The British government yesterday ordered 17 U.S. and British airlines to stop selling cut-rate transatlantic tickets and invalidated the 130,000 tickets they had already sold.
The unprecedented action by Britain, which claimed that the low fares might be used in future antitrust suits, escalated a running battle over the American government's effort to extend U.S. antitrust laws to British airlines flying the Atlantic. The liquidators of Sir Freddie Laker's bankrupt Skytrain service have a billion-dollar antitrust suit pending in federal court in Washington, and a federal grand jury is looking into possible criminal antitrust violations in the Skytrain failure.
British aviation officials and Justice Department antitrust specialists met in Washington Wednesday and yesterday, but the British Embassy said no understandings on the issue had been reached. "The talks are in midstream," said embassy spokesman Charles Anson.
The British move -- which dismayed officials of airlines and travel agencies on both sides of the Atlantic who had hoped the Thatcher government would rescind its refusal last week to allow the new low-cost fares to take effect next Thursday -- forced travelers to decide whether to cancel trips or pay up to $63 more on a round-trip ticket.
Airlines, following standard practice, had been selling the tickets pending British government approval, which is almost always given. The U.S. government had approved the cut-rate winter fares, which would run from Nov. 1 to March 31.
The fares, first proposed by British Airways but matched by Pan Am and TWA, lowered the cost of a London-New York flight to $157, with the New York-London fare slightly higher because of exchange rate differences.
The current lowest fare offered by major airlines is $189 for tickets sold in New York and $170 for tickets sold in London. People Express charges $159, while Virgin Atlantic's fare is $157.
The new ruling does not affect those two cut-rate carriers, whose bargain basement fares already have won approval from the U.S. and British governments. But they each offer only one round-trip flight a day.
"We're disappointed that the British are not going to allow consumers to take advantage of the low fares," a Civil Aeronautics Board spokesman said in Washington.
"We are in favor of cheap fares," said British Aviation Minister Michael Spicer. But he added Britain will not approve the low fares until it gets assurances from the U.S. government that the airlines will not be subjected to American antitrust suits or criminal prosecution if one of the competing airlines goes out of business.
"We're caught in the middle on this, right square in the middle," said David Venz, director of corporate communications for TWA. He said TWA has obeyed the British order and stopped selling the tickets.
But Pan Am continued selling the cut-rate tickets, marked "subject to government confirmation," late yesterday afternoon. "Right now we're selling the tickets. But I don't know if we'll keep selling them at 6 o'clock or 11 o'clock," said Pan Am spokesman Merle Richmond.
British Airways told American travel agents that sales must stop by midnight last night.
Spicer, though, was clear in saying the tickets are invalid. "We will not permit the actual selling, or advertising, or collecting of names for fares without government approval," he told a London press briefing that followed a meeting with airlines to lay down the edict.
"If the airlines are carrying people at these fares," he continued, "they are carrying them illegally."
He added that British officials would check at airports to make sure the tickets are not being used. In the past, Spicer said, passengers could use tickets even if the fare proposal was rejected.
About 70 percent of the cut-rate round trip tickets were sold to Americans.
Virgin Atlantic Chairman Richard Branson said he complained to British authorities that at least three airlines -- Pan Am, TWA and British Airways -- were continuing to sell the cut-rate tickets after the government rejected the new low fares, the Associated Press reported from London.
He called Spicer's announcement yesterday "a minor victory for us."
Virgin Atlantic had accused the major transatlantic carriers of using the same "predatory" pricing practices that drove Laker Airways into bankruptcy.
Britain has contested vigorously the probe by the U.S. grand jury into possible criminal antitrust violations and the right of a U.S. court to hear complaints of antitrust violations by British airlines.
"Current civil and criminal actions in the United States against our airlines in connection with the Laker bankruptcy have called into question the whole basis of our airline agreement with the Americans," Spicer said.
In Washington, meanwhile, some purchasers of cut-rate fares said they would hold on to their invalidated tickets in hopes Britain would approve the new fare or that they would be able to slip through ticket checks.