U.S. negotiators yesterday offered to give European airlines antitrust immunity to set fares on transatlantic routes if the European nations would allow all airlines a broad band of pricing flexibility within which to set fares without government approval on major routes.
The proposal was made in Paris yesterday to the European Civil Aviation conference, an organization of Western European nations, by Deputy Transportation Secretary Darrell Trent, chairman of the U.S. delegation.
U.S. sources said that Eric Willoch, ECAC president and director-general of civil aviation of Norway, responded initially for the Europeans, calling the proposal "extremely constructive."
Under the U.S. plan, the countries would agree to approve automatically all fares proposed by airlines for fare types that fall within the agreed pricing flexibility zones. Fares falling above or below the zones for each fare type would be subject to the requirements of the relevant bilateral agreement, as they are currently.
If an agreement is worked out, a controversial Civil Aeronautics Board order they abhor wouldn't be formalized, the Europeans were told. The board decision to prohibit U.S. airlines from participating in International Air Transport Association conferences that fix fares on the North Atlantic has been a constant bone of contention with the Europeans, who regard price-fixing and capacity restraints as a way of life.
Under the U.S. proposal, three different zones of flexibility for each pair of U.S.-European cities would be set up. Using existing unrestricted coach fares as a base, the first zone would allow airlines to set first-class and business-class fares anywhere within 60 percent above the coach-fare base. The premium fares couldn't go lower than the coach fare.
A second zone would allow the coach fares to go up 20 percent from the base or down 20 percent without government intervention. The third zone would give airlines the ability to set some discount fares--those requiring confirmed reservations, mandatory round-trip travel, and a minimum stay period--anywhere within 30 percent below the coach base fare.