Possible Collusion Among Airlines to Maintain High Fares

on July 2, 2015 by Tenaglia & Hunt, P.A.

Jim hunt picTwo years ago, the Justice Department approved the latest round of airline mergers, all of which were supposed to benefit customers. In 2015, roughly 80 percent of the country’s air traffic is operated by American, United Airlines, Delta Airlines, and Southwest Airlines. The airlines’ originally argued that combined operations would open up more options for customers than previously possible.

The U.S. Government is now investigating the airlines for possible collusion to limit available seats. This would increase demand and keep airfares high, according to The Associated Press. The Justice Department requested passenger-carrying capacity from each airline, dating back to 2010. The big four airlines all acknowledged receipt of a letter and that they would comply. In addition to capacity data, the letter also requested copies of communications between the airlines, with Wall Street analysts, and with major shareholders.

Since the industry began consolidating, the airlines have experienced surging profits. In addition to rising airfares and fees, fuel prices have dropped 30-40% in the last year. The Justice Department fears that these factors combined hurt consumers and fair competition, as opposed to benefiting consumers.

 

The New York Times reported first from The Associated Press, with more detailed coverage following.