B-142802, AUGUST 23, 1960, 40 COMP. GEN. 111

B-142802: Aug 23, 1960

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

IS TO BE REGARDED AS A PART OF FIRST-CLASS FARE. SUCH JET SUBCHARGES ARE TO BE INCLUDED WITH THE FARE SUBJECT TO THE DISCOUNT. 1960: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 3. AT WHICH CONSIDERATION WAS GIVEN TO THE QUESTION OF WHETHER THE 10 PERCENT MILITARY DISCOUNT FROM THE FIRST-CLASS PASSENGER FARES APPLIED TO SURCHARGES IMPOSED ON FIRST CLASS FLIGHTS UTILIZING JET AIRCRAFT. IN SUPPORT OF YOUR POSITION THAT THE SURCHARGES ARE NOT SUBJECT TO THE MILITARY DISCOUNT. THAT THE SURCHARGES ARE NOT A PART OF THE FARE. ARE "CHARGES" RATHER THAN . " AND THAT THE INTENT OF THE PARTIES TO THE AGREEMENT WAS CONTRARY TO THE POSITION TAKEN BY THE PERSONNEL OF THE GENERAL ACCOUNTING OFFICE AT THE CONFERENCE.

B-142802, AUGUST 23, 1960, 40 COMP. GEN. 111

TRANSPORTATION - MILITARY PERSONNEL - AIR CARRIERS - JET SURCHARGES THE SURCHARGE IMPOSED BY AIR CARRIERS FOR THE TRANSPORTATION OF PASSENGERS ON FIRST-CLASS FLIGHTS BY JET AIRCRAFT, EVEN THOUGH CITED IN TARIFFS AS A LOCAL CHARGE AND LISTED SEPARATELY FROM THE FARE, IS TO BE REGARDED AS A PART OF FIRST-CLASS FARE; THEREFORE, IN THE COMPUTATION OF THE REDUCED FARE DISCOUNT OFFERED BY AIR CARRIERS TO THE MILITARY AGENCIES FOR AIR PASSENGER SERVICES PRIOR TO JULY 1, 1960, WHEN SUPPLEMENT 1 TO JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 6, SPECIFICALLY EXCLUDED JET SURCHARGES FROM THE MILITARY DISCOUNT PROVISIONS, SUCH JET SUBCHARGES ARE TO BE INCLUDED WITH THE FARE SUBJECT TO THE DISCOUNT.

TO THE AIR TRAFFIC CONFERENCE OF AMERICA, AUGUST 23, 1960:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 3, 1960, PERTAINING TO A CONFERENCE ON JULY 15, 1959, BETWEEN AIRLINE REPRESENTATIVES AND PERSONNEL TO THE GENERAL ACCOUNTING OFFICE, AT WHICH CONSIDERATION WAS GIVEN TO THE QUESTION OF WHETHER THE 10 PERCENT MILITARY DISCOUNT FROM THE FIRST-CLASS PASSENGER FARES APPLIED TO SURCHARGES IMPOSED ON FIRST CLASS FLIGHTS UTILIZING JET AIRCRAFT, AND ON SIMILAR SURCHARGES.

THE PERSONNEL OF THE GENERAL ACCOUNTING OFFICE STATED AT THE CONFERENCE THAT THEY CONSTRUED THE PROVISIONS OF PART II-2 OF THE JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 6, EFFECTIVE JULY 1, 1959, AS AUTHORIZING THE APPLICATION OF THE 10 PERCENT DISCOUNT PROVIDED THEREIN TO THE SUBJECT SURCHARGES. YOU REQUEST IN YOUR LETTER OF MAY 3, 1960, THAT "THE GENERAL ACCOUNTING OFFICE RECONSIDER ITS POSITION ON THE MATTER AND REVERSE ITS DECISION IN ORDER TO EFFECTUATE THE INTENT AND PURPOSE OF THE CONTRACTING PARTIES.'

IN SUPPORT OF YOUR POSITION THAT THE SURCHARGES ARE NOT SUBJECT TO THE MILITARY DISCOUNT, YOU CONTEND, PRIMARILY, THAT THE SURCHARGES ARE NOT A PART OF THE FARE, BUT ARE "CHARGES" RATHER THAN ,FARES," AND THAT THE INTENT OF THE PARTIES TO THE AGREEMENT WAS CONTRARY TO THE POSITION TAKEN BY THE PERSONNEL OF THE GENERAL ACCOUNTING OFFICE AT THE CONFERENCE. HAVE REVIEWED THE RECORDS AVAILABLE HERE WHICH PERTAIN TO THIS ISSUE, INCLUDING THE COPY OF THE AIRLINE FINANCE AND ACCOUNTING CONFERENCE MEMORANDUM NO. 96, DATED AUGUST 4, 1959, WHICH ACCOMPANIED YOUR LETTER.

JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 6, EFFECTIVE JULY 1, 1959, PROVIDES, IN PART II-2 THEREOF, THAT:

THE AIR CARRIERS WILL MAKE APPLICABLE TO THE TRANSPORTATION OF PASSENGERS REDUCED FARES EQUAL TO THE NINETY PERCENT (90 PERCENT) OF THE FIRST-CLASS * * * PASSENGER FARES PUBLISHED IN TARIFFS WHICH SPECIFICALLY REFER TO A TARIFF APPLYING EXCLUSIVELY TO MILITARY TRAFFIC FOR GOVERNING RULES * *

LOCAL AND JOINT PASSENGER TARIFF NO. M-12, C.A.B. NO. 53, EFFECTIVE JULY 1, 1959, ISSUED BY C. C. SQUIRE, AGENT, APPLIES ONLY FOR ACCOUNT OF THE MILITARY AGENCIES OF THE UNITED STATES AND SPECIFIC REFERENCE IS MADE TO THAT TARIFF IN AIR TRAFFIC CONFERENCE OF AMERICA LOCAL AND JOINT PASSENGER FARES TARIFFS NO. PF-5, C.A.B. NO. 44, ISSUED BY C. C. SQUIRE, AGENT. MANY, IF NOT ALL, OF THE CARRIERS SHOWN AS PARTICIPATING CARRIERS IN TARIFF NO. PF-5, AND RATES ARE PUBLISHED FOR THEIR ACCOUNT IN THE LATTER TARIFF. AN EXAMINATION OF LOCAL AND JOINT PASSENGER FARES TARIFF NO. F-5, C.A.B. NO. 44, SHOWS, FOR EXAMPLE, THAT LOCAL FIRST-CLASS FARES APPLYING FROM BALTIMORE, MARYLAND, TO LOS ANGELES, CALIFORNIA, FOR ACCOUNT OF AMERICAN AIRLINES, INC., ARE PUBLISHED ON 11TH REVISED PAGE 30 THEREOF. ALSO, 15TH REVISED PAGE 29 OF THE SAME TARIFF PUBLISHES "1AMERICAN AIRLINES, INC. LOCAL CHARGES," ONE OF WHICH IS A ONE-WAY CHARGE OF $10 BETWEEN BALTIMORE AND LOS ANGELES. THIS IS SHOWN TO BE AN "1AA B-707 CHARGE" WHICH IS TO BE APPLIED IN ADDITION TO ALL OTHER FARES AND CHARGES PUBLISHED IN THE TARIFF AND APPLIES "ON FLIGHTS OPERATING WITH B-707 EQUIPMENT AND DESIGNATED AS SUCH IN AA'S OFFICIAL GENERAL SCHEDULES.' THE TERM "B 707" IS UNDERSTOOD TO REFER TO A JET PLANE. THUS, A PASSENGER TRAVELING VIA AMERICAN AIRLINES, INC., FROM BALTIMORE, MARYLAND, TO LOS ANGELES, CALIFORNIA, ON A JET PLANE MUST PAY FOR HIS TRANSPORTATION THE AMOUNT SHOWN THEREFOR ON 11TH REVISED PAGE 30 OF TARIFF NO. PF-5, C.A.B. NO. 44, UNDER THE HEADING OF ,1LOCAL FIRST CLASS FARES," PLUS THE LOCAL CHARGE--- OTHERWISE REFERRED TO AS A SURCHARGE--- OF $10 SHOWN ON 15TH REVISED PAGE 29 OF THAT TARIFF. THUS, AS INDICATED ABOVE, THE ACTUAL POINT FOR DETERMINATION IS WHETHER THE CITED LOCAL CHARGE, OR SURCHARGE, IS A PART OF THE FIRST-CLASS PASSENGER FARES TO AN EXTENT THAT WOULD MAKE IT SUBJECT TO THE MILITARY ALLOWANCE.

THE JOINT MILITARY AIR TRANSPORTATION AGREEMENT AUTHORIZES "REDUCED FARES EQUAL TO NINETY PERCENT (90 PERCENT) OF THE FIRST-CLASS * * * FARES PUBLISHED IN TARIFFS," AND THERE IS NO REQUIREMENT THAT THE FIRST CLASS FARE BE PUBLISHED AS A "UNIT" OR "SINGLE FACTOR" IN ORDER TO BE SUBJECT TO THE MILITARY ALLOWANCE. ALSO, THE REQUIREMENT THAT THE FARE BE PUBLISHED IN TARIFFS IS SATISFIED IN THIS CASE. THE FARE ASSESSED THE PASSENGER IN THE PRESENT SITUATION FOR THE TRANSPORTATION SERVICE PERFORMED IS THE TOTAL OF THE AMOUNT PUBLISHED ON 11TH REVISED PAGE 30 PLUS THE AMOUNT PUBLISHED ON 15TH REVISED PAGE 29 OF THE TARIFF. THE PARTICULAR NAME USED TO DESIGNATE THE AMOUNT PUBLISHED ON 15TH REVISED PAGE 29 OF THE TARIFF SEEMS TO BE OF LITTLE IMPORTANCE. IF YOUR CONTENTION THAT THE SURCHARGE WAS NOT A PART OF THE FARE WERE TREATED AS CONTROLLING, THE NULLIFICATION OR SUSTAINING OF ALMOST ANY STATUTORY REGULATION OR CONTRACTUAL PROVISION PERTAINING TO ACTIONS OR ARTICLES WOULD DEPEND SOLELY UPON THE NAME APPLIED TO THE PARTICULAR ACTION OR ARTICLE, REGARDLESS OF WHETHER THE DESIGNATION APPLIED TO THE ACTION OR ARTICLE WAS CORRECT OR NOT. THE SURCHARGE IN THIS CASE SEEMS CLEARLY TO BE A PART OF THE FIRST-CLASS PASSENGER FARE.

