limited to 56 seat planes pose no threat to
           enforcement of the Love Field restrictions.


                                                             38
airline). Thus, “commuter airline” has always included large aircraft operators. Had Congress

intended to limit the exemption to carriers operating small aircraft exclusively, it could have done

so explicitly, and it did not.


        C.      The Wright Amendment permits unlimited operations by 56-seat
                aircraft, with no restrictions on through ticketing, interlining, or
                ticket sales.

        As demonstrated in Legend’s Comments, the answer to the Department’s question

regarding through ticketing on 56-passenger aircraft from Love Field is a straightforward matter

of statutory interpretation. Subsection (c) of the Wright Amendment “permits the authorization

of interstate passenger service between Love Field and points within Texas and the four

contiguous states subject to the prohibitions on interline service (subclause (c)(1)), and online

service (subclause (c)(2)) beyond that Service area.” Brief for Respondent (DOT), Continental

Airlines v. Department of Transportation, No. 86-1026 (D.C. Cir. 1986), p. 8 (emphasis added).

The prohibitions on subsection (c) operations apply to those operations only. They have no

application to services provided under subsection (a) of the Wright Amendment, which authorizes

unlimited operations with 56-passenger aircraft.

        The American parties disagree, arguing that a prior ruling of the Department, Order 85-

12-81, prohibits any attempt to evade the seven-state perimeter established by the Wright and

Shelby Amendments. This argument blatantly misrepresents the Department’s rulings in Order

85-12-81. In a section labeled “INTRASTATE OPERATIONS,” the Department interpreted the

four-state perimeter rule for large aircraft20 and held that an air carrier could not evade the

requirements of subsection (c) operations merely by including an intrastate destination on a route.




                                                   39
Legend has no basis for challenging this holding because it is irrelevant to the issues presented

here. The previous section of Order 85-12-81, “SMALL AIRCRAFT OPERATIONS,” directly

contradicts the argument asserted by American in this case.                    According to the Order, 56-

passenger (small) operations are subject to no restrictions under subsection (a). See Order 85-12-

81, p. 13 (“we find that operations by either a certificated or non-certificated carrier using small

aircraft are exempt from the Amendment with respect to Love Field operations.”) Because 56-

passenger aircraft are exempt from Love Field restrictions, they can serve any destination, without

limitation.

        Moreover, the Department has recognized that 56-passenger aircraft are exempt:

                 Southwest also argues that the Department’s interpretation will
                 permit carriers like Continental to evade the restrictions of the
                 Love Field Amendment by implementing small aircraft operations
                 at Love Field to connect with their services beyond the authorized
                 service area. Southwest suggests, as an example, that Continental
                 could implement small aircraft service between Love Field and
                 Continental’s Denver hub. Passengers using that service could
                 then transfer to Continental’s connecting flights to reach
                 destinations across the country. Br. at 47. However, Southwest’s
                 fears are highly speculative. To implement such a scheme,
                 Continental would have to pay a substantial penalty in the number
                 of seats it could operate on each flight. In addition, such flights
                 might be less attractive to travelers, since many segments of the
                 traveling public have a strong perception that jets are superior to
                 small aircraft. E.g., Guidelines for Individual Determinations for
                 Essential Air Services, 44 Fed. Reg. 5296, 52651 (September 7,
                 1979). See also, Spokane-Alberta Service Case, Order 85-1-21,
                 Recommended Decision at 14-16 (November 16, 1984).
                 Perceptions aside, travelers would also have to pay a time penalty
                 to fly on Continental’s small aircraft, since small aircraft are slower
                 than jets.    Moreover, small aircraft might by very costly for
                 Continental to operate, given its current wage scales based on
                 operation of larger jet equipment. In addition, if Continental were
                 really intent on using the commuter exemption to evade the Love

20
  Large aircraft can service intrastate destinations from Love Field without any limitation by the Wright
Amendment. Interstate operations are limited to the perimeter area, and such flights are subject to the subsection
(c) prohibitions.


