Continental Wins Ruling in Route Case : Could Cost United Seattle-Tokyo Flights

Throwing a new curve into an already convoluted government proceeding, a federal appeals court on Friday ordered the government to let Continental Airlines begin flying passengers between Seattle and Tokyo.

The ruling, if it is upheld, would strip United Airlines of the coveted route, which it has been serving since 1983.

Shares of UAL Corp., parent of United Airlines, fell $1 Friday to $88.75.

A three-judge appeals court panel ruled 2 to 1 that the Transportation Department had passed a statutory deadline for action in the route award case and therefore was obliged to award the route to Continental, as a department hearing officer had recommended in June, 1987.

Started 2 Years Ago

Not surprisingly, Continental applauded the decision, and the airline’s president, Martin R. Shugrue, said: “The law was on our side, as we maintained all along.”

The ruling can be appealed to the U.S. Supreme Court, but it was not clear Friday whether such an appeal would be made.

The Department of Transportation proceedings began in September, 1986, after United bought the Pacific routes of Pan American World Airways. As a condition of approving the purchase, the department insisted on reviewing whether United could keep the route.

The first department official to study the matter, a hearing officer, said Continental was better qualified. Deputy Assistant Secretary Vance Fort, asked to evaluate that finding, urged that United be allowed to keep the route.

Before a final ruling could be made, however, Fort accepted a job with Flying Tiger Line, which had supported United in the proceeding.

The department, fearing that the proceeding had been tainted, decided to start all over again.

The next time around, a second hearing officer sided with United, but Richard F. Walsh, director of the department’s office of economics, recommended that a third contender, American Airlines, be declared the winner.

Dissenting Jurist

Instead of accepting Walsh’s opinion, however, Assistant Secretary Matthew V. Scocozza ordered the case returned to Walsh for further consideration.

Continental’s suit asked the court to award it the route on grounds that a 90-day statutory deadline for action by the Transportation Department had long passed.

Judge Leonard Garth issued a lengthy dissent from Friday’s ruling, saying he could not support the majority’s view.

The court instructed the Transportation Department to transmit the decision to President Reagan for final foreign policy and national defense review.

Besides United, the Seattle-Tokyo route is served by Northwest Airlines and Japan Air Lines.