SAN FRANCISCO -- A Texas travel agency facing a $400,000 debit memo
for misuse of government fares filed suit here against American
Airlines for "acts of interstate extortion," claiming violations of
the federal racketeering act.
Tour World Travel, Wichita Falls, Texas, represented by travel
attorney Alexander Anolik, filed the suit in San Francisco Superior
Court June 13.
The suit claims breach of written contract, breach of implied
covenant of good faith and fair dealing, intentional interference
with economic relations, interference with prospective economic
relations and violations of the Racketeer Influenced and Corrupt
Organizations Act (RICO).
American, citing policy that it does not discuss pending
litigation, declined to comment.
The charges are similar to those in a suit that Anolik brought
last year against Delta Air Lines on behalf of APF Travel in
Alhambra, Calif.
In that suit, Delta claimed the wrong American Express card was
used for payment for the travel account of McClellan Air Force
Base. The suit was settled out of court.
The Tour World Travel case involves the travel of 14 firms that
work under contract for government agencies.
Agency co-owner Karen Meyer said the firms are longtime clients
of Tour World Travel and, during the years, presented it with
letters from government agencies that authorize their corporate
travelers to use government contracted fares.
Meyer said she never questioned the practice of booking
government fares for her clients who presented her with the
letters, although she now understands it was a mistake.
The other mistake was to accept payment from clients by check;
the payment for government contracted fares only is allowed by
government-authorized credit card.
"We were wrong, but we did not do this deceptively," she said.
"We just didn't know."
Her agency, a $4 million business, would shut down if it is
forced to pay the $400,000 debit memo, she said.
The debit memo is for 523 tickets written from January through
August 1999. American is demanding the difference between the
government fares and the full-priced coach fares -- about $1,500
per ticket, according to the suit.
Meyer is angry with the airline because there was no warning,
even though the agency had been in the practice of booking the
government contracted fares, which are only available to government
employees, for the seven years that she has co-owned the
business.
"We never had any problems," Meyer said. "There were no bells or
whistles from American" until her airline sales rep warned her in
October 1999 that the debit memo for $400,000 was to arrive Nov.
1.
The suit claims that American is "aggressively attempting to put
travel agents out of business through the issuance of unmeritorious
debit memos and encouraging clients to purchase travel on the
Internet instead of using agents."
And, it claims that American's action amounts to extortion
because the agency must pay the "unjustified penalties" or lose its
plates -- and thus its ability to operate its business.
Anolik said he is "going a step further" than in the APF Travel
case because of the recent airline mergers proposals.
"I'm trying to show that the danger is that, with fewer and
fewer carriers, you get into a monopoly situation in which such
unfair competitive practices and extortion become even more
prevalent," he said.
Meyer said she also received a $17,000 debit memo from
Continental for misuse of government fares. Her plates were pulled
for nonpayment.