The air fare wars spread to a new battleground - the courts - as Continental Airlines filed an antitrust lawsuit accusing American Airlines of predatory pricing aimed at killing off weaker competitors.
American, the nation's largest airline, denied the allegations and said its recent fare cuts are aimed at reversing its huge losses and turning a profit.Continental, which is operating under bankruptcy protection, accused American in federal court in Galveston, Texas, of predatory tactics.
American's fare cuts won't enable it to make money unless one or more rivals are grounded, Continental said.
The most recent action by American was a half-price fare sale that ended last Friday but is expected to cost airlines millions of dollars this summer.
Meanwhile, the fare war continued Tuesday as Delta, a critic of past fare cuts, lowered trans-Atlantic fares for business travelers. Several airlines matched Delta's new reduction of up to 45 percent on tickets to Europe.
Continental, which filed the lawsuit Monday, asked for unspecified damages and a court order to stop American from engaging in such pricing practices.
In court papers, Continental referred to a Justice Department lawsuit in the early 1980s accusing American Chairman Robert L. Crandall of price-fixing.
That lawsuit was settled in a deal that put restrictions on American's conduct - "restrictions which unfortunately have lapsed," Continental said.
More recently, when now-defunct Pan American World Airways was clinging to life, Crandall received an internal memo on Pan Am and returned it to a fellow American executive with instructions to "crush" Pan Am, Continental said.
American had no immediate response to the specifics of the lawsuit. But in a separate filing in federal court in Chicago, the airline asked a judge to declare its pricing practices legal.
"We have spent the past several weeks listening to people falsely attributing all sorts of sinister motives to our pricing decisions," said Anne H. McNamara, American's senior vice president for administration.
George James, chairman of Airline Economics Inc., a Washington-based aviation consulting firm, said Continental is acting out of desperation after years of management mistakes that pushed it into bankruptcy.
Feuding between the airlines intensified April 9, when American announced a radically simplified fare structure that cut the price of many tickets.
Carriers operating under bankruptcy protection, including Continental and Trans World Airlines, accused American of trying to run them out of business.