                                                        40
                Field restrictions, Southwest’s approach would not prevent it.
                Continental could establish a small aircraft commuter as a
                subsidiary or purchase an existing one. (Footnote: Indeed,
                Continental has recently announced its proposed acquisition of
                Rocky Mountain Airways, a small aircraft operator that serves
                Continental’s Denver hub. Aviation Daily, Vol. 254, No. 52 at
                410 (June 12, 1986).) Despite Southwest’s speculative fears,
                aircraft operations by large or small carriers limited to 56 seat
                planes pose no threat to enforcement of the Love Field
                restrictions.

(Brief of the Department of Transportation, Continental v. DOT, 1986, p. 65-66.)


        Fort Worth’s contention that the rationale of the Department’s restrictions on intrastate

service supports similar restrictions on 56-passenger operations is incorrect. In Order 85-12-81,

the air carriers sought to evade subsection (c) restrictions merely by adding Texas destinations to

a prohibited route, served by large aircraft. The situation is quite different with 56-seat aircraft

because they are not otherwise restricted by the Wright Amendment. Continental Express’ Love

Field-Houston flight is not an attempt to evade the Wright Amendment; it merely serves as a

legitimate means of transporting passengers to Continental’s hub, in full compliance with the

statute. American’s protest that Continental Express’ Houston service undermines the “short

haul” nature of Love Field is patently ridiculous. Even if Love Field were generally a short-haul

airport, this status would have no effect on the Continental Express operations because Houston

is, by any definition, a short-haul destination.


        E.      The Department has the authority to apply its expertise to the
                issues in this proceeding, and the Fort Worth parties’ race to the
                Tarrant County courthouse do not deprive the Department of
                jurisdiction over federal aviation matters.

        The Department’s actions in considering these matters and issuing appropriate rulings are

correct, legitimate, and well within the agency’s authority. As discussed exhaustively in Dallas’


                                                   41
Comments, the Department is uniquely situated to interpret and implement all aspects of the

federal aviation statutes, including the Federal Aviation Act, the Deregulation Act, and the

Airport & Airway Improvement Act. See Dallas Comments, pp. 15, 16 and cases cited. The

Department is charged with the responsibility to “enforce the Love Field Amendment,” just as it

“has regulatory authority to enforce the federal aviation laws.” Cramer v. Skinner, 931 F.2d

1020, 1024 (5th Cir. 1991); Northwest Airlines, Inc. v. County of Kent, Michigan, 510 U.S. 355,

371 (1994).

       Under the doctrine of primary jurisdiction, a court may leave an issue for agency

determination when it involves the special expertise of the agency and would impact the

uniformity of the regulated field. DeBruce Grain v. Union Pacific Railroad, 149 F.3d 787 (1998)

citing Access Telecommunications v. Southwestern Bell, 137 F.3d 605, 608 (8th Cir. 1998). In

DeBruce Grain, a shipper brought suit claiming the railroad’s distribution of rail cars violated

federal rail statutes and its tariff. Assessing the reasonableness of UPR’s response, in this case

to the car shortages, would involve issues related to national rail policy, and recognizing that a

“judicial ruling could affect rail transportation through the country, the appellate court held that

primary jurisdiction was properly invoked by the district court. (DeBruce at 790.) The shippers

claim should be “left to the STB . . . due to its greater expertise with rail policy and the need for a

uniform response to maintain regulatory uniformity.” (Id. at 790.)

       In this case, at every opportunity the American parties claim that the Department lacks the

“special competence” needed to review these issues, and claim this proceeding is “unprecedented

and unsound.” (p. 9, p. 11.) However, it readily admits that the many Love Field issues “have

nationwide significance.” (p. 2.) While mistaken on the first two points, they are correct on the

latter. The issues decided at Love Field will affect the routes and schedules of all airports. Far


                                                  42
from “unprecedented,” the Department has the authority to review these issues and has done so

before.

