The loyalty program similarities are probably just coincidence too…
You’ve got your next trip all planned out, you open up your favorite web browser, navigate to your favorite booking site – and then it hits you. Every airline is offering the exact same price, and they’re all higher than you’d expected. Enter price collusion. What may have sounded like a wild conspiracy just years ago, is now becoming a hot button issue amongst U.S. airlines, and one by one – it looks like they’re choosing to settle. After Southwest settled in January for $15 million, American Airlines has just upped the ante, agreeing to $45 million in fines to drop the case. Delta and United are still to come…
The Backstory
It’s been alleged that U.S. airlines including Southwest, Delta, United and American colluded together in 2009, and potentially before, in an effort to drive up airfare prices. How might one do this? The airlines are said to have agreed on limiting seat capacity on certain routes by keeping the amount of daily flights and or the size of planes down, and limit other (foreign) airlines ability to open routes. If you’ve ever wondered why it’s more expensive to fly from Cincinnati to Washington DC than from Washington DC to Prague, there’s your answer.
The Settlement
American Airlines is the latest airline to settle this landmark pricing collusion case. And like all great TV crime dramas – the “bad guys” are getting away with a slap on the wrist, and without an admission of guilt. American Airlines is not admitting any wrongdoing in the settlement, and is simply settling to end the costly ongoing issue. It’s hard to believe that any future judgement in American Airlines favor would cost as much as this $45 million settlement.
The Future
Delta and United have thus far refused any settlement, and Delta is not mixing words with their stance. The airline told Bloomberg “The assertion that our success is due to anything but the hard work of our people is offensive.” United has somewhat been less vocal, but equally asserts no wrongdoing. It’s no secret all four airlines have worked vigorously to prevent foreign airline competition from gaining access to flight routes, and continue to do so.
How long until Beyond Abysmal (BA) have to face similar cases on based on their dominance of UK landing slots?…
What a shame UK consumers are less letigious and our regulation is so ineffectual. Heathrow runway 3 and some real competition for the truly terrible ‘service’ they deliver can’t come soon enough.
So, who gets the money these
Airline carriers were fined??
I’m 100% sure not the passengers, who’s hard earned dollar paid for those
high priced fares!! Those passengers should be the recipients of those fines collected, and each airline forced to publicly apologize just like Wells Fargo.
Maybe the government should look at big pharma instead