Spirit Airlines, Inc. v. DOT ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 16, 2020 Decided May 21, 2021
No. 19-1248
SPIRIT AIRLINES, INC.,
PETITIONER
v.
UNITED STATES DEPARTMENT OF TRANSPORTATION AND
FEDERAL AVIATION ADMINISTRATION,
RESPONDENTS
On Petition for Review of an Order of the
Federal Aviation Administration
Aimee W. Brown argued the cause for petitioner. On the
briefs were Joanne W. Young and David M. Kirstein. Kannon
K. Shanmugam entered an appearance.
Scott P. Lewis and Thomas R. Devine were on the brief for
amicus curiae Airports Council International - North America
in support of petitioner.
Benjamin M. Shultz, Attorney, U.S. Department of Justice,
argued the cause for respondents. With him on the brief were
Michael S. Raab, Attorney, Steven G. Bradbury, General
Counsel, U.S. Department of Transportation, Paul M. Geier,
Assistant General Counsel for Litigation and Enforcement, Joy
2
K. Park, Senior Trial Attorney, and Arjun Garg, Chief Counsel,
Federal Aviation Administration.
Before: HENDERSON and WALKER, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
GINSBURG.
GINSBURG, Senior Circuit Judge: Spirit Airlines, a low-
fare passenger carrier, challenges the Federal Aviation
Administration’s decision not to reallocate peak-period flight
authorizations previously held by Southwest Airlines at
Newark International Airport. Spirit argues this decision was
arbitrary and capricious because the FAA improperly failed to:
(1) consider the effect on competition; (2) consider less
burdensome alternatives; and (3) support its decision with
substantial evidence. The FAA argues its decision is
unreviewable because it is not final agency action and, in the
alternative, contests each of Spirit’s objections.
We conclude the FAA’s decision was final because it
prevented Spirit from operating as many peak-period flights as
it would otherwise have done in the Summer 2020 scheduling
season. We also conclude the FAA’s decision was arbitrary
and capricious because the agency disregarded warnings about
the effect of its decision on competition at Newark. We
therefore grant Spirit’s petition for review and vacate the
FAA’s decision to retire the peak-period flight authorizations
previously held by Southwest.
I. Background
Since 1968, the FAA has exercised varying degrees of
control over the scheduling of flights to and from Newark
3
International Airport. See High Density Traffic Airports, 33
Fed. Reg. 17,896 (Dec. 3, 1968). For some years the FAA
maintained a formal reservation system known as “slot control”
that required each airline to request in advance a “slot” for each
takeoff or landing it proposed to schedule. See Republic
Airline Inc. v. Dep’t of Transp., 669 F.3d 296, 297-98 & n.2
(D.C. Cir. 2012).
The FAA relaxed this requirement in 2016. See Change of
Newark Liberty International Airport (EWR) Designation, 81
Fed. Reg. 19,861, 19,862 (Apr. 6, 2016). Under its current
policy, the FAA announces hourly and half-hourly caps on
takeoffs and landings for a given scheduling season. See
Notice of Submission Deadline for Schedule Information for
Newark Liberty International Airport for the Summer 2020
Scheduling Season, 84 Fed. Reg. 52,580, 52,581 (Oct. 2, 2019).
Each airline then tells the FAA what flights it wants to operate
during the upcoming season. Id. The FAA may either approve
an airline’s plan or request that it make changes in order to
reduce congestion. Id.An airline is not legally barred from operating flights not
on its FAA-approved schedule. See 81 Fed. Reg. at 19,862.
The FAA has warned, however, that doing so may exacerbate
congestion and bring about a return to slot control. 84 Fed.
Reg. at 52,582 (noting “if voluntary schedule adjustments are
not achievable, consideration may be given to whether [slot
control] is necessary...”). Should that happen, the FAA has
said it would allocate slots based upon a grandfathering policy:
“historic precedence would not be granted,” however, “for any
operation conducted without FAA approval” under the current,
more relaxed framework. Id. As a result, only flights that
currently operate with the FAA’s blessing would be allowed to
continue under slot control.