          Although American uses countless cases with completely dissimilar facts to extract a

seemingly supportive rule of law, it dismisses the rule of judicial deference to an administrative

agency espoused in Mass. Port Auth. because “the issues in this proceeding are of a very different

character from those in Mass. Port Auth. (American’s Comments, p. 10.) Perhaps American

should have been consistent in this argument, and saved us from all their worthless case research.

          1.     The Department Has Been Involved in Love Field Issues.

          The American parties assert the Department lacks the expertise to provide a meaningful

interpretation to which deference might be owed in the future. This insulting argument is contrary

to the history of this issue. The Department’s expertise and familiarity with this matter at issue is

well demonstrated by its active involvement in Love Field and Wright Amendment issues for three

decades.

          Legend’s September 22, 1998 comments detailed the long history of Love Field issues,

including those involving the Department. Some of the actions taken by the Department over the

past several years involving Love Field include:

   •      A 1992 study on the impact of changing the Wright Amendment which concluded
          that “fare savings to travelers. . . resulting from a Wright Amendment repeal . . .
          range from $183 million to more than $300 million in the first year following
          repeal.”

   •      Department letters, dated November, 1994 and September, 1996, to Centennial
          Express in response to requests for opinions concerning use of 56-seat aircraft at
          Love Field.

   •      Review of request for interpretation, dated May 28, 1996, submitted by Dalfort
          Aviation concerning use of 56-seat jets at Love Field. (During the course of that
          review, a number of third parties, including American Airlines, provided
          information to the Department on the request for interpretation.)


                                                   43
   •   Department response to Dalfort, dated September 19, 1996.

   •   Fifth Circuit Court of Appeals case brought by Dalfort in response to the
       Department’s interpretation. (American, DFW and Fort Worth all filed briefs in
       the Fifth Circuit proceeding.)

   •   Congressional appearances by a number of senior Department officials, including
       Secretary Slater, at which questions concerning Love Field were raised.

   •   Testimony of senior Department officials before Senate Aviation Appropriations
       Committee concerning barriers to entry, including the Wright Amendment.

   •   Introduction of the Shelby Amendment.

   •   Committee action concerning the Shelby Amendment.

   •   Passage of the Shelby Amendment, signed by President Clinton on October 27, 1997.

   •   Application of American and American Eagle for a change in 401 certificates based
       upon the Shelby Amendment.

   •   Application of Legend Airlines for 401 certificate. (American, DFW and Fort
       Worth all filed comments in DOT proceeding)

   •   Multiple Texas court actions, including a suit filed against the Department by the
       City of Dallas in U.S. District Court in Dallas.

   •   Review of request submitted by Continental Express and response of General
       Counsel Nancy McFadden to Continental Express, dated June 30, 1998.

   •   Visits to Departmental officials by officials of American, DFW and the City of Fort
       Worth from the fall of 1997 through the summer of 1998 to discuss Love Field
       issues.

(From American’s Answer and Objections to Legend Airlines, Inc.’s Second Set of
Interrogatories, Court of Tarrant County):

              Interrogatory No. 2:

              •   In early December of 1997 American Senior Attorney Bruce
                  Wark, American’s outside counsel Mike Powell, and Fort
                  Worth’s outside counsel Glenn Johnson met with
                  [representatives of the Department’s General Counsel’s office]
                  to discuss the status of the litigation in Texas. The conversation


                                               44
    related primarily to Dallas’s federal court lawsuit, the inclusion
    by Dallas of the DOT and FAA as defendants in that lawsuit,
    the removal of the Fort Worth state court lawsuit to federal
    court, and the legal issues raised by Fort Worth’s motion to
    remand the case to state court. Either before or at that meeting,
    a paper was given to the DOT. The paper included portions
    relating to the history of DFW Airport and the Wright
    Amendment, the status of the Texas litigation, a legal analysis
    of preemption issues, and the potential effect of expanded
    operations at Love Field on DFW Airport. Prior to that
    meeting, Mr. Wark had one or more phone conversations with
    [a representative of the Department’s General Counsel’s office]
    in which they discussed the logistics of the meeting.

