Report: DOJ investigating airlines for alleged price collusion

The nation’s four largest airlines confirmed Wednesday that the Justice Department has contacted them as part of a reported probe into unlawful collusion, which comes amid complaints from Democratic lawmakers that years of industry mergers have left travelers at the mercy of high airfares.

Delta, United, American and Southwest airlines all pledged to cooperate with the investigation, while the industry maintained that competition is alive and well.


“We welcome the review as the data shows that the industry remains highly competitive with more people flying than ever before,” American Airlines said in a statement. The industry’s main trade group, Airlines for America, said Department of Transportation data show that domestic air fares are down this year, while seat capacity is at a high since the recession.

A Justice Department spokeswoman confirmed to POLITICO that it is looking into potential “unlawful coordination” between some airlines, but declined to comment further. The Associated Press said the investigation concerns whether major airlines have colluded to limit available seats, which has the effect of propping up airfares.

The probe comes little more than a year and a half after the Justice Department agreed to a legal settlement that green-lit the last giant airline merger, which allowed American Airlines and US Airways to combine while requiring them to shed dozens of flight slots at airports. DOJ had initially sued to block the merger on the grounds that it would eliminate competition, but then said the settlement “opens up the marketplace as never before.”

But the marketplace is far from open, the industry’s critics in Congress maintain.

Last month, Democratic Sen. Richard Blumenthal of Connecticut called for the department to “investigate this apparent anti-competitive conduct potentially reflecting a misuse of market power, and excessive consolidation in the airline industry.”

“This investigation must be tireless and timely to save consumers from the onslaught of price increases in summer fares that may result from collusive and anticompetitive airline company misconduct,” Blumenthal said in a statement Wednesday.

Democratic Sen. Chuck Schumer of New York, who called for an investigation in December, welcomed the news.

“It’s hard to understand, with jet fuel prices dropping by 40 percent since last year, why ticket prices haven’t followed,” he said in a statement. “We know that when airlines merge, there’s less price competition. What we need now is a top-to-bottom review to ensure consumers aren’t being hurt by industry changes.”

A series of mergers, beginning in 2008, led to Delta, Southwest, American and United controlling more than 80 percent of U.S. commercial airspace. Additionally, major airlines have eliminated unprofitable flights to midsize and smaller hubs, at travelers’ expense.

According to a March survey by the U.S. Travel Association, six in 10 said they would pay an additional $4 to fix airport infrastructure, remedy inefficiencies and offer more choices. In the same poll, seven in 10 found their current travel options inadequate.

Airlines for America, predicted that DOJ’s probe will conclude that carriers “compete vigorously every day, and the traveling public has been the beneficiary.”

Burgess Everett contributed to this report.