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Agency sues AA after debit memo

’We never had any problems. There were no bells or whistles from American.’
Karen Meyer
co-owner Tour World Travel
Wichita Falls, Texas

By Laura Del Rosso

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.