4
Competition – more specifically, the lack of competition
among airlines – has long been a problem at Newark. In 2010,
when the airport was still under slot control, United and
Continental Airlines sought to merge. To prevent harm to
competition, the Department of Justice (DoJ) conditioned the
merger on United’s transferring 36 slots to Southwest Airlines,
a low-fare carrier that was not then operating at Newark. See
DoJ Press Release, “United Airlines and Continental Airlines
Transfer Assets to Southwest Airlines in Response to
Department of Justice’s Antitrust Concerns,” (Aug. 27, 2010),
https://www.justice.gov/opa/pr/united-airlines-and-
continental-airlines-transfer-assets-southwest-airlines-
response. Over the next five years, the DoJ resisted United’s
multiple attempts to acquire more slots at Newark. For
example, United tried to acquire more slots once in 2014 and
twice in 2015 even though it was not using all the slots it
already had. Verified Compl. at ¶¶ 3-4, 7-8 21-24, United
States v. United Continental Holdings, Inc., No. 2:15-cv-07992
(D.N.J. Nov. 10, 2015). In 2015 the DoJ sued United for
attempted monopolization in violation of the Sherman
Antitrust Act. Id. at ¶¶ 21, 48-49. United ultimately
abandoned each effort. Id. at ¶ 21; Stipulation of Dismissal,
United Continental Holdings, No. 2:15-cv-07992 (D.N.J. Apr.
6, 2016). United remained the dominant carrier at Newark
nonetheless.
In July 2019 Southwest announced it would pull out of
Newark in November of that year. Of Southwest’s 36 slots,
approximately 16 were in the highly desirable “peak hours,”
which run from 7:00 a.m. to 8:59 a.m., and from 1:30 p.m. to
9:59 p.m. Those are the periods in greatest demand. See 84
Fed. Reg. at 52,581. Spirit Airlines immediately asked for
5
them. 1 In meetings with officials from the U.S. Department of
Transportation (DoT) and the FAA, Spirit said it would
“continue the low-fare service that had been established by the
Department of Justice in 2010 and prevent the detrimental
effects on competition” that would ensue if Southwest’s peak
hour authorizations were simply retired.
Others weighed in too. In an August 2019 letter to the
FAA, Makan Delrahim, Assistant Attorney General in charge
of the Antitrust Division of the DoJ, observed that United then
held “approximately 66% of [the] authorizations at Newark.”
He also noted over half of all flights at Newark were United
flights on “monopoly routes,” meaning no other airline flew the
same route. Huntley Lawrence, Director of the Aviation
Department of the Port Authority of New York and New
Jersey, which operates Newark Airport, shared similar
concerns in his own August 2019 letter. He pointed out that
United accounted “for 72 percent of [Newark’s] peak hour
operations” and, he observed, “the true price of [United’s]
dominance ... is borne by consumers in the form of higher ticket
prices, or the ‘Newark Premium.’”
Both the DoJ Antitrust Division and the Port Authority
cautioned the FAA against retiring Southwest’s slots. The
Antitrust Division explicitly forewarned that “some
stakeholders, particularly United, may urge the DoT and FAA
to retire the capacity, ostensibly to alleviate congestion at the
airport.” It urged DoT and the FAA to preserve competition by
1
Airlines such as United that already operated during peak hours
with the FAA’s blessing did not need to worry about running into the
hourly caps. See 84 Fed. Reg. at 52,581. As the agency explained,
it would continue to “accept flights above the limits if the approved
flights were operated by the same carrier on a regular basis in the
previous corresponding season.” Id.
6
reallocating Southwest’s peak period slots and to address the
problem of congestion by other means, such as “scheduling
reduction meetings” with all carriers operating at Newark,
pursuant to 49 U.S.C. § 41722. The Port Authority expressed
similar concerns:
Allowing [United] to increase its share of peak hour
operations at Newark would cement its monopolistic
position. The threat to consumer choice and healthy
competition can only be mitigated by maintaining
meaningful low-fare service options during peak (i.e.
marketable) times. Accordingly, Southwest’s authorized
operations should be allocated as a package to a new
entrant, limited incumbent, or low-cost carrier.
And, like the Antitrust Division, the Port Authority urged the
FAA to convene a scheduling meeting to address congestion.
It further charged that United and the FAA had “largely
caused” the congestion problems because the agency had
allowed United to operate an increasing number of flights
during already busy hours.