•   In early January of 1998, American’s General Counsel Anne
    McNamara, American’s Associate General Counsel Laura
    Einspanier, and Mr. Wark met with [a representative of the
    FAA’s Chief Counsel’s office] at American’s headquarters in
    Fort Worth. . . . The conversation related to the general status
    of the Texas litigation and then pending motion to remand Fort
    Worth’s suit to state court. A paper was given to [FAA]; the
    paper discussed the same topics as set out in the paragraph
    immediately above.

•   Shortly after reading Nancy McFadden’s June 30, 1998 letter,
    Mrs. McNamara phoned Ms. McFadden, who was not in the
    office. In Ms. McFadden’s absence, Mrs. McNamara spoke with
    [a representative of the General Counsel’s office]. In the
    conversation Mrs. McNamara expressed American’s concern
    that the June 30 letter was issued during the pendency of the
    injunction hearing in the state court action with no opportunity
    for input from all of the parties to the litigation. Mrs.
    McNamara also expressed American’s surprise that the
    Department would want to opine on legal issues regarding the
    scope of airport proprietor’s powers given the inherently legal
    nature of such issues and the Department’s previous statements
    that the courts were the proper forum for such issues to be
    resolved. [Mrs. McNamara] also discussed . . . American’s
    opinion that the 1992 DOT study was flawed when it was
    prepared and that it was out of date at this time.

•   On July 6, 1998 Mrs. McNamara wrote to Ms. McFadden
    expressing to her the same thoughts described in the above
    conversation.



                                 45
•   On July 29, 1998, Mrs. McNamara, Mrs. Einspanier, and Mr.
    Wark met with Ms. McFadden [and other Department
    representatives]. The conversation related primarily to the
    DOT’s 1992 Love Field study, flaws therein, and the status of
    the Texas litigation. The American representatives expressed
    their disappointment that the June 30 letter was issued during the
    pendency of the injunction hearing in the state court action with
    no opportunity for all of the parties to the litigation to have
    input. At the meeting, a paper summarizing the status of the
    Texas litigation and the injunction hearing and setting out flaws
    with the 1992 study was given to the DOT. Additionally, copies
    of two exhibits from depositions taken in the case and maps with
    demographic information related to Love Field were given to the
    DOT at this meeting.

•   On August 10, 1998, as a follow up to the earlier meeting, Mrs.
    McNamara wrote Ms. McFadden. This letter discussed the
    history of the founding of DFW Airport, some of the provisions
    of the 1968 Bond Ordinance, and the unique nature of the Love
    Field-related issues before the courts. Attached to the letter
    were copies of two CAB orders.

•   On August 26, 1998, Mrs. Einspanier returned a call . .
    .informing American of the institution of the Love Field Service
    Interpretation Proceeding.      Mrs. Einspanier [said] that
    American had received the Order instituting the proceeding and
    expressed her view that the time given for comments to be filed
    was inadequate. . . . Mrs. Einspanier also inquired as to
    whether questions regarding the four topics of the Order should
    be addressed with DOT prior to the filing of comments or as a
    part of the comments.

•   Near the end of August 1998 Will Ris, American’s Vice
    President of Government Affairs, placed a phone call to Ms.
    McFadden, which was returned by [another representative of
    the General Counsel’s office]. Mr. Ris expressed American’s
    disappointment at the DOT’s institution of the Love Field
    Service Interpretation proceeding and American’s opinion that
    the proceeding would not hasten a resolution of the disputes
    and litigation related to Love Field. [The representative] stated
    that the DOT had concluded that it had no choice but to
    institute the proceeding.

