American, United Win Lawsuit Over Reservation Systems

A U.S. District Court jury in Los Angeles ruled Friday that American Airlines and United Airlines had not unfairly exercised monopoly power in the use of their computerized reservation systems.

After 10 days of deliberations and a lengthy trial, the jury voted 10-2 not to hold the two giant carriers liable.

About 85% of all airline bookings in the United States are made by computerized reservations systems, and several airlines asserted in a suit filed in 1984 that American and United gained dominant positions in the market after the computerized systems became technologically feasible in 1976.

The plaintiff airlines alleged that American and United, whose systems account for about 75% of the nation’s computerized ticketing revenue, illegally abused their domination of the market by charging exorbitant fees and by imposing restrictions on travel agents who use their booking systems, making it difficult or impossible for agents to switch to rival systems.

Of the original plaintiffs, USAir and Republic settled out of court, but four other airlines--Northwest, Muse (which has since been merged into Southwest Airlines), Alaska and Midway, went to trial, seeking $149 million in damages.

American and United contended that their fees and contract requirements were fair compensation for the millions of dollars they have invested in the intricate nationwide databases that search through thousands of airline flights and print out an airline ticket instantly in any travel agent’s office. American officials have said they have more than $400 million invested in their Sabre system.

The jury’s verdict “is a victory for the free enterprise system,” said Robert E. Cooper, of the Los Angeles law firm Gibson, Dunn & Crutcher, who represented American. “Our clients developed something that others didn’t. We were first, and we were successful. What we had here was a case of sour grapes.”

American Chairman Robert L. Crandall said, “After five years of this litigation ordeal, including depositions of almost 300 individuals and production of hundreds of thousands of documents, American obviously feels vindicated and gratified by the jury’s decision.”

Edward Hoenicke, United’s general counsel, said his company also felt that its position on the pricing and fairness of its Apollo reservation system had been vindicated.

The chief lawyer for the plaintiffs said he was disturbed by the verdict and indicated that his clients would appeal. “We’re predictably disappointed, particularly after the jury was out 10 days,” said Maxwell M. Blecher, of Los Angeles’ Blecher & Collins, who represented the plaintiffs.

Blecher said it was “likely” that his clients would appeal the jury verdict.