In October 2019, the FAA issued a Notice announcing the
deadline for airlines to submit their proposed Summer 2020
Newark schedules for review. See 84 Fed. Reg. at 52,580-82
(October Notice). At the same time, the FAA announced it
would retire Southwest’s entire block of peak period slots:
The FAA plans to assess the impacts of the peak period
Southwest reductions and other schedule changes at
[Newark] on performance, as well as the impacts on
competition in close coordination with the Office of the
Secretary of Transportation, in the upcoming Winter
2019/2020 and Summer 2020 scheduling seasons. The
FAA intends to publish additional information on the
7
outcome of this assessment in future notices related to
these airports [sic]. However, the FAA will not during that
assessment period be replacing or “backfilling” the peak
morning and afternoon/evening operations that Southwest
conducted during Winter 2018/2019 and Summer 2019, to
the extent the new operations would exceed the current
scheduling limits.
Id. at 55,582.
Spirit petitioned this court to review and vacate the FAA’s
decision not to reallocate Southwest’s peak slots. It claims the
decision was arbitrary and capricious because the FAA:
(1) failed to consider the effect of its decision on competition;
(2) did not explain why it could not use a less burdensome tool,
such as a schedule reduction meeting, to address congestion;
and (3) lacked substantial evidence for its decision. The FAA
argues its decision retiring Southwest’s peak slots is not final
and hence not reviewable and contests each of Spirits
contentions.
II. Reviewability
Spirit relies upon 49 U.S.C. § 46110(a), which authorizes
this court to review an “order” issued by the FAA. City of
Dania Beach v. FAA, 485 F.3d 1181, 1187 (D.C. Cir. 2007)
(explaining that, as under the Administrative Procedure Act, “a
reviewable order under 49 U.S.C. § 46110(a) must possess the
quintessential feature of agency decisionmaking suitable for
judicial review: finality” (cleaned up)). Because “section
46110 does not impose any explicit finality requirement,” we
have “incorporated generally applicable finality principles into
the analysis of what counts as an ‘order’ under [that
provision].” Flytenow, Inc. v. FAA, 808 F.3d 882, 888-89
(D.C. Cir. 2015). “To be deemed ‘final,’ an order must mark
8
the ‘consummation’ of the agency’s decisionmaking process,
and must determine ‘rights or obligations’ or give rise to ‘legal
consequences.’” City of Dania Beach, 485 F.3d at 1187(quoting Bennett v. Spear, 520 U.S. 154, 177–78 (1997)); see
also Nat’l Envtl. Dev. Assoc.’s Clean Air Project v. EPA, 752
F.3d 999, 1006 (D.C. Cir. 2014) (“An agency action may be
final even if the agency’s position is subject to change in the
future.” (internal quotation marks omitted)).
The FAA argues its October 2019 Notice “neither
determines obligations nor carries legal consequences”
because airlines may legally operate flights not included on
their preapproved schedules. As a result, any consequence the
Notice may have is not “legal” but merely “practical.” 2 See
Joshi v. NTSB, 791 F.3d 8, 11 (D.C. Cir. 2015) (explaining an
agency’s request for voluntary compliance had practical
consequences, but no binding legal effect and therefore did not
constitute final agency action). Admittedly, it is a blurry line
that separates legal consequences from practical consequences.
We can see, however, that an agency’s action need not flatly
prohibit a party from acting in order to affect its legal rights; it
is enough that the agency action presently and directly limits or
2
The FAA characterizes its finality argument as jurisdictional. See
Resp. Br. at 12 (“This Court lacks jurisdiction because the [Notice]
is not a final order.”). As we have explained before, however,
finality is a prudential doctrine, not a limit on our jurisdiction.
Flytenow, Inc. v. FAA, 808 F.3d 882, 889 (D.C. Cir. 2015) (“Because
the finality requirement under section 46110(a) is judicially imported
from the APA, it is no more jurisdictional than the APA’s own
finality requirement. Our precedent confirms that finality under the
Federal Aviation Act is a matter of judicial creation, allowing us to
avoid premature intervention in the administrative process.”)
(internal quotation marks omitted).
9
defeats a party’s ability to enter into an advantageous business
arrangement. Two of our cases illustrate this principle.