•   On or about September 11, 1998 Daniella Strother, an in house
    lobbyist in American’s Government Affairs office in


                                 46
                      Washington, D.C., received a phone call from [a representative
                      of the General Counsel’s office, who said] that he was calling to
                      inform American that its lawyers were accusing him and Ms.
                      McFadden of forging documents and that as a result of such
                      accusations the DOT was receiving media inquiries. Ms.
                      Strother inquired as to whether the purported accusations were
                      made by American’s attorneys or those of Fort Worth. [The
                      representative of the General Counsel’s office] stated that he
                      saw no difference between the two. Ms. Strother responded by
                      pointing out that in fact American and Fort Worth had separate
                      legal counsel in the Texas litigation.21

                  •   On or around September 14, 1998, Mr. Ris phoned Ms.
                      McFadden to tell her that any allegations that were being made
                      in the Texas litigation related to the proprietary of her June 30
                      letter were not being made by American or its attorneys and that
                      American was not challenging Ms. McFadden’s personal or
                      professional integrity. Mr. Ris did state that American was
                      surprised that Ms. McFadden was able to respond to David
                      Siegel’s letter of June 29 in one day.22


     • Public Statements made by American, Fort Worth, and DFW officials concerning
     the air traffic control system, congestion, the future of DFW and American Airlines, at
         the same time that those parties are seeking:

                           -        new international route authority
                           -        request for approval of American alliances
                           -        PFC applications
                           -        airport funding requests

     •   Statements made by American, Fort Worth, and DFW officials concerning
         questionable conduct and bias by Department officials.

     •   Startup by Southwest Airlines of new through service to Jackson, Mississippi
         and to Birmingham, Alabama from Love Field, bringing lower fares and new
21
   Once again, American officials have a difficult time distinguishing fact from fiction. Although Mr. Kelly is
counsel for Fort Worth, he has been a member of American’s Board of Directors for over 15 years, and his firm
represents American on other issues, and that all tactics and positions involved in the state court litigation are
closely coordinated by all parties. There is little question that Mr. Kelly speaks for American. Moreover, where
has American repudiated those “bias” claims?
22
   Apparently American did question Departmental behavior. It is ironic that Fort Worth, in its comments,
suggests that the Department may be biased because it discussed the issues in this proceeding with Continental
Express and Legend. Fort Worth states, “These actions raise serious concerns about agency bias,” while it is
asking the state court judge to review the bias. Does Fort Worth also believe that the Department may be biased
because of its numerous meetings with American officials? Legend rejects Fort Worth’s claim of bias.


                                                         47
       service to dozens of markets. (In announcing the service, Southwest issued press
       releases acknowledging that the new service was only permitted by the Shelby
       Amendment.)

   •   Initiation of service by American between Houston and LaGuardia, bringing
       complaints of anti-competitive behavior.

   •   Initiation of service by American at Love Field for the first time in 24 years.

   •   Reports concerning the millions of dollars allocated in the Dallas/Fort Worth area
       by the American parties to litigate all issues involving airline service.


       With all of these actions taking place, even the American parties must concede that the

Department had reason to believe that a major issue existed impacting competition, federal law,

the authority of the federal government and airline deregulation. Moreover, considering that

these same parties have filed voluminous documents in various court and administrative

proceedings on the very issues being considered by the Department, the question was not why the

Department became involved but why was it necessary to have such a lengthy comment period.

       American’s Comments imply that the Department is engaged in some sinister plot to

destroy its hub. (Of course, the Department is good when it is helping American increase its

international presence or when considering its mammoth alliance with British Airways and the

new “OneWorld.”) Although it applauds the “good” Department, American objects to the “ad

hoc procedure” of the “bad” Department. The American parties claim that it “appears” that the

Department commenced this proceeding at the request of Legend or Continental, pretending that

the Department would have had no reason to review state court cases brought to overturn federal

law, Department rulings, the control of interstate commerce, attacks on the air traffic control

system and the safety of that system, and repeated statements made about bias of Department

officials. Once again, the American parties ignore fact.



                                                 48
        2.      Legitimate Principles of Federalism Do Not Affect the
                Department’s Authority to Conduct these Proceedings.

