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Airlines Face Antitrust Scrutiny, Again

In case you hadn’t noticed, the Big Three legacy airlines have changed their pricing policy for multi-city trips. And yes, you guessed it: The new policy makes such trips more expensive. In some cases, much more expensive.

That’s disconcerting for travelers, who for years have been told that roundtrips were cheaper than one-ways. But price increases are a fact of travel life. And with the airline industry’s ongoing consolidation, the outlook is for ever-rising prices ahead.

What makes this latest pricing initiative newsworthy is its timing. American, Delta, and United imposed an identical new policy practically simultaneously. And that, as any bona fide consumer advocate will tell you, suggests collusion.

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Cries of “Foul!” were first raised by the Business Travel Coalition, an organization representing the interests of corporate and government travel managers. In an April 1 letter to Assistant Attorney General William Baer at the Antitrust Division of the Department of Justice, the group alleged as follows:

(J)ust last week, all three major U.S. carriers, virtually simultaneously, and without disclosure to consumers, implemented a complex policy change that bars customary multi-city ticketing using the lowest available fare on each segment. Instead, the new policy combines the highest fares available on each segment and returns a round-trip single price that is substantially higher than if a consumer purchased separate one-way fares. Perhaps most troubling is how the airlines knew that their competitors had made this change given that there was no public announcement … This is not a match-and-go decision, but one that would have received considerable thought, analysis and discussion over time.

The BTC cited as an example a three-city trip, from New York to Los Angeles to Albuquerque to Montreal to New York. As now normally booked on an airline website, the trip would be priced at $2,745. But what the great majority of travelers don’t know is that the same trip can be booked as four separate tickets, for $898.

The BTC’s call for federal scrutiny of the airlines’ move was taken up a few days later by Senator Bob Menendez (D-NJ), who sent a letter to the Department of Transportation requesting an investigation of the new rules, which he denounced as unfair and misleading:

That makes no sense. You’re riding the same plane, with the same crew, using the same amount of jet fuel, even sitting in the same seat. It shouldn’t cost hundreds of dollars more. It seems to me that the nation’s big airlines are working in concert to deceive and cheat the flying public. Consumers are fed up with an airline industry – blinded in the pursuit of higher profits – that will try any dollar-driven gimmick to make air travel less comfortable and more expensive every day.

While charges that the airlines collude to keep prices high are newsworthy, they’re hardly new. Last summer the DOJ launched an investigation of collusive capacity restraint by American, Delta, Southwest, and United. And as recently as February of this year, a diverse group of travel-related organizations called on Congress to establish a “national commission to examine the lack of competition in the U.S. domestic air travel market, and how it impacts American jobs, local economies and businesses, and U.S. customer satisfaction and choices in air travel.”

So, the scrutiny of the airlines’ pricing behavior is ongoing. And the advice to travel consumers remains the same: Caveat emptor.

Reader Reality Check

Should U.S. airlines be subject to more government regulation, or less?

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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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