Federal control and regulations are imposed upon air carriers on the following matters:
- safety and security measures to protect passengers from acts of violence and air piracy;
- aircraft noise and sonic boom;
- economic or business activities pertaining to air carriers;
- arming of aircraft during a war and at any other time when the President determines that the security of the U.S is threatened; and
- insurance and reinsurance by the U.S. of aircraft necessary in the interest of air commerce or national security.
Apart from the regulations on safety and security, economic regulations are also provided under the Federal Aviation Act. Accordingly, the entry into the business of air transportation is controlled by the Civil Aeronautics Board (Board) through the issuance of certificates of convenience and necessity. The air carriers must also establish, file, and adhere to tariffs reflecting reasonable and non-discriminatory rates, regulations, and practices[i]. Hence the Act charges the Board with the prevention of unjust, unreasonable, unjustly discriminatory, or unduly preferential, or prejudicial rates, fares, or charges. The Board also has the authority:
- to suspend unjust, unreasonable rates or practices, and to prescribe lawful ones;
- to prescribe industry accounting practices and require reports;
- to approve mergers, acquisitions, and certain interlocking relationships.
Likewise, the Board shall not approve any consolidation, merger, purchase, lease, operating contract, or acquisition of control which would result in creating a monopoly or monopolies and thereby restrain competition or jeopardize another air carrier who is not a party to the consolidation, merger, purchase, lease, operating contract, or acquisition of control[ii].
In Flying Tiger Line, Inc. v. Civil Aeronautics Board, 350 F.2d 462 (D.C. Cir. 1965), the court observed that, “section 403(b) of the Federal Aviation Act (Act) is in part as follows: Nothing in this Act shall prohibit such air carriers or foreign air carriers, under such terms and conditions as the Civil Aeronautics Board may prescribe, from issuing or interchanging tickets or passes for free or reduced-rate transportation to their directors, officers, and employees; witnesses and attorneys attending any legal investigation in which any such air carrier is interested; persons injured in aircraft accidents and physicians and nurses attending such persons; immediate families, including parents, of persons injured or killed in aircraft accidents where the object is to transport such persons in connection with such accident; and any person or property with the object of providing relief in cases of general epidemic, pestilence, or other calamitous visitation; and, in the case of overseas or foreign air transportation, to such other persons and under such other circumstances as the Board may by regulations prescribe. Any air carrier or foreign air carrier, under such terms and conditions as the Board may prescribe, may grant reduced-rate transportation to ministers of religion on a space-available basis.”
[i] Advanced Micro Devices v. Civil Aeronautics Bd., 742 F.2d 1520 (D.C. Cir. 1984).
[ii] Northwest Airlines, Inc. v. Civil Aeronautics Board, 303 F.2d 395 (D.C. Cir. 1962).