Safe Extensions, Inc. v. FAA involved an “advisory
circular” specifying how the bases that secure runway lights to
the runway must be tested in order to get on the FAA’s list of
approved products. 509 F.3d 593, 595-96 (D.C. Cir. 2007). An
airport that receives federal funds (as do all major airports) may
not use a product that is not on that list. Id. The FAA issued
several circulars that together had the effect of exempting one
type of light base from testing and intensified the requirements
for another. Id. at 596-97. A manufacturer of the latter type
challenged the FAA’s actions as arbitrary and capricious. Id.
at 597. The agency argued its circular was not a final order
under section 46110 because it “neither imposed a legal
obligation upon any person nor created any legal rights.” Id. at
598 (cleaned up). We noted, however, that the circular
“effectively prohibits airports from buying light bases that fail
the new ... test, and it bars manufacturers like Safe Extensions
from selling their products to airports. These are clear legal
consequences of enormous significance.” Id. Safe Extensions
remained free to manufacture its light bases and sell them to
the few airports that might be willing and able to buy them.
Indeed, in principle nothing prohibited Safe Extensions from
trying to persuade other airports to forgo federal funding in
order to buy its light bases, but obviously that would be a fool’s
errand.
This court applied the same principle more recently in
SecurityPoint Holdings, Inc. v. TSA, 769 F.3d 1184 (D.C. Cir.
2014). That case involved a program of the Transportation
Security Administration that allowed private venders to place
advertisements on checkpoint equipment (such as plastic bins)
they provided free of charge. To participate in the program, an
airport would sign a Memorandum of Understanding (MoU)
10
with the TSA requiring “participating airports to indemnify
TSA from all liability for intellectual property claims related to
the checkpoint equipment.” Id. at 1186. One of the
contractors, SecurityPoint, asked the TSA to reconsider,
arguing no airport would be willing to enter into the MoU. Id.
at 1187. When the agency refused, SecurityPoint petitioned
this court for review under section 46110. Id. We held the
TSA’s refusal was final because it “gave rise to legal
consequences by confirming that participating airports will be
subject to TSA’s new mandatory MOU language and thereby
affected SecurityPoint’s ability to contract with those airports.”
Id. at 1187 (cleaned up). The indemnification clause may not
have stopped all airports from contracting with SecurityPoint,
but it limited the company’s ability to enter into business
relationships with many airports.
So, too, here: Spirit is legally free to operate unapproved
flights or, improbably, to try to persuade other airlines to swap
their peak slots for Spirit’s off-peak slots. The FAA’s action,
however, effectively forecloses Spirit from operating as many
peak-period flights as it would otherwise do. In this way, the
FAA’s action hinders Spirit’s ability to pursue business
opportunities as surely as would an express prohibition.
To emphasize the purportedly voluntary nature of the
overall scheduling regime at Newark, 3 the FAA also ignores
3
We question just how “voluntary” this regime is. When it ended
slot control at Newark in 2016, the FAA acknowledged “some
carriers might operate at times without approval from the airport’s
schedule facilitator.” 81 Fed. Reg. at 19,862. Since then, however,
the FAA has conveyed its expectation – backed by the threat of a
possible return to slot control – that airlines will cooperate with its
scheduling efforts. See 84 Fed. Reg. at 52,581-82. A request for
help backed by a threat hardly seems a call for voluntary action; at
best, the airlines appear to have been “voluntold.” U.S. Army,
11
the value to an airline of having the agency’s approval. The
FAA acknowledges operating flights without its blessing could
cause it to reimpose slot controls at Newark,4 but it argues this
possibility is speculative and therefore of no legal
consequence. In the same vein, the FAA maintains that none
of the scheduling decisions it makes under the scheme now in
place at Newark is or ever could be final. 5 By declaring that
“Soldier-Speak: A Brief Guide to Modern Military Jargon” (Mar. 9,
2015),
https://www.army.mil/article/144045/soldier_speak_a_brief_guide_
to_modern_military_jargon (noting “a voluntold assignment is
technically voluntary,” but “is understood to be mandatory”). In
Chamber of Commerce v. Department of Labor, we rejected an
agency’s attempt to portray as voluntary a program that allowed
certain workplaces to eliminate the risk of costly inspections by
implementing a comprehensive safety and health program. 174 F.3d
206, 209 (1999). There, as here, “the voluntary form of the rule is
but a veil for the threat it obscures.” Id. at 210.