        The American parties attack the Department’s authority to conduct this proceeding

because it violates their understanding of “the basic principles of federalism.”          American

Comments, p. 82.23 The federalism argument is, however, patently frivolous. American’s entire

legal support for deferring to Tarrant County Court on a matter of federal aviation law is a dissent

from a denial of certiorari in United Credit Bureau v. NLRB, 454 U.S. 994 (1981). By definition,

a dissent registered in a matter that the Court did not even consider cannot be considered to be

competent legal authority. Moreover, Justice Rehnquist only indicated that he did not believe that

a federal agency had the power to file a lawsuit enjoining an individual to dismiss a state lawsuit.

In this case, by contrast, the Department seeks only to consider the comments of persons with an

interest in the designated issues of federal law. The result will be a declaration. There is no basis

anywhere in law for the Department to refrain from its mission to administer the federal aviation

system as efficiently as possible.

        As demonstrated in Centennial Express, the Department is uniquely qualified to balance

the critical interests of the national aviation system, the requirements of federal airport

development contracts, and the need for and extent of federal preemption over local regulation of

air carrier operations. See Centennial Express, p. 3. The present Proceeding, in which all

interested parties may participate and provide the factual and legal information necessary to an

informed decision, is ideal. American’s suggestion that the Department participate in the Texas

proceedings as an intervenor or amicus curiae is curious.           American essentially asks the

Department to articulate a position on the issues without first considering the arguments and




                                                 49
comments raised by DFW, Fort Worth, Dallas, or other interested entities. There exists no legal

obligation to take such a precipitous approach, and the Department should issue its Order

expeditiously in this Proceeding only after considering the Comments submitted by all the parties.

IV.     CONCLUSION

        The American parties have been litigating issues concerning Love Field and competition

for thirty years.   Unable to dispose of Southwest, they tried to close Love Field. Unable to close

Love Field, they asked Congressman Wright to place shackles around Southwest to limit the level

of competition that would be provided by Southwest. Now facing a much smaller level of

possible competition, the American parties are engaging in new forms of warfare.

        First, they have learned that if the issues involved in this dispute are reviewed by the

federal government or by experienced and proper courts, they will have little chance of prevailing.

Therefore, they turned to an inexperienced state court judge, in a district with significant numbers

of plaintiff’s employees and in which the judge is up for re-election in two years, and have

presented aviation issues to him to decide. This judge is not only ruling on airline safety,

competition, airport growth, and differences between classes of operations, but he is also ruling

on the validity of the Department’s involvement and rulings on these issues. Moreover, his

decision will impact Southwest Airlines and the future of Alliance Airport, which has been

significantly funded by the federal government. These are issues that he has already decided with

little or no evidence. Such an approach is an abuse of the legal system and is inconsistent with

long-established case law.




23
  Fort Worth has not discussed the bases for dismissal in its Comments and has stood on its Motion to Dismiss.
The DFW Board has not taken a position on the Motion to Dismiss. Thus only American has added additional
support to Fort Worth’s request for dismissal of this Proceeding.


                                                     50
       Second, the American parties have learned that their historical explanations for their

actions do not hold up in court. Therefore, they are now arguing that they either:

       •   have veto power over Congressional action, or

       •   federal laws don’t apply to Dallas/Ft. Worth, or

       •   regardless of federal law and Department rulings, there are no limitations on their

           ability to prevent or restrict airline competition.


       The American parties believe that to best serve their customers in certain markets, they

will use all sizes of jets in commuter markets but that no jet should be allowed to be utilized to

serve commuter markets from Love Field. American’s customers at O’Hare, New York, Miami,

and Dallas/Fort Worth can board those jets and larger turboprops but if one of those aircraft

operates at Love Field, the future of American, DFW, Northern Texas and the state will be placed

in jeopardy. It is hard to imagine a more outrageous position. As Abraham Lincoln remarked:

               If you once forfeit the confidence of your fellow citizens, you can
               never regain their respect and esteem. It is true that you may fool
               all the people some of the time; you can even fool some of the
               people all the time; but you can’t fool all of the people all the time.
                               [To a caller at the White House. From Alexander K. McClure,
                                                           Lincoln’s Yarns and Stories, 1904.]

       All of these arguments are made of whole cloth and do not pass the laugh test.

