Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, November 2, 1994 TAG: 9411020051
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
But an attorney for frequent-flier club members who sued American said barring such claims from state courts would leave customers with no way to seek damages for restrictions that reduce the value of travel miles they have saved.
American, which has the world's largest frequent-flier club and gave out more than 2 million tickets last year, is trying to fend off a class-action lawsuit over restrictions it imposed in 1988.
Seeking to hold down costs, American limited the number of seats used on each flight for free or discounted frequent-flier tickets and began keeping customers from using such tickets during heavy travel periods such as Christmas and Thanksgiving.
``American expressly reserved the right to change frequent-flier awards and rates at any time,'' said the airline's attorney, Bruce J. Ennis Jr.
The frequent-flier club members who sued American contend it could not restrict the use of travel miles they already had earned, said their lawyer, Gilbert W. Gordon of Chicago.
But Ennis said that allowing people to sue over such restrictions would discourage airlines from adopting the kinds of innovative programs that a 1978 federal airline-deregulation law sought to encourage.
The deregulation law pre-empts state court lawsuits over issues related to airline rates, routes or services. Ennis said disputes over frequent-flier programs fall into that category and should be handled by the federal Department of Transportation.
Gordon said the frequent-flier club members were not asserting a right to a particular airline rate or service.
A free ticket under the frequent-flier program is ``clearly not a rate, it's a reward for your brand loyalty,'' he said.
But Justice Sandra Day O'Connor noted that a dissatisfied customer could ask the federal agency to bar an airline from making retroactive changes in its frequent-flier program.
She also said a frequent-flier plan appears to be related to airline rates because trading in mileage credits is ``just another way of buying a ticket on the airline.''
American started the first frequent-flier program in 1981 as a temporary promotion, allowing customers to earn free or discounted trips based on the number of miles they had flown with the airline.
The program proved so popular that American kept it, and other airlines started their own. Now more than 30 million people are enrolled in frequent-flier programs with every major airline.
by CNB