Australia, US End Airline Dispute - for Now

THE anticipated dogfight over the Pacific never got past the gunning of engines. The Australian government and United States carrier Northwest Airlines resolved their differences June 17 over a contentious North Pacific route.

In October 1991, Northwest was given permission to fly a thrice-weekly schedule from New York to Sydney via Osaka, Japan. As part of the agreement with Australia's Department of Transportation and Communications, Northwest had to agree that at least 50 percent of its passengers would originate in New York. Northwest said the rule violated the bilateral air-travel agreement between the two countries and that it had signed under protest.

Problems arose in January when the Australian government informed Northwest that, because it breached the agreement, it would be pulled back to two flights a week as of June 30. Northwest was carrying more Osaka-Sydney passengers than allowed, the government said. Northwest replied that despite its stand that the ruling was illegal, it had been trying to meet the conditions in good faith.

The war of words then became a tit-for-tat battle. The US government said if the Australians canceled the one Northwest flight, it would cancel three out of 10 weekly nonstop Qantas flights from Sydney to Los Angeles. Qantas protested, saying it was an innocent party. At one point, Qantas said it would try to bypass the ruling by flying to San Francisco instead of Los Angeles, but that idea was shot down.

Finally, the two sides reached the June 17 agreement. Australia will allow Northwest to keep all three flights. The 50-percent rule still stands, but there will be no move to enforce it and the government has given Northwest a six-month extension in which to abide by the conditions, after which there will be a review. The agreement allows Northwest to move the origin of the flight to Detroit, where the carrier provides more service. The US government is allowing Qantas to keep all of its Sydney-Los Angel es flights. It still maintains that the 50-percent rule is illegal.

Northwest has withdrawn its Federal Court appeal against the ruling. Australia will suspend its action to have the ruling referred to international arbitration.