An investigation has been launched into possible conspiracy in the airline industry.
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While the investigation is still in its early stages, it could be revealed that airlines have been driving up ticket prices for quite some time. Pierce would not say if investigators have their eye on any companies in particular.
Concern that airlines may have been coordinating on fares led the USA to sue to block the American-US Airways merger in 2013. The squeeze left American, Delta Air Lines Inc and United Continental Holdings Inc as lone providers of full-service cabins and worldwide networks. Smaller carriers, including Frontier Airlines, said they had not been contacted by the government. After hearing about that meeting, US Sen. The probe was triggered by a Democratic senator Richard Blumenthal’s letter to the Justice authorities, urging to investigate the industry for unhealthy collusion and anti-competitive behavior. Together, those carriers control more than 80 percent of the domestic seats in the USA Now the government will review statements executives made to Wall Street analysts and others. “If all they’re talking about is an industry acting in a disciplined fashion, matching supply with demand as opposed to cutting prices willy-nilly in order to fill up seats… then I don’t expect the government will actually file a lawsuit”. The average domestic airfare rose an inflation-adjusted 13 percent from 2009 to 2014, according to the Bureau of Transportation Statistics. And that doesn’t include the billions of dollars airlines collect from new fees.
That has led to record profits.
Virtually every major U.S. airline has been in bankruptcy at some point since the 2001 plane hijackings, only turning the corner recently with $22bn in profits over the past five years.
It is still unclear how the airlines had coordinated seat availability, but the Justice Department has allowed two major airline mergers in recent years that have raised suspicions.
All this has paid off for the airlines.
It’s unclear if there is a similar smoking-gun comment today.
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Airlines increase flights routinely based upon demand. Rising fares across every major airline. That sparked a rally in airline stocks, as investors were more assured that capacity growth would be limited.
