If you’re among the many air travelers who believe that the airlines have conspired to keep airfares high by restraining capacity growth, you’re about to have that suspicion reality-checked in a court of law.
Late last week, a federal judge in Washington, D.C., overruled objections by the airlines and gave the go-ahead to a class-action suit alleging price-fixing by the Big Four airlines, American, Delta, Southwest, and United. While the judge, Colleen Kollar-Kotelly, didn’t rule on the merits of the plaintiffs’ complaint, she said she could “reasonably infer the existence of a conspiracy.”
There’s little question that the airlines reduced capacity beginning in 2009, following the latest recession. And they did so in what appears to be a coordinated fashion. To prove collusion, however, requires more than the appearance of coordinated action. In this case, that coordination may have been hidden in plain sight.
During the period in question, top executives of the defendant airlines routinely made public statements calling for the need for “capacity discipline” in order to firm up prices and restore profits. If those statements turn out to be the smoking gun in the case, those airline managers will have shot themselves in the foot.
It will take months, perhaps longer, for the case (Domestic Airline Travel Antitrust Litigation, U.S. District Court, District of Columbia, No. 15-mc-01404) to play out. In the meantime, the Department of Justice is also looking into charges that the Big Four fixed prices.
Where there’s smoke, there’s fire. But proving there’s fire, even when you have burns to show for it, is another matter.
Reader Reality Check
Is there a conspiracy here, or just four companies independently reacting to market forces?
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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.