Rivals Say American’s Fare Cuts Violated Law : Airlines: America West and Northwest contend that the nation’s biggest carrier is trying to drive them out of business.

WASHINGTON —  Charging American Airlines with “predatory pricing” during the round of fare slashing that just ended, the top executive of rival America West Airlines called Wednesday for a Justice Department investigation to determine whether American is trying to drive weaker competitors out of business.

Other airlines had to match American’s recent half-priced fares to avoid “instant suicide,” Michael Conway, president and chief executive of America West, said during a Senate subcommittee hearing on airline competition.

Virtually all of the discounted, heavily restricted vacation fares were “slashed to levels far below the cost of providing the product,” said Conway, whose airline is one of three carriers operating under Chapter 11 protection from creditors. American’s cuts, he said, were intended to force other airlines out of business, in violation of federal antitrust statutes.

Separately, a Phoenix judge Wednesday authorized America West shareholders to investigate whether the pricing strategies of American Airlines are intended to drive America West and other ailing carriers out of business.

Bankruptcy Judge Robert G. Mooreman’s order requires American to provide documents detailing its rationale for recent price cuts and its 1991 and 1992 operations in markets in which it competes with America West.

The Wednesday testimony, before the aviation subcommittee of the Committee on Commerce, Science and Transportation, came a day after Continental Airlines, also in Chapter 11, filed an antitrust suit in a Texas federal court challenging American’s fare reductions. In a separate filing, American, the nation’s largest airline, has asked a Chicago federal court to declare its pricing practices legal.

Sen. John McCain (R-Ariz.), ranking Republican on the subcommittee, does not plan to contact the Justice Department because “the issue is already being pursued in the courts,” according to a spokesman. A spokesman for the subcommittee chairman, Wendell Ford (D-Ky.), said the senator has not received comment on the issue from other members of the subcommittee. The industrywide sale, which ended Friday, is expected to cost airlines millions of dollars.

Barry Kotar, a senior vice president at Northwest Airlines, echoed Conway’s accusations.

Kotar said he believed that American’s reductions were made in response to Northwest’s “Grown-Ups Fly Free” offer, aimed at a family market that American had not targeted.

The Northwest program should have turned a $20-million profit, Kotar said, but instead resulted in a projected $40-million loss. “If that’s not predatory pricing in action, I don’t know what is,” he said. Asked if Northwest would also take American to court, Kotar said it is “under consideration.”

Robert Crandall, American Airlines’ chairman, said price competition is necessary to the survival of the industry, even if weaker airlines go under. “If we want a competitive system, we must allow the market to finish the painful process of eliminating surplus capacity,” he testified.

American had no choice but to cut fares after Northwest did, Crandall testified, because “consumers are extraordinarily price sensitive. Airlines will always match the lowest price, whatever that lowest price may be.”

The industry has lost $6 billion since 1990, and senators voiced concern that as few as three major airlines will survive 1992. “If the current situation should worsen, we will have failed to achieve the objective of deregulation: assuring a more competitive and efficient airline industry,” McCain said.

McCain has introduced legislation to increase competition by eliminating advantages some airlines enjoy from computer reservation systems that travel agents use, and by granting more airlines greater access to airports in New York, Chicago and Washington.