American After Weak Airlines, Icahn Charges : Fares: The TWA chief fears that the new pricing system will eventually mean higher rates; the American chairman rejects that argument.

American Airlines is cutting fares to drive weaker competitors out of business and will raise prices if it succeeds, the chairman of financially troubled TWA said Sunday.

“You believe in the tooth fairy if you believe these fares aren’t going to go back up,” TWA’s Carl Icahn said on ABC’s “This Week with David Brinkley.”

American Airlines Chairman Robert Crandall said on the same program that the company’s new fare structure is “good not only for consumers and for the economy, but it’s good for all airlines” because it will increase travel.

“If I were so fortunate as to be the only airline in America . . . we wouldn’t raise fares for a long time,” Crandall said.

American has announced plans to lower fares as much as 50% in some cases. Many other carriers have matched the new price structure.

TWA, which is trying to fight its way out of bankruptcy court, said last week that while not matching American it will cut many ticket prices an additional 10% to 20% in response to the stronger airline’s action.

“The reason American is doing this, without question in my mind, is to do away with the weaker carriers,” Icahn said.

He said he wasn’t criticizing Crandall, who he said was acting in the best interests of his airline.

“You’re not at a church social here,” he said. “You’re in a very tough league when you’re in the airline business.”

Icahn predicted that TWA, which went into bankruptcy court to seek protection from its creditors, will survive.

“We are now the low-cost carrier,” he said. “I think we’ve definitely developed a niche for ourselves.”

Julius Maldutis, an aviation analyst with the investment banking firm of Salomon Brothers, was less sanguine about TWA’s chances.

“I am very concerned that unless the pricing structure stabilizes in the industry, that its chance of coming out of bankruptcy is small,” he said.

Maldutis disagreed with Icahn and others who have said American’s new fare structure is a scheme to drive smaller airlines out of business.

To the contrary, he said, the proposal, “if it is adopted by the rest of the industry, has a chance of bringing some financial responsibility to the industry” by simplifying fares.