US airlines in competition probe over alleged price-fixing

US airlines in competition probe over alleged price-fixing

US airlines face a price-fixing probe amid allegations that they colluded to keep fares high.

The US Justice Department confirmed that it is investigating some carriers over “possible unlawful coordination”.

The civil antitrust inquiry follows a period in which domestic flight prices have kept rising despite the fall in fuel prices.

Major US carriers received a letter from the authorities on Tuesday demanding copies of their communications.

The request focused on correspondence relating to the airlines’ plans for passenger-carrying capacity.

The Associated Press reported that it had seen a document revealing that the Justice Department had requested information from airlines as part of a competition probe.

AP said the Justice Department was investigating whether airlines were now conspiring to grow slowly in order to keep ticket prices high. By limiting the number of routes and available seats, airlines could charge higher prices.

The report did not name which airlines had been asked for information by the Justice Department.

It is thought that investigators have requested all communications the airlines had with each other, Wall Street analysts and major shareholders about their plans for passenger-carrying capacity.

Last month, the International Air Transport Association (Iata) revised up its profit forecast for US airlines.

Democratic senator Richard Blumenthal (pictured) urged federal authorities to investigate the aviation industry two weeks ago.

He wrote in a letter: “Consumers are paying sky-high fares and are trapped in an uncompetitive market with a history of collusive behaviour.”

Available seat miles on US carriers remain significantly below the peak in late 2007, a year before a series of mergers began, according to Department of Justice data.

The consolidation left American Airlines, Delta Air Lines, Southwest and United in control of more than 80% of seats in the US domestic travel market.

The Business Travel Coalition welcomed the move by the Department if Justice which could prove “illegal co-ordination” to restrict capacity in domestic US, transatlantic and other international markets.

BTC chairman Kevin Mitchell said: “The number one concern that antitrust experts have – with no close second – as with regard to radical consolidation of any industry, is the risk of tacit competitor co-ordination on policies, practices and prices among a reduced number of industry participants.

“Since recent US airline mega-mergers, we have witnessed near constant airline CEO calls for ‘capacity discipline’ during industry gatherings and analyst earnings calls only to be echoed by analysts in follow-on earning calls with other airlines.

“This represents perhaps the darkest hours of airline co-ordination as well as a too-cozy harmonisation between airlines and Wall Street.”


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