- The Washington Times - Wednesday, June 27, 2001

The Justice Department yesterday appealed a decision by a federal judge to dismiss an antitrust lawsuit filed by the government against AMR Corp.'s American Airlines, which was accused of predatory practices.

Department spokeswoman Gina Talamona said the lawsuit, which charged that the airline had sought to drive low-cost air carriers out of its hub at Dallas/Fort Worth International Airport, had been dismissed by U.S. District Judge J. Thomas Marten in Wichita, Kan., in April after ruling the government had failed to prove its case.

Ms. Talamona said the appeal was filed in the 10th Circuit Court of Appeals in Denver.

In its civil lawsuit, the Justice Department accused American of monopolizing and attempting to monopolize passenger service to and from Dallas/Fort Worth International Airport.

The department said American repeatedly sought to drive small, start-up airlines out of the airport by saturating their routes with additional flights and cutting fares. After the competitors withdrew or drastically reduced their service, American re-established high fares and reduced its service, the department said, charging that American adopted a "calculated strategy" to force smaller carriers out of that market.

The government said in the suit that American invested in short-term capacity increases and airfare reductions in order to maintain its monopoly. The government sued after negotiations with the airline broke down.

American denied any wrongdoing, saying at the time the suit was filed that the accusations were "unwarranted and go against the very essence of free-market competition. American will mount an aggressive defense and is confident that its actions in Dallas-Fort Worth will prove to be nothing more than those of any tough competitor in a highly competitive industry."

Dallas/Fort Worth is the nation's third-largest airport and American dominates service there, flying more than 70 percent of all nonstop passengers who travel through it. American is the nation's second-largest carrier, the largest being United Airlines.

The Justice Department charged in its suit that American violated antitrust law by increasing its fares by more than 50 percent after it drove Vanguard Airlines out of the Wichita, Kan., airport.

The lawsuit also accused American of taking aim at Sun Jet's routes to Long Beach, Calif., and Western Pacific's to Colorado Springs.

The department argued that its objectives were to provide consumers with greater choices and lower prices for air travel.

It said consumers should not have to pay "sky-high prices because one airline is trying to keep out low-cost competitors."

The lawsuit asked Judge Marten to declare that the practices violate antitrust law; that a permanent injunction be entered to stop American from engaging in allegedly predatory acts; and that restraints be imposed to remedy the effects of such alleged past acts.

The lawsuit was the second brought by the Justice Department's anti-trust division against American citing monopoly tactics. In 1983 during the Reagan administration, the department charged that American's then-president, Robert L. Crandall called his major competitor at Dallas/Fort Worth, president Harold Putnam of Braniff, and proposed that they coordinate fare increases.

Mr. Putnam was taping the conversation for Justice Department investigators, who ultimately got Mr. Crandall and American to agree to a court order barring such activity in the future.

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