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DOJ Subpoenas Airlines over Alleged Collusion

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DOJ Subpoenas Airlines over Alleged Collusion

DOJ Subpoenas Airlines over Alleged Collusion
July 02
13:49 2015

MIAMI — The Department of Justice of the United States (DOJ) has sent subpoenas to several major US mainline and low-cost carriers as part of an investigation into collusion, an alleged practice intended to limit capacity increases, and keep ticket prices high.

According to Associated Press, the DOJ sent last Tuesday a letter to major U.S. airlines, requesting documents and information from the last two years related to statements and decisions related to the capacity of air carriers.

Justice Department Spokesperson Peter Carr affirmed today that the department was investigating “possible unlawful coordination by some airlines,” declining to comment further on which airlines are being investigated.

Airlines discussed capacity early last month during the 71st IATA Annual General Meeting held in Miami. According to the Association, airlines in the United States have been able to use its profits to invest in new fleet, pay down debts and deliver “normal return to investors through dividends and share buy-backs”. The region is expected to see a 3.0% growth in demand, although capacity is starting to pick up with an anticipated 3.1% expansion.

As a result of a series of mergers starting in 2008, American Airlines, Delta Air Lines, Southwest Airlines and United Airlines now control more than 80 percent of the seats in the United States. Back in early 2014, DOJ tried to block American Airlines and US Airways merge, but late agreed after the airlines made minor concessions.

Seth Miller, founder of the Wandering Aramean Blog and contributor to AirwaysNews.com, assures “the Department is likely over-reaching here, trying to make things look good heading in to the peak summer travel season, while not actually doing anything to improve the situation for consumers.”

Meanwhile, the response from US mainline and low-cost carriers have been open and cooperative. Joshua Freed, SM Corporate Communications, American Airlines confirmed that the airline “has received a Civil Investigative Demand from the Department of Justice Antitrust Division”, adding “we welcome the review as the data shows that the industry remains highly competitive with more people flying than ever before. Demand has been enabled by a robust and competitive marketplace in which capacity has been added and average fares have decreased. We will cooperate fully with the investigation and demonstrate that the last two years have presented an entirely new competitive landscape that has greatly benefited air travel consumers.” Also a spokesperson from Southwest Airlines confirmed receiving notice from Justice and said, “We will fully cooperate with any questions or requests the DOJ would pose.”

 

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Roberto Leiro

Roberto Leiro

Airline and Aviation Writer, with a Fascination for Languages and History, Translator, Incurable Planespotter and Aviation Enthusiast.

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