Are Airlines Conspiring to Keep Plane Tickets Costly?

Are Airlines Conspiring to Keep Plane Tickets Costly?

The federal government is investigating possible collusion among major airlines to limit available seats, thereby keeping airfares high.

The Associated Press first reported the news, citing a document that the news organization obtained as its source.

According to the AP report, the U.S. Department of Justice investigation is focusing on “whether airlines illegally signaled to each other how quickly they would add new flights, routes and extra seats.”

The investigation also has been confirmed by a spokesperson from the Justice Department, who tells CBS MoneyWatch:

“We are investigating possible unlawful coordination by some airlines.”

The spokesperson declined to comment further to CBS and multiple other news publications, and did not specify which airlines are being investigated.

However, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines all told the AP that they received a letter from the DOJ and that all are complying with it.

Several smaller carriers, including JetBlue Airways and Frontier Airlines, told the AP they had not been contacted by the government.

Last month, Democratic Sen. Richard Blumenthal of Connecticut urged the Department of Justice to investigate possible collusion and anti-competitive behavior among U.S. airline companies.

A press release issued by his office on June 17 summarizes Blumenthal’s concerns, which stem from discussions among a group of top airline executives at the annual International Air Transport Association meeting in Miami:

Per a report from The New York Times, the executives announced parallel strategies to maintain “discipline” regarding airline capacity across flight routes — a strategy identified as a highly valuable way for airlines to artificially raise fares and boost profit margins during the DOJ’s 2013 investigation into the US Airways/American Airlines merger.

The industry group Airlines for America has denied such allegations in a statement, CBS reports:

“We are confident that the Justice Department will find what we know to be true: Our members compete vigorously every day, and the traveling public has been the beneficiary, as the DOT’s own data shows that domestic fares are down in 2015.”

Do you think major airlines have cooperated to keep prices high? Sound off in a comment below or on our Facebook page.

Comments
Are Airlines Conspiring to Keep Plane Tickets Costly?

2,404 Active Deals

More Deals