PORTLAND, Ore. (KOIN) — Major airlines are now under the microscope, as the U.S. Department of Justice begins an investigation into price fixing allegations.
The government is looking into possible collusion among major airlines to limit available seats, which keeps airfares high.
“I think it’s really interesting that we have a major industry like this that’s able to control, basically, travel for anyone in the United States,” Vancouver resident Anne Limbrick said.
The airlines under investigation are some of the industry’s heavyweights: American, Southwest, United and Delta all said they received a letter demanding copies of any communication they had with each other. The Justice Department asked each airline for its passenger-carrying capacity both by region, and overall, since January 2010.
“From what we have seen, there has definitely been a lot of consolidation among the larger airlines,” Bigyan Bista, visiting PDX from Boston, told KOIN 6 News. “As a consumer, I think that definitely decreases our negotiating power when it comes to prices.”
Thanks to a series of mergers starting in 2008, America, Delta, Southwest and United now control more than 80% of the seats in the domestic travel market. They’ve eliminated unprofitable flights, filled more seats on planes and made a very public effort to slow growth to command higher airfares.
It worked. The average domestic airfare rose an inflation-adjusted 13% 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. During the past 12 months, the airlines took in $3.6 billion in bag fees and $3 billion in reservation-change fees.
That has led to record profits. In the past two years, U.S. airlines earned a combined $19.7 billion.
A spokesperson for the industry defended the airlines saying, “it is customers who decide pricing,” and “our members compete vigorously every day, and the traveling public has been the beneficiary.”
Industry analyst Josh Marks said he doesn’t believe the airlines are working together.
“Technology today is so pervasive that airlines can watch what their competitors are doing in real time and make decisions almost instantly that change their level of capacity based on what someone else is doing,” Marks said.
Some consumer groups said they believe the current industry landscape has made these accusations of collusion inevitable.The Associated Press contributed to this report
