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.