Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Major domestic airlines charged with conspiring to keep airfares artificially high, (Mar 22, 2016)
Organizations Mentioned:Alioto Law Firm | American Airlines, Inc. | Delta Air Lines | Delta Air Lines, Inc. | Southwest Airlines | Southwest Airlines Co. | United Airlines | United Airlines, Inc.
By Edward L. Puzzo, J.D.
Southwest Airlines, Delta Air Lines, American Airlines, and United Airlines have conspired and colluded to restrict capacity and limit comparison-shopping by consumers in order to keep airfares artificially high, according to a class action complaint filed in the federal district court in San Francisco (Rubinsohn v. Southwest Airlines Co., March 21, 2016).
William Rubinsohn brought a putative class action complaint against the four airlines, alleging that they had conspired and colluded to limit routes, information, and available seats in order to keep airfares artificially high, in violation of the Sherman Act.
Capacity. The complaint alleges that, as a result of mergers starting in 2008, the named airlines control over 80 percent of the domestic market and have used this consolidation to exercise "capacity discipline"—that is, restraining growth or reducing established service in order to command higher airfares. Conferences of the International Air Transport Association (IATA) serve as a mechanism for airlines to collude in restricting capacity in the name of "discipline" in order to keep ticket prices high, the complaint claims.
With the suppression of routes, seats, and information, the average domestic airfare rose 13 percent from 2009 to 2014, despite the substantial decrease in the cost of jet fuel during the same period. During that time, the airlines also imposed ancillary fees for previously included services such as checking baggage. The imposition of ancillary fees and fare increases were imposed by airlines in lockstep with each other, the complaint contended.
Price comparisons. The airline-owned Airline Tariff Publishing Company (ATPCO) gives each airline complete access to every detail of their competitors' published fare structure for every route. At the same time, airlines also have acted to limit the public's ability to compare prices by methods such as periodically pulling flight information from metasearch websites such as Orbitz and Expedia and by refusing to pay such sites for direct referrals to the airlines' own websites or to allow them to refer consumers to online travel agencies. The complaint cites a study indicating that airfares will increase an average of 11 percent if fare-comparison sites do not have access to fare information from the biggest airlines.
The complaint seeks to certify a class consisting of all persons or entities that purchased an airline ticket from any of the named airline defendants from January 1, 2010 to the present, and seeks a joint and several judgment in favor of the plaintiff and the class against defendants in an amount treble the damages sustained.
The case is Civil Action No. 3:16-cv-01365.
Attorneys: Joseph M. Alioto, Theresa D. Moore and Jamie Miller (Alioto Law Firm) and Lingel H. Winters for William Rubinsohn.
Companies: Southwest Airlines Co.; Delta Air Lines, Inc.; American Airlines, Inc.; United Airlines, Inc.
News: Antitrust CaliforniaNews