4
The FAA has said it sets flight limits based upon congestion. See
84 Fed. Reg. at 52,581; see also 81 Fed. Reg. at 19,862. It has also
said flights at Newark are already above capacity and that it has
observed problematic delays. See 84 Fed. Reg. at 52,581-82. And it
has warned continued congestion could result in a return to slot
control. Id. at 52,582. So airlines that choose to operate unapproved
flights do so knowing the FAA already considers them congestion-
enhancing. In other words, were Spirit to try to backfill Southwest’s
authorizations without the FAA’s blessing, it would risk hastening a
return to slot control.
5
See Oral Arg. at 20:14-20:57 (“[W]e’re not here saying that if at
some point in the future the FAA goes to [slot control] and Spirit
wants to get a spot and ... doesn’t get that slot in the [slot controlled]
regime – we’re not saying that Spirit can’t at that point seek judicial
review. A [slot controlled] regime would have legal effect. What
we are saying is that in [the current] regime where all the FAA is
doing is this voluntary facilitation process ... because those decisions
12
only approved flights would be grandfathered should it
reimpose slot control, however, the FAA effectively created
two classes of flights of profoundly different value. The first
class comprises flights an airline operates with the FAA’s
approval; they would be given precedence if congestion
worsens and slot controls return. The second class consists of
flights operated without the FAA’s approval; they would
assuredly be barred under slot control. Thus, the FAA’s
decision to retire Southwest’s peak slots rather than allocating
them to Spirit denied Spirit (and perhaps other airlines) both
the chance to use those slots in the present and the value they
would have should the FAA reimpose slot control in the future.
That is surely final agency action.
The FAA nonetheless argues the October Notice is not the
consummation of the FAA’s decisionmaking process because
it did not actually approve or disapprove any specific proposed
flights. The agency did predict it would not approve new peak
period flights but, as it points out, those predictions could prove
wrong. The FAA also notes there could be some swaps among
airlines, the upshot being that Spirit might end up with approval
to operate some peak flights after all.
The FAA misses the forest for the trees. Spirit is not
challenging the FAA’s decision regarding any individual
scheduling authorization; rather, it is challenging the FAA’s
decision, in the same October Notice, to retire Southwest’s
entire block of peak-period slots. Even if Spirit were to swap
its way into all Southwest’s peak authorizations, the Notice
would still limit its ability to take full advantage of them for the
FAA’s decision denies them the protected status approved
don’t have legal effect and Spirit is still free to fly right now then it’s
not yet final agency action.”).
13
flights get. Because these legal consequences are the direct
result of the FAA’s decision, our precedents, as we have seen,
require that we deem the October Notice final agency action.
III. Merits
Having concluded the FAA’s order was final, we must
determine whether the FAA’s decision to retire Southwest’s
peak authorizations was arbitrary and capricious, as Spirit
claims. “Under this standard, we may reverse only if the
agency’s decision is not supported by substantial evidence, or
the agency has made a clear error in judgment.” J.A. Jones
Mgmt. Servs. v. FAA, 225 F.3d 761, 764 (D.C. Cir. 2000)
(internal quotation marks omitted). Although our review is
inherently deferential, it is not satisfied by an agency decision
that ignores an important aspect of the problem before it or
relies upon a threadbare explanation. See Am. Wild Horse
Pres. Campaign v. Perdue, 873 F.3d 914, 923 (D.C. Cir. 2017).
“An agency is required to consider responsible alternatives to
its chosen policy and to give a reasoned explanation for its
rejection of such alternatives.” Am. Radio Relay League, Inc.
v. FCC, 524 F.3d 227, 242 (D.C. Cir. 2008) (internal quotation
marks omitted). This principle goes to the heart of reasoned
decisionmaking; it is not limited to rulemaking. See, e.g.,
Yakima Valley Cablevision, Inc. v. FCC, 794 F.2d 737, 746
n.36 (D.C. Cir. 1986) (collecting cases and noting “[t]he failure
of an agency to consider obvious alternatives has led uniformly
to reversal”).