THE CONCLUSION STATED ABOVE IS CONSISTENT WITH THE VIEW EXPRESSED BY THE CIVIL AERONAUTICS BOARD IN ITS ORDER NO. E-13417, DOCKET NO. 10142, ENTITLED "1IN THE MATTER OF ADDITIONAL CHARGES PROPOSED BY AMERICAN AIRLINES, INC., FOR SERVICE ON BOEING 707 JET AIRCRAFT.' THE BOARD SAID IN THE FIRST PARAGRAPH OF THAT ORDER THAT:

AMERICAN AIRLINES, INC., BY TARIFF REVISIONS FILED DECEMBER 23, 1958 * * * PROPOSED EXTRA CHARGES TO BE ADDED TO FARES FOR THE PURPOSE OF INCREASING FARES FOR SERVICE IN THE FIRST-CLASS AND COACH COMPARTMENT OF BOEING 707 JET FLIGHTS. (ITALICS SUPPLIED.)

THE PRESENT CASE IS SOMEWHAT SIMILAR TO CASES INVOLVING SURCHARGES ACCRUING TO THE RAILROADS WHICH WERE ASSESSED AGAINST PASSENGERS TRAVELING IN PULLMAN CARS. IN THOSE CASES, THE INTERSTATE COMMERCE COMMISSION HELD THAT THE SURCHARGE WAS, IN FACT, A PART OF THE FARE ACCRUING TO THE RAILROAD FOR THE TRANSPORTATION OF THE PASSENGERS. SECOND PASSENGERS IN SLEEPING CAR BERTHS OR SECTIONS, 182 I.C.C. 636; CHARGES FOR PASSENGERS IN SLEEPING AND PARLOR CARS, 95 I.C.C. 469, 478.

THE LANGUAGE EMPLOYED IN PARAGRAPH 2 (B) OF THE JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 6 EFFECTIVE JULY 1, 1959, CONTINUED SIMILAR LANGUAGE IN PRIOR AGREEMENTS ENTERED INTO LONG BEFORE THE INAUGURATION OF JET SERVICE AND WE FIND NOTHING THEREIN WHICH WOULD WARRANT THE CONCLUSION THAT THE MILITARY DISCOUNT WAS NOT TO APPLY TO THE JET SURCHARGES OR THAT THE PARTIES TO THE AGREEMENTS SO INTENDED.

FOR THE REASONS GIVEN ABOVE, THE SURCHARGES HERE CONSIDERED ACTUALLY APPEAR TO CONSTITUTE A PART OF THE FIRST-CLASS FARE, AND THOSE ASSESSED FOR SERVICE PERFORMED PRIOR TO THE AMENDING OF THE AGREEMENT ON JULY 1, 1960, BY SUPPLEMENT NO. 1 THERETO, ARE SUBJECT TO THE MILITARY ALLOWANCE. WHAT HAS BEEN SAID ABOUT THE SURCHARGES PUBLISHED BY THE AMERICAN AIRLINES, INC., APPLIES WITH EQUAL FORCE TO THOSE PUBLISHED BY OTHER CARRIERS FOR SIMILAR SERVICE.

ACCORDINGLY, THE CONSTRUCTION PLACED UPON THE PROVISIONS OF THE JOINT MILITARY AIR TRANSPORTATION AGREEMENT AND THE SUBJECT SURCHARGES BY THE GENERAL ACCOUNTING OFFICE PERSONNEL WHO ATTENDED THE CONFERENCE REFERRED TO ABOVE MUST BE SUSTAINED AS TO SERVICES PERFORMED PRIOR TO JULY 1, 1960. OF COURSE, AS TO SERVICES ON AND AFTER THAT DATE, SUPPLEMENT 1 TO JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 6, PARAGRAPH II-2 (B) SPECIFICALLY PROVIDES THAT THE MILITARY DISCOUNT SHALL NOT APPLY TO JET SURCHARGES.