Justice Department Investigates US Airlines' Overcharging
The Department of Justice is investigating whether U.S. airlines cooperated and deliberately limited available seats to keep airfares high, a charge major carriers strongly denied through their trade group.
According to USA Today, the probe comes after a series of mergers have led to significant consolidation in the domestic airline market, which today is dominated by four major players - American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. As carriers cut back on the number of seats flown, the tighter capacity that results has led to higher airfares even as demand for flights continues to rise.
The Justice Department is looking into potential "unlawful coordination" among some airlines, its spokeswoman, Emily Pierce, told the Associated Press. Pierce would not say if investigators have their eye on any companies in particular.
However, several major U.S. carriers confirmed that they had received a letter urging them to hand over copies of all communications they had with each other, as well as to detail their interactions with Wall Street analysts and major shareholders about their plans for capacity or "the undesirability of your company or any other airline increasing capacity," the AP revealed.
American, Delta, United and Southwest acknowledged receipt of the missive and said they would be complying with the request. A number of smaller carriers, including JetBlue Airways and Frontier Airlines, however, told the newswire that they had not been contacted by investigators.
Joel Chefitz, an antitrust lawyer who is a partner in the Chicago office of McDermott Will & Emery, told USA Today that the government might have a hard time bringing a case against any airlines unless there was stark evidence of collaboration.
"It would be truly ironic if the government, having approved the mergers that created a consolidated, concentrated industry -- an oligopoly -- would now complain,'' Chefitz said. "If all they're talking about is an industry acting in a disciplined fashion, matching supply with demand as opposed to cutting prices willy-nilly in order to fill up seats ... then I don't expect the government will actually file a lawsuit."
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