Are Airlines Conspiring to Keep Ticket Prices High?
The nation's four largest airlines — American, United, Delta, and Southwest — are being investigated by the U.S. Department of Justice amid concerns that they allegedly colluded to keep fare prices high. Combined, the four carriers control more than 80% of the domestic seats on planes.
Coordinating Capacity, Keeping Supply Low
At the center of the probe is whether the nation's major airlines coordinated on whether or not to expand various flight capacities. By making sure flights are full — and competition for passengers on various routes is low — airlines are able to keep profits high. The investigation began as a result of public comments made by airline executives at a trade conference in Miami.
The investigation comes just as the airline industry announced record profits of $19.7 billion in the past two years combined. Analysts predict this year could bring even bigger profits for the industry thanks to a drop in the price of jet fuel and a steep rise in the number of ticket and baggage fees.
However, federal investigators have a tough job ahead. To prove collusion, investigators must comb through thousands of emails, letters, and phone calls that could be used to prove that the airlines communicated with each other about how much seating capacity to add. Absent from the probe are smaller airlines like JetBlue and Alaska Airlines.
What do you think? Would you fly with smaller carriers if the big airlines are found guilty? Let us know in the comments below.
To answer the author's question, "Would you fly with smaller carriers if the big airlines are found guilty?" Unfortunately in a mid/small market like Syracuse, we don't have much of a choice. There are several airlines serving SYR airport, but not every airline serves every destination. A few of the so-called "discount fare" airlines only serve one or two "key" destinations from here, usually with no connections available.
My new jam are ultra-discount airlines such as Spirit and Frontier. Those airlines are unapologetically cheap, but they charge you for everything (carry on, drink, snack, better seat), but totally worth it for shorter trips.
Spirit's advertising is very risque (bare fare, 69 sale) which makes it even more fun ;-)
With what we have seen around LIBOR rates fixing scandals, FX scandals etc it is just a matter of time that we realize that the uberwealthy behind these companies are collectively filling pockets everywhere because they basically "pay" for our government.
It's in my mind just a matter of time before the evident insurance companies etc are also going get exposed.
I dont mind paying taxes and paying my dues to ehlp our country. But the people behind big industries are feasting. Call me a tinfoil hatter.
Lastly: i'd go for the little guys.
I often fly JetBlue or Southwest just for the convenience of a direct flight to an airport that's within an hour's drive of my ultimate destination. But I don't find that the pricing is much different than the other major carriers. Sometimes it's even cheaper to fly Delta, but I prefer the non-stop option that they don't typically offer. And I actually thought the pricing wasn't too bad, though maybe I'm just used to it.