ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, October 26, 1996 TAG: 9610280047
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Associated Press
A federal judge on Friday dismissed a portion of USAir's lawsuit against the proposed British Airways-American Airlines alliance, but issued no immediate ruling on the case.
USAir claims that the arrangement between British Airways and American breaches the terms of the British carrier's 1993 investment in USAir stock, and that it violates antitrust laws. USAir also claims that American interfered with the British Airways-USAir contract.
U.S. District Judge Miriam Cedarbaum of the Southern District of New York dismissed the interference allegation against American on a technicality. She said she would rule on the antitrust allegations later.
Cedarbaum said the interference allegation was a matter of state law, but became moot when the federal government deregulated the airline industry.
Andrea Rader, an American Airlines spokeswoman, would not characterize the ruling as either a victory or loss for American.
``We want the whole thing against us dismissed,'' Rader said. ``We'll see what happens.''
BA and American announced in June that they want to combine their services and share profits from their trans-Atlantic routes. They want to operate essentially as one airline - though they claim they are not merging because they are exchanging no ownership stakes and will maintain separate names.
USAir subsequently sued to try to force BA to sell its 24 percent share of the airline and pull its representatives off USAir's board of directors.
USAir said Thursday that it would end the pact, under which the carriers sell seats on each other's flights and unite their frequent-flier programs.
That action puts at risk BA's guaranteed feed of about 560 U.S. domestic passengers a day from USAir.
Gene Swartz of Travelmasters in Roanoke said ending the so-called code-sharing agreement between USAir and British Air should have no impact on Roanoke travelers.
He said Roanoke travelers going to London from Charlotte or Philadelphia have sometimes flown with USAir planes and sometimes with British Air craft, but now all the flights will be in planes owned by the former.
There might be higher fares on British Air to points beyond London, Swartz said, but he believes competition will hold fares in line.
He said loss of the frequent-flier agreements could affect travelers who fly with British Air. Swartz said points earned on British Air have, until now, been "banked" with USAir.
Mel Ludovici of Martin Travel in Roanoke said the agreement allowed for a joint pricing of a trip with connections. In the future, he said, he will have to get a price for each airline and add them together.
Ludovici speculated that British Air, which as a foreign shareholder cannot acquire more than the 24 percent of USAir stock that it already owns, might sell that interest to American. He said American, as a U.S. company, has the right to buy more stock and could come into control of USAir.
If that should happen, he said, American and British Air would control most of the air traffic in the Northeast as well as connecting flights overseas. They would thus be in a position to increase fares. But there is no evidence such speculation is true, he emphasized.
Staff writer Mag Poff and Bloomberg Business News contributed to this story.
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