No one is sure where this investigation might lead, but if the DOJ is able to find evidence of improper collusion, it could negotiate a consent decree with the four airlines to stop them from continuing the behavior.
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News of the inquiry follows a request for an investigation last month by Sen.
The government is in the early stages of an investigation, sending letters to the big carriers – Delta, Southwest, American Airlines, and United.
In the past two years, USA Airlines have seen recorded profits earning a combined $19.7 billion.
The competition cops have continued to use the airlines’ own words against them: executives repeating the phrase “capacity discipline” – code for restricting the number of available seats to ticket-buyers – is what renewed attention from critics like Connecticut senator Richard Blumenthal, who compiled a damning list of utterances at a recent summit of global airline chiefs and appears to have accelerated the probe.
He also noted that the Justice Department itself, in reviewing the US Airways-American Airlines merger in 2013, took note that airlines generally have a history of coordinating capacity and pricing moves. The industry has posted positive net margins every year since 2010, reaching 6.4% in 2014 the highest since 2006, industry group Airlines for America (A4A) data shows.
Analysts say the industry is strong and would weather possible antitrust fines.
During the past two decades, the Justice Department has had several run-ins with the airline industry over alleged price-fixing. They’ve eliminated unprofitable flights, filled more seats on planes and made a very public effort to slow growth to command higher airfares.
The specialists do not happen to be amazed by the recognize from Department of Justice. By seeing this stats, the airline prices should have been lessened than the drastic inflation.
Critics say the investigation will increase distrust among air travelers who are frustrated by rising fees and shrinking seats. As said by a report from Uncover Michigan, investigators will have to prove that different airlines were selectively disclosing information in order to drive up fares. Sometimes routes are reduced due to not enough demand.
“The real question is”, Parker said, “is this a one-time catch-up for fuel prices being lower, or is this airlines behaving like airlines used to and just increasing capacity because times are good?”
“They have consolidated and stopped oversupplying the market with seats”, he said.
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“I certainly haven’t seen any outward signs of collusion”, said Joe Denardi, an analyst with Stifel Financial Corp in Baltimore. “But the profits they are making are still not anything that would make Google jealous”.
