Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, March 18, 1994 TAG: 9403180249
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Justice lawyers identified more than 50 separate price-fixing agreements covering hundreds of routes, both to raise fares and to end fare discounts, Assistant Attorney General Anne Bingaman said at a news conference.
The airlines negotiated these agreements by sending each other elaborate signals about planned price changes over their jointly owned computerized ticket information system, according to Bingaman, head of the antitrust division.
Although they agreed to new rules, the airlines denied violating any law.
``The price increases in some cases were huge. In some cases, they were $8,'' Bingaman said. She added that $8 a ticket spread over the millions of tickets sold during the 1988-1992 period would have cost consumers $1.9 billion.
As a result of one agreement, consumers paid $138 more for travel between Chicago and Dallas, the department said. In another, airlines agreed to raise discount one-way fares by $20.
``This case is a critically important victory for American consumers and for American businesses who paid ... higher fares that they shouldn't have been charged,'' Bingaman said.
But the actual impact on consumers already may have occurred. Bingaman said, and several airlines confirmed that they voluntarily changed their ticket pricing practices after the government brought its civil antitrust suit against them in December 1992.
The settlement contained no refunds for consumers, because the government has no legal authority to seek them in price-fixing cases.
Bingaman said the government decided against charges because the Civil Aeronautics Board, which regulated air fares until the late 1970s, used to require airlines to post their price actions in advance so they could get CAB approval.
That history, she said, would make it difficult to prove guilt to a jury.
Bingaman described the signals this way:
An airline would put a notice of the first date for a fare increase or the last date for a discount into the computer along with a footnote describing what routes the moves would affect. Airlines that agreed would file identical notices with the same footnote.
Other airlines would signal counterproposals with different prices or different routes in similarly tagged footnotes until there was an agreement.
Every proposal with the same footnote tag ``would show up on a computer printout on every airline executive's desk across the country, all competing airlines,'' Bingaman said.
``Where a dissenting airline wanted a smaller or no increase, the others signaled their displeasure by filing reduced fares in markets important to that airline and offering to remove those fares if the dissenter agreed to the proposed increase,'' the government's court filing said.
The airlines said the practices were legal and part of competition.
``We continue to believe that the pricing practices in question benefited the traveling public and were consistent with the law,'' said Anne H. McNamara, general counsel of American Airlines. ``But litigation is expensive.''
The six airlines agreed to a court order that would bar them from offering new fares available only at a future date. The department said that once a fare is posted in the computer system, the airlines must immediately begin selling tickets to consumers at that price. The order also would limit communication about ``last ticket dates'' for discount fares.
Besides American, the other carriers that signed the consent decree were: Delta, Northwest, Continental, Trans World and Alaska Airlines. The decree, filed in federal court here, also was signed by the Airline Tariff Publishing Co., the airlines' jointly owned computer fare information system.
Two other airlines, United and USAir, agreed to similar court order in December 1992.
The decree must be approved by a federal judge. The public will have 60 days to comment before the judge acts.
by CNB