Six Airlines Settle Suit Over Fares : Transportation: They had been charged by Justice Dept. with inflating ticket prices by up to $1.9 billion. Consent decree limits use of a jointly owned computerized ticket reservation system.

Six major airlines on Thursday agreed to permanently change their pricing practices to settle a federal lawsuit charging them with illegally raising air fares, in a scheme that investigators say inflated ticket prices by up to $1.9 billion between 1988 and 1992.

The suit, which the Justice Department filed in December, 1992, charged the airlines with conspiring to fix air fares through the misuse of a computerized ticket reservation system operated by the Airline Tariff Publishing Co., which is jointly owned by the airlines and known as ATP.

“The airlines used the ATP fare dissemination system to carry on conversations just as direct and detailed as those traditionally conducted by conspirators over the telephone or in hotel rooms,” Assistant Atty. Gen. Anne K. Bingaman said in a statement Thursday. “Although their method was novel, their conduct amounted to price fixing, plain and simple.”

Justice officials said they found more than 50 separate incidents of price fixing over hundreds of routes. In one case, fares between Chicago and Dallas were raised by as much as $138 as a result of the airline practice, the government said.

The six airlines involved in the Justice Department settlement are Alaska Airlines, American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines and Trans World Airlines. None of the six admitted guilt.

Consumer advocates hailed the settlement Thursday as one that will let airlines know their pricing practices are under close scrutiny.

However, the agreement is not likely to result in immediate changes for the traveling public because the six airlines have been abiding by the provisions of the settlement more than a year while vowing to fight the Justice Department lawsuit.

But the government’s consent decree, which still must be approved by a federal judge, ends the dispute and assures air travelers that the new system for publicizing fares and making ticket reservations will become permanent.

Under the guidelines agreed to on Thursday, new fares must be available for sale when filed with the ATP, denying airlines the chance of signaling plans to competitors, the Justice Department said. In addition, airlines can not say when a fare--including discounts--will expire unless the information already has been advertised in newspapers or other general interest media.

Two airlines--United Airlines and USAir--also have been following the new rules after entering into a consent degree to settle the charges in December, 1992.

The airlines at that time also agreed to settle a separate class-action lawsuit, which was based on the Justice Department’s investigation, by planning to issue nearly $500 million in airline ticket vouchers to travelers.

Used as an electronic clearinghouse, the ATP digests and organizes the massive amounts of fare information supplied by individual airlines. Then the information is distributed to airline reservations systems, which are used by travel agents and carriers to reserve and buy tickets.

But during a three-year-long probe, the Justice Department said it found evidence that the airlines were using the system to “float trial-balloon price increases, make and receive counter proposals, and reach consensus on the amount and timing of price increases or the removal of discounts.”

For example, an airline might file a proposed fare cut in ATP only to withdraw the change if other carriers failed to go along, federal investigators said.

In other cases, airlines that had filed plans to cuts fares sometimes met with retaliation by competitors, which threatened to file even deeper discounts in the ATP. That would force the fare-cutting airline to drop its proposed discount.

The federal guidelines were designed to prevent these incidents. However, one element of the settlement had triggered a wave of protest from travel agents and consumer advocates. By forbidding airlines from specifying when a sale would end, consumers might end up missing out on discounts and end up paying higher fares, travel observers said.

But few consumers have complained about paying higher fares as a result of the changes, travel agents say.

“The great fear was totally unwarranted,” said travel agency president Thomas Nulty. “The airlines have been good about advertising their sales, and customers are adapting well. I can’t think of a single problem.”

But some say the airlines have found loopholes within the new Justice Department guidelines.

Tom Parsons, editor of Best Fares magazines, notes that airlines have filed fare increases on the weekend--when business is very slow--and later drop the increase by Monday when other carriers have not followed suit.

“The only way the program will truly work is to disallow fare increases over the weekend,” Parsons said.

Some also doubt whether the Justice Department guidelines will lead to lower air fares.

“It’s difficult to say now whether any airline that had been precluded (from offering) a $99 fare will now offer the discount and consumers will save money,” said Con Hitchcock, an aviation specialist with Washington, D.C.-based Public Citizen, consumer advocate Ralph Nader’s group.

* AIRLINE PACT EXTENDED: Reservation-code sharing by British Airways and USAir was extended for a year. D1

Explaining the Rules

Six major airlines settled a federal price fixing suit and agreed to permanently adopt guidelines regarding the filing of fares with the Airline Tariff Publishing Co.:

* Any new fare must be available for sale when filed into the computer system. Airlines in the past often filed fares that would go into effect at a later date.

* The only time an airline can indicate the beginning and end of a fare sale is when the promotion has been widely advertised in newspapers or other general news media.

* What Airline Tariff Publishing Co. does: Jointly owned by the airlines, it collects and distributes fare information from participating carriers. The information is supplied to airline reservations systems, which are used by travel agents and carriers to book and purchase tickets.