Low Cost Airline

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CAB regulations give low cost airline and travel agents protection from antitrust laws, so airlines can sell tickets on competitors' flights and travel agents can handle "clearinghouse" matters, such as splitting fares when more than one airline is used to make a trip.

Gabriel Phillips of the Air Transport Association of America, representing the airline industry, testified that without the antitrust protection, these so-called "interline" functions might stop for low cost airline. Fears were expressed that other such activities, including baggage transfers for a change in airlines, might cease.

Opponents of the legislation, including CAB chairman Dan McKinnon, accused the airlines of scare tactics. The Justice Department's antitrust chief, Assistant Attorney General William Baxter, testified there is "no prospect whatsoever that the clearinghouse operation would ever be challenged as antitrust violations." He saw no antitrust problems with standardized ticket forms or "interline" services.

The Justice Department said yesterday that computer reservation systems have been used by the airlines that own them--primarily industry giants American and United--to the disadvantage of competitors and that "some government intervention is necessary" to correct the problem. In a filing with the Civil Aeronautics Board, the department detailed a number of instances in which the computerized systems were used to "punish or favor specific airlines in particular markets."

Thus a consumer calling a travel agent may not be told about the most convenient flight or the cheapest fare available because of the way airline schedules are displayed on agents' computer screens. An airline competing with American and United may lose hundreds of potential customers.

The Justice filing cited several examples of the American Sabre system and the United Apollo systems being used to improve owners' competitive situations, including charges that American decided not to match Continental's "supersaver" fares in 65 markets, but simply to remove the Continental fares from the Sabre fare display.

When New York Air decided to start competing with American between New York's LaGuardia Airport and Detroit, American alerted its computer display "so that New York Air flights would be buried far down in the display sequence. There is evidence that American's purpose was to punish New York Air for its entry and to intimidate New York Air so that it would not enter the LaGuardia-Chicago market in competition with American.

Evidence suggests that United suppressed information in its Apollo system on specific Frontier, USAir and, perhaps, Continental flights.