TWA Can Bar Frequent-Flyer Resales--Court

A federal appeals court ruled Thursday that Trans World Airlines can prohibit broker sales and other transfers of frequent flyer discount coupons.

But the 9th U.S. Circuit Court of Appeals would not issue TWA an injunction preventing a Newport Beach broker from operating.

And it said the airline would have to go to trial to prove that the broker, which buys unused coupons and sells them at cut rates, had damaged its business.

The 3-0 ruling reversed a decision by U.S. District Court Judge Alicemarie Stotler of Los Angeles, who had ruled that the American Coupon Exchange had violated TWA’s economic rights. She forbid the broker to trade in TWA coupons.

The appeals court said TWA had not presented conclusive evidence that it had been harmed by the broker’s practices, and would have to go to trial on that issue.

Since 1983, American Coupon Exchange of Newport Beach has bought the coupons that entitle airline customers to free trips after traveling a certain number of miles. The coupons are resold at 30% to 70% below full fare.

Some airlines do not restrict transfer of the coupons.

But TWA prohibited its customers in 1983 from letting anyone else use their coupons, under penalty of disqualification from the program.