Delta, Northwest lose appeal to stop passenger lawsuit

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Delta, Northwest lose appeal to stop passenger lawsuit
By Laurie Asseo
Bloomberg News
Posted June 3 2003

Delta Air Lines Inc. and Northwest Airlines Corp. lost a U.S. Supreme Court
bid to keep a group of passengers from acting collectively in pursuing a $4
billion claim the carriers overcharged on some travel routes. The justices
refused to hear the airlines' argument that the passengers should only be
allowed to sue individually in alleging the carriers monopolized certain
routes. US Airways Group Inc., also a defendant in the suit, didn't join
the appeal to the Supreme Court in Washington. The antitrust suit accuses
the airlines of unlawfully trying to bar "hidden-city ticketing," a
practice that lets travelers avoid higher fares to hub airports by buying
cheaper tickets for other final destinations. The traveler disembarks at
the hub city, paying the reduced fare. The facts of the individual claims
are too diverse to be tried collectively, the airlines said. The lawsuit
presents "highly generalized hub-based evidence, which lumped 234 separate
antitrust markets into a one-size-fits-all analysis," lawyers for Delta and
Northwest said in court papers.

Atlanta-based Delta is the third-largest U.S. airline by passenger traffic;
St. Paul, Minn.-based Northwest is the fourth-largest, and US Airways,
based in Arlington, Va., is the seventh largest. The lawsuit accuses the
airlines of conspiracy and of maintaining monopoly prices on routes to
their hub airports by trying to keep travelers from buying and using part
of a cheaper ticket. The passengers say the policy helps airlines charge
higher fares for flights to their hub cities, which are routes they
dominate, than for flights to other cities where they face greater
competition. The suit seeks damages of almost $1.5 billion, which after
being tripled under antitrust law would total $4.4 billion, lawyers for
Delta and Northwest said in court papers. The lawsuit claims that at least
as early as 1992, the airlines agreed to try to stop the practice, such as
by making travel agents enforce their policies. Travel agents account for
most ticket sales, passengers' lawyers said in court papers. A federal
judge in Detroit in May 2002 allowed the plaintiffs to pursue the suit as a
class action. The 6th U.S. Circuit Court of Appeals in November refused to
hear the airlines' appeal.

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