Gov.’t faces burden in proving airlines worked together
Published 12:39 pm Saturday, July 4, 2015
WASHINGTON — As the Justice Department launches an investigation into possible collusion in the airline industry, experts say the government faces the burden of proving that carriers were deliberately signaling business decisions to each other.
Airlines routinely increase flights based on demand. A particularly cold winter in the Northeast, for instance, might merit more flights to the Caribbean. And sometimes, routes are cut because there isn’t enough demand. Nothing is illegal about that.
Any company can limit the supply of its own products, whether airline tickets, sneakers or smartphones. But it would be illegal for airlines to work together to limit flights in order to drive up fares.
The government’s investigation is just in its initial phases. Letters went out this week to American Airlines, Delta Air Lines, Southwest Airlines and United Airlines. Together, those four carriers control more than 80 percent of the domestic seats on planes.
Airlines are quick to say they can’t talk about pricing decisions. But in recent years, airline executives and Wall Street analysts have been much more open in discussing how the airlines have kept their passenger capacity — the number of seats they put into given markets — in check. With that capacity kept from growing too fast, airplanes have been fuller and carriers have been able to command higher ticket prices. That’s led to record profits.