The government has known of alleged price gouging and ‘capacity discipline’ for years – but such tweaking is not cut-and-dried evidence of conspiracy

Crowded planes. Pinched seating. Vanishing fare bargains. Extortionate fees. Rising fares across every major airline.

The antitrust cops at the US justice department think they know what’s behind the blight of modern air travel: “Major airlines, in tandem, have raised fares, imposed new and higher fees, and reduced service.”

The government also accused America’s leading airline companies of a preference for “tacit coordination over full-throated competition”.

Except those words did not arrive this week, when documents surfaced indicating a justice department investigation into unlawful coordination by the airlines over pricing and capacity. Those suspicions of collusion came alongside a federal lawsuit almost two years ago, before the merger of American Airlines and USAirways created the world’s largest air carrier and, industry watchers said at the time, ended any hope for a competitive industry that could lower ballooning ticket costs for consumers.

Now, the surviving quartet of US airline giants – American, Delta, United and the discounter Southwest – are coming under increased scrutiny for “unlawful coordination” on price-gouging. But airline insiders and legal analysts say the government’s case against the industry will be near-impossible to prove – indeed, that the feds have known about potential ticket schemes for years and have not been able to fight back against lobbyists fighting to bring the transportation business back from the post-9/11 brink.

“It’s de facto collusion,” said Charles Leocha, president of Travelers United, a consumer advocacy group. “Flights are full, and the airlines have become very good at signaling their strategy” to their not-so-arch rivals, he added.

While the justice department refused to elaborate on the leaked details of its investigation, the airlines did confirm that they have been asked to turn over reams of documents about their discussions on capacity, not just among themselves but with Wall Street analysts who have cheered the airlines’ recent string of profits.

The antitrust division tried to block the American-USAirways deal in 2013, but allowed it to proceed in exchange for concessions such as giving up choice airport slots to competitors like JetBlue. Even with Southwest remaining a discount outlier to American, Delta and United, four major companies now control more than 80% of all air travel out of the domestic United States – and, through their global alliances, wield influence on fares and flights around the world. Fifteen years ago, 10 large airlines carried 90% of domestic traffic.

The competition cops have continued to use the airlines’ own words against them: executives repeating the phrase “capacity discipline” – code for restricting the number of available seats to ticket-buyers – is what renewed attention from critics like Connecticut senator Richard Blumenthal, who compiled a damning list of utterances at a recent summit of global airline chiefs and appears to have accelerated the probe.

But watchdogs say the companies can still get their way on coordinated ticket prices without cutting a trust-busting deal, by keeping the number of seats they offer low – and keeping prices high.

“When there are a small number of competitors, it is easy for them to agree not to compete head to head,” said Christopher Sagers, a professor at Cleveland-Marshall College of Law who testified at a congressional hearing on the 2013 merger.

In recent years, the average airfare has risen by more than 10%, while capacity slid by nearly 20%. But planes are more full than at any time since the beginning of the jet age, with load factor – or percentage of seats filled – currently averaging 83%, up from 71% in 2000.

But even if the airlines appear to move in lockstep on prices and capacity changes, that does not prove they are conspiring, said Helen Becker, an airline analyst at Cowen and Company.

“Because of technology, everyone has perfect knowledge,” she said. “Airlines know when their competitors change prices.”

Capacity changes usually follow the gross domestic product, she noted: “It’s not rocket science.”

The airlines, meanwhile, deny the accusations of collusion and insist they will fight any potential charges.

“We are confident that the Justice Department will find what we know to be true: our members compete vigorously every day, and the traveling public has been the beneficiary,” the Airlines for America trade group said in a statement.

The lobbyists also said that capacity is at a “post-recession high”, with airlines increasing the number of available seats by 4.6%, or 126,000 per day, during the summer travel period; as a result, the group claims, “fares are actually down thus far in 2015”.

Industry defenders point to cumulative losses of $55bn in what they call the “lost decade” after 9/11, when the airlines lurched from crisis to crisis, including a dramatic spike in oil prices and the financial crisis of 2008.

Virtually every major US airline has been in bankruptcy at some point since the 2001 plane hijackings, only turning the corner recently with $22bn in profits over the past five years. American Airlines posted a record profit of $1.2bn in the first quarter of this year, as the last major carrier to go through the post-9/11 wash-and-rinse cycle.

Indeed, airlines have begun to add more flights, which analysts say might be what set off the eyebrow-raising chatter about restoring “discipline” after Wall Street effectively punished airlines for their largesse, pushing down stock prices.

An airline industry under the microscope is not good news for investors, with some pro-airline analysts claiming the feds simply do not understand the business.

Michael Derchin, transportation analyst at CRT Capital, said that even in good times airlines’ profit margins traditionally are razor-thin and that oil prices, now relatively low, could spike at a moment’s notice.

“What do you want them to do,” he asked, “go out of business again?”