Airline Price Collusion Alledged
The problem the DOJ has is in providing convincing proof that airlines entered into agreements that individually would not have been in their best interest. The interest of the Justice Department was piqued during a recent industry trade group meeting in Miami where airline executive spoke of “being more disciplined” in their pricing strategy and adding capacity to popular routes. To many this was a thinly veil code speak for limiting seats and fatter profit margins.
Speaking at a trade meeting while raising red flags, is not enough to meet the burden of proof according to Mikal Watts. An actual meeting of industry executives (the classic “smoke-filled room”), where an agreement was reached would have to be proven to show that the airlines did collude on pricing and routes.
The trouble for airlines does not end with any anti-trust violations. If the DOJ does succeed in proving any collusive activity whether in pricing or by maintaining route capacity, then the airlines could see a raft of class action and individual lawsuits seeking compensation for their activies.