Fuel reservation program proposed by National Business Aircraft Association, an association of owners of…

AVVIDUNY UFLINLUNS 15o0l .

Fuel reservation program proposed by National Business Aircraft Association, an association of owners of business and

executive aircraft. (File No. 743 7010)
Opinion Letter
June 24, 1974
Dear Mr. Powell:

This is in response to your request of February 14, 1974, on behalf of the National Business Aircraft Association, for an advisory opinion. Your request states that NBAA is an association of owners of business and executive aircraft.Because of the regulations imposed by the Federal Energy Office under the Emergency Petroleum Allocation Act, NBAA members and other segments of general aviation have experienced some difficulty and uncertainty in purchasing aviation fuel away from their home airports. This is because the aviation service organizations and fixed base operators (inclusively ASO’s) which operate airport fueling businesses have insufficient and uncertain amounts of fuel for transients who must refuel away from their home bases. The result of this uncertainty, according to your request, is that NBAA members and other segments of general aviation cannot plan their flight itineraries properly, because they cannot know if they will be able to refuel at airports where they are unknown.

To cope with this problem, NBAA seeks to develop a call-ahead fuel reservation program for transient aircraft in general aviation. In concert with other organizations interested in general aviation, NBAA would develop and disseminate a suggested fuel reservation system for voluntary adoption by participating ASO’s. Any transient pilot could call a participating ASO within a specified time of his estimated arrival, tentatively 48 hours, and reserve necessary fuel; the ASO would hold the fuel for a specified period after the reservor’s estimated arrival time, tentatively 6 hours, before selling it to any other customer. The plan, according to your request, would be voluntary and nondiscriminatory. It would be available to all segments of general aviation, and would be disseminated in all available communications channels, including an advisory circular from the Federal Energy Office. Subsidiary to the main plan would be a recommended list of fuel amounts to be made available by an ASO when shortages forced it to curtail sales. Under the subsidiary plan, in shortage situations each ASO would limit sales to two hours cruising time for each plane serviced. This would entail selling differing amounts to each customer, depending upon the size of each particular plane.

Based on its understanding of the NBAA proposal, the Commission advises that no objection will be raised to NBAA’s meeting with the other associations mentioned in your letter for the purpose of discussing and implementing a voluntary call-ahead fue] reservation program, subject to the conditions detailed below. National Macaroni Mfrs. Assn., 65 FTC 583, 612 (1965), aff'd 345 F.2d 421 (7th Cir. 1965). However, you are cautioned that if such meetings have any anticompetitive purpose or effect, including but not limited to the fixing of prices or a concerted refusal to deal, or if they are otherwise used to develop an anticompetitive plan, NBAA would be in violation of Section 5 of the Federal Trade Commission Act.

As to the main plan, concerning call-ahead fuel reservations, the Commission is of the view that the procedures you propose, if truly voluntary and non-discriminatory, would not raise questions under Commission administered law if the procedures do not result in any anticompetitive effects. See, e.g., Advisory Opinion Digest Nos. 64, 133, 332. However, because of the potential for abuse, the Commission conditions its advice on the following:

First, in order to avoid concerted refusals to deal with nonparticipating ASO’s, and to avoid the possibility of conspiracy among participating ASO’s, the proposed plan must be voluntary and be limited solely to dissemination of information. Although the names of participating ASO’s may be disseminated, any attempt to impose sanctions for nonparticipation would not be permissible. Second, since the plan is premised on dislocations caused by the FEO’s fuel allocation regulations, the Commission cannot extend approval beyond the life of those regulations without a re-evaluation of the program.

Third, the Commission explicitly reserves its right to proceed against NBAA and other participants, if in practice the plan proves to be anticompetitive. Because of the fast-changing conditions in the petroleum industry, the Commission requests that you submit a report in six months outlining the plan’s working and effect. If you choose not to file such a report, the Commission’s advice will expire. The Commission cannot approve of the subsidiary plan for acute shortage situations, which recommends a two hour flight time limita-tion. The specificity of the recommended list—down to the gallon— suggests strongly that it amounts to an allocation program for an entire industry administered by the NBAA. The Commission will not accept a plan for an extra-governmental agency to undertake such a governmental function. See Fashion Originators’ Guild v. FTC, 312 U.S. 457, 465 (1941). Rather, specifics of an allocation method in time of shortage