A federal judge has approved the first settlement in the Sarah
Futch Hall antitrust case against the major airlines, prompting
speculation that more settlement agreements may soon follow.
The deal with Lufthansa has been considered a bellwether for
future negotiations in the class-action lawsuit, which charges 17
major airlines with conspiring to eliminate agent commissions.
Lawyers for the agents held preliminary discussions with several
airlines during the summer, but sources involved in the case said
the talks had stalled as participants waited for the court to rule
on Lufthansa’s proposal.
Daniel Shulman, the co-counsel for Hall, declined to discuss
settlement talks. He said the agreement with Lufthansa shows other
airlines “the wisdom” of negotiating with agents “instead of
fighting a battle they will lose.”
Airlines contacted last week declined to comment.
The Association of Retail Travel Agents had vigorously opposed
the settlement with Lufthansa, in part out of fear that it would
set a precedent for future deals.
The Lufthansa deal calls for the carrier to set up a “bonus
program” for agents who book flights directly through the airline,
but includes no damage payments or admission of guilt concerning
commissions.
More than 700 ARTA members, American Airlines and the Department
of Justice had opposed the deal.
American Airlines’ protest charged that the deal would “set a
new precedent for how incentive agreements should operate
industry-wide.” It said the settlement was an attempt “to
reinstitute a commission that the competitive marketplace
ended.”
The Department of Justice filed a brief with the court
expressing official concern that the deal represented an
inappropriate attempt by travel agents to set up a new fee
system.
But Judge W. Earl Britt decided the settlement agreement “is
fair, adequate, reasonable and in the best interests of the
plaintiff class for settlement purposes.”
Shulman said it would be inappropriate to suggest that the
Lufthansa deal would be a model for any future deals. “What would
be a model is the process we used,” finding mutual interests,
Shulman said.
To arrive at a deal with Lufthansa, the parties spent three days
in mediation with Robert Mnookin, director of the Harvard
Negotiation Research Project.
Parties have 30 days to appeal Britt’s decision. ARTA won’t
appeal the ruling, even though “agents won’t make any money off of
it,” according to its attorney, Alexander Anolik. But the group
will oppose any future deals that don’t offer damages.
The Lufthansa settlement represented a “break in the cartel,”
but future settlements will have to “make up for the loss,” Anolik
said.
Details of the Settlement
" Trans-Atlantic Bonus Program is to begin January 2004.
" Agents will be able to register online at
www.lufthansa-usa.com.
" All agents will be eligible in the first year. In the second
year, only agents who booked $10,000 worth of Lufthansa tickets; in
the third year, only agents who booked $20,000.
" Lufthansa will pay $100 for first- and business-class
bookings, $30 for economy class and $20 for S-class. Agents will be
paid when tickets are booked. Lufthansa will pay a $10
administrative fee for cancellations.
" Agencies that went out of business after April 1, 1998 and
booked Lufthansa-plated tickets between April 1, 1998 and June 2003
may receive payment for underpaid commissions, up to 10
percent.
" Agents have until Dec. 23 to file claims.
" Lufthansa says an administrator will be established to handle
claims. There will be a link to the administrator at
www.lufthansa-usa.com.
