A federal grand jury yesterday indicted three major international airlines on charges of conspiring to fix the price of a military excursion air fare paid by American soldiers and their families between Germany and the U.S.
The criminal charge against Pan American World Airways, Trans World Airlines and Lufthansa German Airlines is the first criminal anti-trust action involving airline rate-fixing, according to the Justice Department.
The maximum penalty that could be placed against the airlines upon conviction is $50,000 each.
At the same time, the Justice Department filed a civil suit against the same three airlines to block the companies from similar conduct in the future.
The documents filed in U.S. District Court here yesterday accuse the three airlines of agreeing in 1972 to fix the price of the military excursion airfare known in the airline industry as a "non-IATA milex fare."
The fare, which was paid by servicemen and their families who traveled between the two countries, brought in $15 million in revenue for the three companies in 1974 alone, according to the documents.
"This prosecution is part of the department's effort to insure that companies in regulated industries are aware that their failure to stay within the prescribed regulatory framework when pursuing anticompetitive activity will subject them to antitrust liability," said Donald I. Baker, assistant attorney general in charge of the antitrust division.
He said it is legal for airlines to fix international airfares if the agreement is conducted in accordance with certain procedures of the Civil Aeronautics Board and the International Air Transport Association.
The air fare involved in the indictment, however, was instituted outside IATA procedures and was not approved by the CAB, Baker added.
The indictment charged thatt the companies met and exchanged telephone conversations to set the rate, and then the fare agreement from the CAB.
The effect of the conspiracy was to raise the price of the fare, restrain competition in the sale of the fare and deprive customers of the benefits of "free and open competition" in the air fare market, the indictment said.
The indictment said the three airlines "provided the predominant share of international air transportation services" to U.S. military personnel on leave and their dependents between Germany and the U.S.
The U.S. Department of Defense "encouraged" such travel trips for military personnel "in the interest of the morale of the troops stationed" in Germany, the indictment added.
According to the charges, Pan American earned $5 million from the fare in 1974, TWA earned $7 million, and Lufthansa earned $3.8 million.
The case was presented to the grand jury by Justice Department attorneys Elliott M. Seiden, David W. Brown and Susan L. Gornstein. No date has been set for trial.
A spokesman for Pan American said the company would have no immediate comment on the charges. Spokesmen for the other two airlines could not be reached for comment late yesterday afternoon.