American Airlines Settles Fare Collusion Lawsuit

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Bloomberg was reporting late yesterday that American Airlines had reached an agreement with the court and agreed to pay $45 million to settle a consumer antitrust lawsuit regarding fare collusion among major US airlines.

American Airlines

Southwest had reached an agreement earlier and paid $15 million. Delta Air Lines and United Airlines are the two remaining airlines that likely need to open their purses for this problem to go away.

You can access the Bloomberg article here of which below is an excerpt:

American Airlines Group Inc. agreed to pay $45 million to end a consumer antitrust lawsuit that accused it and three other major U.S. airlines of colluding to limit plane capacity and drive up domestic airfares.

The four airlines’ fares rose substantially even though demand was stagnant and the price of jet fuel, one of the largest costs for airlines, was declining, according to the consumers. Executives for those companies are accused of assuring one another that they’d adhere to “capacity discipline” and of carrying out their scheme by limiting consumer ability to compare prices and deter market entry by foreign rivals.

Conclusion

Airline CEO’s were signaling each other “capacity discipline” for a long time to ensure that the fares would stay at inflated levels and this was harming consumers. These settlements, however, are just pocket change for the corporations in questions.

Airline consolidation has lead to fewer airlines. It is easier for these remaining four/five to collude and use “Airlines for America” trying to deny foreign airlines access to US.

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