The U.S. Court of Appeals in New Orleans has reinstated a civil complaint against American Airlines and its president, Robert L. Crandall, in which the Justice Department charges that Crandall sought Braniff International Airlines' aid to fix ticket prices and thus monopolize the Dallas market.
The action Monday overturned a Dallas federal district court decision dismissing the complaint and permits the Justice Department to pursue it. Elliott Seiden, chief of the transportation section of Justice's antitrust division, said yesterday, "We're planning to go ahead."
Justice is asking that Crandall be suspended from his job for two years and that American be barred from discussing ticket pricing with competitors for 10 years.
Lowell Duncan, a spokesman for American, said, "both American and Mr. Crandall are disappointed by the decision of the Court of Appeals, but are convinced it is incorrect and plan an immediate petition to the U.S. Supreme Court. The decision, while disappointing, is not a finding that the antitrust laws were violated, but merely a statement that the government should be allowed to attempt to prove its case."
The Justice Department complaint was based largely on a tape recording of a Feb. 1, 1982, phone conversation between Crandall and Howard Putnam, then Braniff's president. In that conversation, recorded by Putnam, Crandall said "I have a suggestion for you. Raise your goddamn fares 20 percent. I'll raise mine the next morning . . . You'll make more money and I will, too."
As the Court of Appeals noted, "Putnam did not raise Braniff's fares in response to Crandall's proposal; instead he presented the government with a tape recording of the conversation."
Earlier in the conversation, Crandall had said, "We can both live here, and there ain't no room for Delta. But there's, ah, no reason that I can see, all right, to put both companies out of business."
The conversation occurred just weeks before Braniff declared bankruptcy and ceased operations for two years. At the time, American and Braniff were engaged in a fierce fare war centered on the Dallas-Fort Worth airport, where together they carried 76 percent of the passengers boarding there monthly.
The Justice Department charged American and Crandall with violating the Sherman Antitrust Act by attempting to establish a cartel with Braniff so the airlines together could control prices and exclude competition.
U.S. District Judge Robert M. Hill dismissed the complaint on the grounds that there was no agreement between American and Braniff to monopolize, and therefore no attempted monopolization.
The three-judge appellate panel disagreed. "We hold that an agreement is not an absolute prerequisite for the offense of attempted joint monopolization and that the government's complaint sufficiently alleged facts that if proved would permit a finding of attempted monopolization . . . ," the court said. It remanded the case to Judge Hill.
A reorganized Braniff has had difficulty competing with a very healthy American in Dallas since it restarted service, and Delta, although trying hard, is still far from matching American's strength there.