Antitrust Deal Opposed

American, ARTA objections may affect Lufthansa hearing

By: Kevin Brass

American Airlines and the Association of Retail Travel Agents have filed formal objections to a proposed settlement in agents’ landmark antitrust suit against the major airlines.

The court filings, the first official objections to a settlement agreement with Lufthansa, came just days before Judge W. Earl Britt is scheduled to convene a hearing on the deal in U.S. District Court in Raleigh, N.C.

ARTA’s formal opposition came after attorneys representing Sarah Futch Hall presented details to its board during a meeting earlier this month. The class-action suit charging the airlines with conspiring to eliminate commissions was filed under travel agent Hall’s name.

Rather than offering its support, as the attorneys had hoped, the board voted unanimously to oppose the settlement, reiterating the objections it voiced when the settlement was announced in June.

“We’re worried that this sets an awfully low precedent for the other carriers,” said ARTA President John Hawks, who plans to attend the Sept. 2 court hearing. The Lufthansa settlement includes a bonus program that would pay agents as much as $100 when they book with the airline.

It also would create a mechanism for agencies that went out of business in the last five years to file claims for underpaid Lufthansa commissions.

American Airlines said its objection to the proposed settlement is based on legal grounds the carrier believes the deal violates antitrust regulations.

In court filings, American argued that the Lufthansa deal would constitute a joint action with travel agents to “reinstitute a commission model that the competitive marketplace ended” and would unfairly influence agents to steer business to Lufthansa.

American is one of the major carriers named in the antitrust suit.

“In essence ... plaintiffs are using their class status to demand and negotiate standard incentive-based compensation from all other carriers,” American’s filing stated.

Under the judge’s guidance, plaintiff attorneys have asked the Department of Justice to review the legal issues, according to Hall attorney Bradley Coxe.

Coxe said he doesn’t believe American has any standing to object to the settlement.

But ARTA, which represents two of the named plaintiffs, as well as more than 3,000 agents, does have standing.

After its initial objections, ARTA had held off on any formal opposition to the settlement to see if other airlines would move to settle.

ARTA was told no other carriers have come forward, Hawks said.

More than 700 ARTA members have registered their objections to the settlement.

In its Aug. 18 court filing, ARTA opposed several specific points in the agreement, including minimum sales thresholds in the second and third years of the three-year deal.

Agents would have to meet those sales levels to continue to qualify for the bonus program.

The sales thresholds are “clearly designed to exclude the vast majority of class members who are independent, neighborhood Mom-and-Pop travel agencies,” ARTA argued in its filing.

“We want the settlement to be meaningful for small retailers,” Hawks said.

Although Hall’s attorneys have argued that the deal establishes a basis for future business relationships between agents and airlines, Hawks said it would be difficult for ARTA to accept any settlement that doesn’t call for some direct compensation for damages to agencies.

“Our board feels it has been burned enough by the carriers,” Hawks said.

Attorneys for Hall said ARTA’s objections would not affect their presentation of the settlement to the court Sept. 2.

“I have not heard anything that leads me to believe that this is not a good settlement for the class,” said Hall attorney Daniel Shulman.

Despite ARTA’s now-formal opposition, Hawks stopped short of saying that the organization might try to remove itself from the class-action suit if the judge approves the deal over the association’s objections.

Said Hawks: “Our feeling is that this is our best shot.”

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