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1987 - January DOT Ord. & Dec. [1] (January, 1987)

handle is hein.usfed/dotod0371 and id is 1 raw text is: Order 87-1-1 UNITED STATES OF AMERICA DEPARTMENT OF TRANSPORTATION RECEIVED IN LEGAL OFFICE OF THE SECRETARY o - .. WASHINGTON, D.C. N 8 1987 1 Issued by the Department of Transportation DB SBB MB GWB FAB NLC on the 24th day of December, 1986 RAC RC ELG WGG EG PJL JML PAR RS AMU U.S.-Canada fare increases proposed by: : SERVED JAN 2 1987 CANADIAN PACIFIC AIR LINES, LTD. : Docket 44587 ORDER OF SUSPENSION AND INVESTIGATION By tariff revisions filed for effectiveness January 10, 1987, Canadian Pacific Air Lines, Ltd. (Canadian Pacific) proposes four percent increases in a number of its U.S.-Canada coach fares. In the absence of justification in support of its tariff revisions, we have decided to suspend and investigate Canadian Pacific's proposed coach fare increases. Our regulatory ceilings for U.S.-Canada coach fares are based on the Standard Foreign Fare Level (SFFL) plus ten percent upward fare flexibility, 1/ with SFFL base levels determined by the higher of either actual fares in effect on Octoher 1, 1979, or the levels produced by the Standard Industry Fare Level (SIFL) mileage formula in force on that date. 2/ However, these ceilings are not rigid; we are prepared to allow carriers to exceed them upon a showing of sufficient justification. Canadian Pacific's filing proposes coach fares above our ceilings in two of its gateway-to-gateway markets. 3/ The carrier has furnished no economic justification in support of Tts proposal. Under these circumstances, we have decided to investigate the lawfulness of Canadian Pacific's proposed coach fare increases, and to suspend them pending completion of the investigation. 4/ We shall submit this order to the President pursuant to Section 801(b) of tTe Federal AviatiOn Act of 1958, as amended. 5/ 1/ As in other international markets, we generally allow U.S.-Canada carriers complete discretion in pricing their premium and promotional fares. Furthermore, we limit the application of our U.S.-Canada regulatory ceilings to gateway-to-gateway markets only. 2/ See Civil Aeronautics Board Order 83-4-47, April 8, 1983. 3/ See Appendix A. T/ We note that our SFFL methodology, as applied to transborder fares, has not unduly limited increases in Canadian Pacific's coach fares. The alternative use of the SIFL mileage formula produces SFFL base fares that are higher than the fares actually in effect on October 1, 1979, in the markets at issue. Moreover, the carrier's current coach levels have benefitted from earlier, higher SFFL factors. As a result of these circumstances, Canadian Pacific's current coach fares are about 54 percent above Octoher 1979 levels, whereas the SFFL cost index reflects aggregate cost increases since October 1979 of only about 12 percent. 5/ Section 1002(j) of the Act authorizes the Department to take this action in the circumstances presented. Section 801(b) of the Act states that the Department shall submit any order suspending a fare or proposed fare in foreign air transportation pursuant to section 1002(j) to the President.

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