DOT Charges AA With Unfair Competition

<FONT SIZE="+3"><B>DOT Charges AA With Unfair Competition</B>

By Barbara Cook

<I>Washington, D.C. </I>- The Department of Transportation's aviation enforcement office has charged American Airlines and its Sabre CRS unit with unfair competition over the carrier's distribution of Preference MAAnager software to travel agencies, saying the add-on product unfairly biases displays in favor of American and its American Eagle affiliates.

American immediately responded that it will "vigorously" contest the charge in a hearing before a DOT law judge and described the proposed $500,000 fine in the case as "unprecedented and excessive."

Preference MAAnager, which Sabre developed, has been distributed free to at least 650 travel agencies subscribing to Sabre between April 1993 and February 1996. The software rearranges the Sabre display by listing the flights of American and American Eagle before those of other carriers on the same screen, by showing only those flights in certain markets during defined dates and times, and by listing American and American Eagle fares before equivalent fares of other carriers. For agencies with clients who frequently use a single carrier, the program allows an agent to tailor the displays to the client's needs.

The software displays violate the anti-bias provisions of DOT's CRS rules, according to the complaint. While the CRS rules permit third party vendors to distribute add-on software that reorders CRS displays, "neither American nor Sabre is a 'third party' vis-a-vis Sabre within the meaning of the CRS rules," the complaint charged.

American responded by saying that DOT apparently believes that every other airline and any software provider has the right to distribute such software to Sabre users while demanding that American withdraw from the market.

Anne McNamara, American's senior vice president and general counsel, said that American has told DOT "repeatedly" that it would not object to a rule banning all providers from building software similar to Preference MAAnager, "but that it cannot accept a rule that singles out it, or its customers, for unfavorable treatment."

Noting that DOT adopted the rule allowing add-on software during a 1992 revision of the CRS rules, McNamara said the department at that time considered both a total prohibition on software providing carrier-specific displays and a ban on the distribution of such programs that would have applied to CRSs only. The department rejected both alternatives.

DOT's decision to institute the case against American stemmed from a complaint against Preference MAAnager filed by Northwest Airlines in August 1995. That complaint was supported by Alaska Airlines, American Trans Air and TWA. In addition to seeking a $500,000 fine from American, DOT wants to order the carrier to recover all copies of Preference MAAnager from travel agents.