DOJ subpoenas airlines over keeping ticket prices high

Posted at 8:38 PM, Jul 01, 2015
and last updated 2015-07-01 20:39:28-04

WASHINGTON (CNN) — The Justice Department has sent subpoenas to several major airlines as part of an investigation into “possible unlawful coordination” to limit capacity increases, and thereby keeping ticket prices high, a department spokeswoman said Wednesday.

The department sent civil investigative demand letters to airlines on Tuesday, Justice spokeswoman Emily Pierce said.

At issue is whether different airlines are coordinating to keep capacity — the number of seats available on planes — stable, having the effect of keeping ticket prices high.

How the airlines have coordinated isn’t immediately clear, but among the evidence that investigators is considering includes public comments by airline executives and industry analysts.

In recent years, the Justice Department allowed two major airline mergers to take place — including United and Continental, as well as American and U.S. Airways. Industry groups have cited the merging of airlines as an example of the business has gotten tougher for consumers.

“If not for the radical consolidation we have seen in the airline industry in the last few years, we probably would not even be having this conversation. Now that four carriers control 85 percent of domestic routes, ‘collusion’ is a thought that’s constantly going to be in the back of the minds of federal regulators,” U.S. Travel Association President and CEO Roger Dow said in a statement.

A United Airlines spokesperson confirmed to CNN that the airline has received a letter from the DOJ “and we are complying with their requests.”

American Airlines said they also had received notice from the Justice Department.

“We welcome the review … Demand has been enabled by a robust and competitive marketplace in which capacity has been added and average fares have decreased,” a spokesperson for American Airlines said. “We will cooperate fully with the investigation and demonstrate that the last two years have presented an entirely new competitive landscape that has greatly benefited air travel consumers.”

A spokesperson from Southwest Airlines said, “We’ll cooperate fully in answering any questions the (Justice Department) has of us.”

JetBlue said they have not been contacted for the investigation.

The Associated Press first reported on the Justice Department investigation.