America’s airlines being investigated for possible airfare collusion

The US Department of Justice has decided to launch an investigation into whether US airlines have been illegally colluding in a manner intended to keep seat prices at a high level. The investigation is centering on whether seat availability has been deliberately limited with the express intention of driving up prices. The Department of Justice has written to all US Airlines requesting they provide comprehensive details of why they have each chosen to limit seat availability and, in addition, what information they made available to investors, members of the public and securities analysts. Delta, United, American and Southwest, who combined hold an 80% share of the domestic air travel market have each confirmed they have received a letter from the Department of Justice and will fully cooperate.
Share prices in US airlines are currently volatile owing to a conflict between anticipated growth in demand, Wall Street warnings over the effect on seat prices if anticipated expansion is catered for too early, and airlines’ decisions to rein back by taking flights off upcoming schedules and postponing aircraft deliveries. Since a string of bankruptcies following the 9/11 attack in 2001, mergers, a conservative approach to adding to capacities and new fees levied on passengers, plus continued falling of oil process, airlines have now been posting billion dollar profits. However this has not stopped them from complaining at what they see as unfair competition coming from Gulf airlines thorough what they claim are state subsidies which have a negative effect on the Open Skies agreement as far as US airlines are concerned. Add to this the battle being put up against low-cost Norwegian Air Shuttle which is looking to expand its US flights, but which unions fear will result in an undermining of wages and standards.
The actions of the Department of Justice have been well received by politicians and consumer advocates alike, with US Senator Richard Blumenthal saying in a statement that “This investigation must be tireless and timely to save consumers from the onslaught of price increases in summer fares.” However airlines have been quick to respond by pointing out that in 2015 ticket prices have fallen and capacity is at its highest levels after the recession. The trade group Airlines for America released in a statement that “Our members compete vigorously every day, and the travelling public has been the beneficiary.”