WESTWAYS SUIT IS THIRD VINDICATION FOR ARC OVER "HIDDEN-CITY" AND "BACK-TO-BACK" DEBIT MEMOS

Arlington, VA, February 7, 2005 - On November 30, 2004, the Honorable Robert J. Timlin of the United States District Court for the Central District of California approved a settlement between ARC and the plaintiffs in the lawsuit Westways World Travel, Inc. and Sundance Travel Service, individually and on behalf of others similarly situated v. AMR Corporation, American Airlines, Inc., American Eagle Holding Corporation, Airlines Reporting Corporation, and Sabre Inc. (C.D.Cal), Case No. ED CV 99-386-RT.  This highly favorable settlement marks for ARC the third successful resolution of the "hidden-city ticket litigation," involving three lawsuits in two federal courts during the last eight years.  The first two suits were dismissed.

The "hidden-city ticket litigation" centered on tariffs or policies instituted by several carriers prohibiting the purchase of hidden-city, back-to-back and throwaway tickets.  In 1999, plaintiffs Westways World Travel and Sundance Travel Service filed a case on behalf of a class of travel agents in the Central District of California, asserting claims for breach of contract and for violation of the Racketeer Influenced and Corrupt Organization Act (RICO) against American Airlines and related entities, and naming ARC as a defendant as well.  The plaintiffs claimed that ARC aided the carrier in extorting payments by issuing debit memos and threatening termination of the agent's ARC accreditation if the amounts were not paid.

Because ARC is not involved in the enforcement of debit memos issued by carriers for tariff violations, ARC vigorously denied the allegations in the plaintiffs' complaint.  "This is one of a number of cases that have been brought under the false assumption that ARC gets involved in carriers' efforts to enforce rules against hidden-city ticketing, back-to-back ticketing, and other tariff requirements," said ARC General Counsel Kathleen Argiropoulos.  In two earlier cases in which ARC was alleged to have enforced carrier tariff rules through the Agent Reporting Agreement, the courts entered judgment in ARC's favor finding that ARC played no role in the enforcement of carrier tariff provisions.  (Nelson Chase v. Northwest Airlines, Inc. et al., U.S. District Court, Eastern District of Michigan (1996), and All Direct Travel Services Inc. v. Delta Airlines, Inc., et al., U.S. District Court, Central District of California (2002).)   "These claims get dismissed because ARC has never enforced tariff violations.  We therefore do not issue or enforce debit memos related to tariff violations.  I think if the plaintiffs' lawyers understood our role, we would not be named in these cases."

ARC has issued a statement to all travel agents (via e-mail and posted on ARC website at www.arccorp.com) clarifying that: (i) ARC does not and will not involve itself in disputes between travel agents and carriers related to tariff-related debit memos; (ii) disputes pertaining to tariff-related debit memos are matters solely between the agent and carrier; (iii) if an agent contests a tariff-related debit memo it should contact the carrier directly, and (iv) agents are not required to pay contested tariff-related debit memos through ARC, but may voluntarily do so.

Argiropoulos added, "ARC is pleased to avoid the costs of further litigation by settling the case on these terms.  We hope that by publicly stating ARC's policies regarding tariff disputes between carriers and agents, agents will understand that those are matters between them and the carriers, and that ARC does not get involved in such disputes."

About ARC
ARC is the premier provider of financial settlement solutions and data and analytical services for the travel industry. Airlines, travel agencies, corporate travel departments, railroads, and other travel suppliers process more than $65 billion annually through ARC's world-class settlement system, making it the financial backbone of travel distribution. ARC COMPASS®, the leading, trusted source for travel transaction information, powers data and analytical tools that help ARC customers make confident business decisions. ARC is an airline-owned company that builds on values of integrity, teamwork, innovation, cost-effectiveness, and excellence. For more information, please visit http://www.arccorp.com.