Nevertheless, because there are few consequences to their fantasies about controlling the world’s

aviation system, they continue their odyssey because their costs are less than the cost of

competition. With no regard for public benefits, they press on in an attempt to raise the bar to

competition while at the same time begging for approval of proposals that will give them

unprecedented control of major domestic and international markets.                 As Senate Commerce

Committee Chairman John McCain recently stated:



                                                   51
                 I am afraid, Mr. President, that concentration is increasing rather
                 than decreasing. That trend can only be reversed when we get new
                 entrants into the airline business. I am very disappointed at some of
                 the information - much of it anecdotal - that I hear of the major
                 airlines basically preventing that competition from beginning, or
                 even existing, for a long period of time.


        Whether or not American, DFW, or Fort Worth is given the authority to approve or

disapprove federal law and make decisions concerning airline competition and federal law, is an

issue that is significant to competition in the Dallas/Fort Worth area and throughout the country.

At a time when concentration is reaching alarming levels, American and its partners are proposing

even broader agreements to control traffic.24 Somehow, this empire will crumble if three flights a

day are allowed to Cleveland, or 12 a day on reconfigured jets with 56 seats. At the same time,

there is no new entry.25 The Department’s ruling on these issues will impact the future of airline




24
   On September 21, 1998, Don Carty, American’s chairman, Bob Ayling, British Air’s chief executive, and the
chief executive of Canadian, Cathay Pacific and Australia’s Qantas airlines introduced the “OneWorld” alliance.
Together, the OneWorld partners serve 632 cities worldwide, carry 174 million passengers and 2.6 billion tons of
cargo a year, and fly 1,524 planes. Air New Zealand, Anset Airlines of Australia and Japan’s All Nippon Airways
are expected to join the Star Alliance in the next few months, according to people in the industry. The OneWorld
executives said they expect several more major airlines to join them. They have already named Japan Airlines,
Iberia Spanish Airlines, FinnAir, Dragonair of Hong Kong, and perhaps several of American’s existing Latin
American partners as potential partners. Those include LanChile, Aerolineas Argentinas and the TACA Group of
national airlines in Central America. The OneWorld executives also would not rule out the eventual inclusion of
another U.S. airline. OneWorld represents one of the first big steps toward consolidation of the global airline
industry.
25
   According to a report prepared by The Campbell-Hill Aviation Group, Inc. for the Air Transport Association,
“Debunking the Department of Transportation Myths About Domestic Airline Competition,” (September 21,
1998), one of the reasons why new entry has slowed includes: “The DOT frustrated the efforts of at least one new
entrant by its exclusionary interpretation of the ‘Wright Amendment.’” The report further stated:
                   Legend Airlines, a new carrier that has an application pending before the DOT
                   for a Part 401 certificate, was thwarted in 1996 by the DOT’s insistence that
                   the company’s proposal to operate at Dallas Love Field with 56 seats in large
                   aircraft was not permitted under the ‘Wright Amendment.’ It took Legend
                   approximately one year to have Congress deal with the Wright Amendment
                   issue and allow Legend to proceed with its service plan. Legend filed in court
                   to have the DOT General Counsel’s opinion overturned but the proceeding
                   dragged on so long that the company pursued Congress for relief from the
                   General Counsel’s order.


                                                       52
deregulation. It is time for the Department to say “no more” and again assert itself into a clear

federal issue. The public interest must be put ahead of corporate greed.

       For all the foregoing reasons, and for those articulated in Legend’s Comments, the

Department should promptly enter appropriate orders as articulated above.




                                                     Respectfully submitted,



                                                     _______________________________
                                                     Edward P. Faberman
                                                     Michelle M. Faust
                                                     Paul A. Olsen
                                                     UNGARETTI & HARRIS
                                                     1747 Pennsylvania Avenue, N.W.
                                                     Suite 900
                                                     Washington, D.C. 2006-4604
                                                     Tel: (202) 778-4460
                                                     Fax: (202) 331-1486




SUBMITTED: October 2, 1998




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