Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Four major airlines allegedly colluded to fix prices of airline tickets, (Jul 2, 2015)

By Linda O’Brien, J.D., LL.M.

Four major airlines—Delta, American, Southwest and United—engaged in a conspiracy to fix the prices of airline tickets by limiting routes and available seats in order to keep the price of airfares artificially high, according to a complaint filed in the federal district court in White Plains, New York (Devivo v. Delta Airlines, Inc., July 1, 2015).

Delta Airlines, American Airlines, Southwest Airlines, and United Airlines are the four major airlines in the United States. Christopher Devivo, Jack Sniado, and Julia L. Holt have purchased tickets from the one of the major airlines.

The complaint states that, on July 1, the U.S. Department of Justice (DOJ) announced that it was investigating the airline industry for potential unlawful coordination. As part of its investigation, the DOJ requested copies of all communications that the airlines had with each other about their plans for passenger-carrying capacity.

As a result of a series of mergers beginning in 2008, the defendant airlines control more than 80 percent of the airline seats in the domestic travel market. From 2009 to 2014, the average domestic airfare rose 13 percent while capacity on domestic flights remained virtually flat. In the past two years, U.S. airlines have earned a combined $19.7 billion, according to the complaint.

The complaint also alleges that, with the suppression of routes, seats, and competitive fare information along with the reduction in the price of jet fuel, the airlines could make even higher profits. In the absence of collusion, the cost savings in airfares due to decreased jet fuel costs should occur.

The defendant airlines reinforced their commitment to the conspiracy through industry conferences, including the International Air Transport Association (IATA) meetings. At such conferences, the airlines agreed to restrict capacity increases to keep airline ticket prices high. Their commitment to the conspiracy has paid off. The IATA projected that airline industry profits will more than double in 2015 to a record $30 billion, the complaint alleges.

The plaintiffs assert claims for violations of Sections 1 and 3 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, pre- and post-judgment interest, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 7:15-cv-05162.

Attorneys: Barbara J. Hart (Lowey Dannenberg Cohen & Hart, P.C.) for Christopher Devivo, Jack Sniado, and Julia L. Holt.

Companies: Delta Airlines, Inc.; American Airlines, Inc.; Southwest Airlines, Co.; United Airlines, Inc.

News: Antitrust NewYorkNews