Ignoring an important aspect of the problem is precisely
what the FAA has done. The DoJ, the Port Authority, and
Spirit all complained to the FAA that retiring Southwest’s peak
authorizations was a drastic measure to address congestion and
would do substantial harm to competition and hence passengers
at Newark. If cutting flights was necessary, the DoJ urged the
14
DoT to do so through a schedule reduction meeting pursuant to
49 U.S.C. § 41722, rather than by retiring Southwest’s slots.
Despite all this, the FAA gave no indication it even considered
convening a schedule reduction meeting. Indeed, we find very
little to suggest it considered competition at all beyond a single
sentence in the October Notice, quoted above, saying it “plans
to assess” how its decision to retire Southwest’s slots affects
competition at Newark. 84 Fed. Reg. at 52,582. That falls well
short of what is needed to demonstrate the agency grappled
with an important aspect of the problem before it or considered
another reasonable path forward. See Chamber of Commerce
v. SEC, 412 F.3d 133, 145 (D.C. Cir. 2005) (“Where a party
raises facially reasonable alternatives, the agency must either
consider those alternatives or give some reason for declining to
do so” (cleaned up and quoting Laclede Gas Co. v. FERC, 873
F.2d 1494, 1498 (D.C. Cir. 1989)); Allied Local & Reg’l Mfrs.
Caucus v. EPA, 215 F.3d 61, 80 (D.C. Cir. 2000) (“To be
regarded as rational, an agency must ... consider significant
alternatives to the course it ultimately chooses”). For this
reason, we must vacate the FAA’s decision not to reallocate
Southwest’s peak slots as announced in the October Notice and
remand this matter to the agency to deal with the issue of
competition.
We could stop here, but to inform the FAA’s consideration
on remand and avoid another round of review, we will address
Spirit’s contention that the FAA’s decision was not supported
by substantial evidence. The substantial-evidence standard
requires such “evidence as a reasonable mind might accept as
adequate to support a conclusion.” Biestek v. Berryhill, 139 S.
Ct. 1148, 1154 (2019) (quoting Consolidated Edison Co. v.
NLRB, 305 U.S. 197, 229 (1938)). The FAA fails to clear this
low bar.
15
The FAA argues the record shows it tried to address a
hopelessly complex problem and was beset by irreconcilable
proposals from stakeholders. It points to United’s submissions,
which argued congestion at Newark was so bad that the agency
should immediately reimpose slot control. “Faced with ...
competing proposals, and accompanying uncertainty
surrounding what effect Southwest’s departure would have on
[Newark],” the FAA contends it “adopted a middle-of-the road
approach.” It also contends an agency faced with uncertainty
acts reasonably when it pauses to study an issue further. Of
course, that can sometimes be the only rational thing to do. Cf.
Commonwealth of Pa. v. Lynn, 501 F.2d 848, 855-56 (D.C. Cir.
1974).
In this case the FAA’s ‘pause to study’ explanation runs
into three problems. First, the agency assumes embracing a
“middle-of-the-road approach” and studying an issue further is
self-evidently reasonable. But the FAA points to nothing in the
record from which we can conclude it rationally analyzed the
various issues before deciding to retire Southwest’s peak-
period slots and then study the effect on congestion. See Fla.
Power & Light Co. v. FERC, 85 F.3d 684, 689 (D.C. Cir. 1996)
(noting “parties are entitled to the agency’s analysis of its
proposal, not post hoc salvage operations of counsel”).
Second, contrary to the FAA’s suggestion, the record does
not show it had to tackle a particularly complex problem. The
agency produced a fairly simple model based upon historical
data – which Spirit does not challenge – to predict how
congestion would change if Southwest’s peak authorizations
were retired. The model predicted varying reductions in delay
over the course of a day but they were uniformly quite modest,
to say the least. For example, the FAA anticipated no delay
reduction whatsoever from retiring the flight Southwest
operated during the 7:00 a.m. hour or the two flights it operated
16
during the 1:00 p.m. hour. Retiring the seven flights Southwest
operated during the 2:00 p.m. or 5:00 p.m. hours was
anticipated to reduce the average delay per operation (i.e., per
landing and takeoff) by about 20 seconds. Retiring the three
flights Southwest operated during the 7:00 p.m. hour was
anticipated to reduce delays by about one minute per operation.
The greatest reduction would occur if the agency retired the
two flights Southwest operated between 8:00 p.m. and 9:59
p.m. In that case, delays would decrease by about four minutes
per operation, from approximately 28 minutes to
approximately 24 minutes per flight. In total, the FAA’s model
suggested retiring all of Southwest’s authorizations during
peak hours – as it did – would reduce delays on average by a
little over one minute per operation.
Meanwhile, the agency also ignored information about the
competitive situation at Newark. The Port Authority, in
particular, had painted a dire picture. United already accounted
for 72 percent of the peak period operations at Newark, and it
estimated retiring Southwest’s authorizations would increase
that to 75 percent. The Port Authority also observed airfares
generally fall by nearly 45 percent when a second airline begins
flying what had been a monopoly route. And the Port
Authority suggested United’s own scheduling requests – on
which the FAA signed off – were “the root cause of ... delay”
at Newark.
The record provides precious little insight into whether or
how the FAA approached the competition problem. The
agency has not pointed us to a single page in the record where
it analyzed the competition issues highlighted by the DoJ, the
Port Authority, and Spirit. Nor did it say in the Notice or
anywhere else why it prefers miniscule reductions in delay
more than competition that could lower fares for passengers.
Hence, we cannot say a reasonable mind would find the record
17
as a whole supports the FAA’s decision, bearing in mind that
“[t]he substantiality of evidence must take into account
whatever in the record fairly detracts from its weight.”
Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951).
Here that means we must consider the Port Authority’s
contention – which the FAA did not address let alone contest –
that other, less drastic measures for reducing delays were
preferable to retiring Southwest’s peak-period approvals. It
also means we must take with a grain of salt the “self-serving
views of the regulated entities,” such as those offered by United
upon which the FAA seems to have relied. NetCoalition v.
SEC, 615 F.3d 525, 541 (D.C. Cir. 2010), superseded by statute
as stated in NetCoalition v. SEC, 715 F.3d 342, 344 (D.C. Cir.
2013).
Third, the FAA has pointed to nothing in the record to show
why a delay reduction meeting would be impractical or less
appropriate than retiring all Southwest’s peak-period
authorizations. The agency tells us it “reasonably concluded
that convening such a meeting (or engaging in any other
process that would involve the extreme measure of forcibly
reducing existing flights) would be premature” because it “was
still gathering data on competition and delays in the post-
Southwest era.” But that explanation makes no sense, nor is it
supported by the record. It makes no sense because its decision
to retire Southwest’s authorizations did, in fact, forcibly reduce
the number of existing flights. And it is unsupported by the
record because the FAA’s own predictive model and the
information provided by the Port Authority suggested retiring
Southwest’s peak-period approvals would do hardly anything
to reduce delays.
If the FAA again decides to retire Southwest’s peak-period
slots, it should be prepared to provide a reasoned explanation
for preferring to cut travel time an average of one minute rather
18
than to cut the price of flying by as much as 45 percent on
routes that would gain a second carrier.
IV. Concluding Remarks
We close by touching briefly upon Spirit’s statutory
arguments. Spirit claims various statutory provisions obligated
the FAA to consider competition when it determined the fate
of Southwest’s peak-period authorizations. See 49 U.S.C.
§§ 40101(a), 40103(b), and 47101(a)(9). The FAA counters
that none of those provisions applies to the decision Spirit is
challenging. It argues § 40101(a) imposes an obligation only
on the Secretary of Transportation and only when carrying out
duties not at issue in this case. It argues § 40103(b) permits,
but does not require, the agency to consider competition. And
it argues § 47101(a)(9) is “best read as an advisory directive
only.” Given our discussion thus far we need not decide
whether the FAA was bound by statute to consider competition.
But see Am. Airlines v. Civil Aeronautics Bd., 192 F.2d 417,
420 (D.C. Cir. 1951) (“Whatever belittling significance may be
attached to the fact that [provisions detailing factors for the
agency to consider] were under a title ‘Declaration of Policy’,
they are in the statute, are peremptory, and are as much an
enactment by the Congress as is any other section of the
statute”). Under the APA, it is enough that interested parties
raised the lack of competition to the FAA, which essentially
ignored the issue.
For the foregoing reasons, the petition for review is,
Granted.