Madone59

While US-AA may have been the straw that broke the camel's back, that camel was going down eventually. The shrinking competition between carriers, and shrinking options for flyers has been worse for the market not better.

kop84

All 3 legacy carriers went through bankruptcy.

They largely got there because over capacity was decreasing fares and the planes were half full. Less $ for tickets + Less tickets sold = bad news

DOJ is going to investigate the companies for NOT doing the exact thing that got them in trouble in the first place?

Do they want DL to start SFO/IAH, AA MSP/ATL, UA DFW/CLT?

They are mad the airlines stopped flying routes that they LOST money on!
Was there a DOJ investigation when Crystal Pepsi was cancelled?

Duke787

Too little too late. FT has been predicting this for years especially in the lead-up to the the AA/US merger. This is the potential problem in a highly regulated industry with enormously high barriers to entry especially when the number of participants is consolidated to our current state.

FWIW, I don't inherently have a problem with prices going up while oil is going down (I don't hear anyone demanding Ford/GM lower their prices despite oil going down), my issue only comes with the coordination and "wink-wink" activities going on (such as the not so subtle statements at the IATA conference about capacity discipline.

Where was Senator Blumenthal when the DOJ was investigating the merger AA/US merger? The DOJ isn't about to roll back the mergers so I won't be holding my breath that anything substantive comes out of this.

At most this will lead to DOJ giving a harder look at the JFK/EWR swap between DL/UA (though even that is unlikely IMO) and maybe a requirement to swap a few slots around in other places. The only way to solve this is to provide Virgin with the slots necessary to actually compete with the big four and seek to have the same impact that B6 has had on the NYC market.

entropy

The feckless DOJ got this market is created when it allowed the majors to merge into supercarriers. Its not like people didn't know what they were up to. Its a lot easier to get a fare increase to stick if you've got 3 carriers than 6.

They allowed it to happen, plenty of consumer advocates at the time warned that they would keep fares high.

I personally have little issue with the airlines making a decent profit. And unless they were sending secret message to one another agreeing on quotas... there doesn't seem to be anything illegal about their conduct.

If anything, US airlines are boosting capacity a lot this year, to the alarm of investors.

What the DoT and DoJ need to do is ensure when event occur, like United PS going away from JFK, that they re-allocate slots appropriately, to new/smaller entrants. If they allow UA to get more EWR slots and DL more JFK, they're contributing to the problem.

AA-Flyer-SAN

A good read - seems the DOJ has gathered enough probable cause to subpoena the major airlines for coordinating limited capacity increases therefore keeping airfares high.

DOJ subpoenas airlines over keeping ticket prices high
http://www.cnn.com/2015/07/01/politi...ion/index.html

JDiver

Is that surprising when airline cartelization occurs? It was already "monkey see-monkey do" fare and fee adjustments before; with the "Big a Three" this isn't surprising.

Doc Savage

http://www.flyertalk.com/forum/trave...ust-probe.html

flyingmusicianlax

Good!

msv777

No surprise here.

Cheers.

AANYC1981

Glad to see this!

pinniped

Oops. Guess the cartel was looking and acting too much like a cartel.

Maybe the DOJ should have considered this before they allowed the industry to consolidate to such a smaller number of players. Or, maybe they did consider it, and the airlines' behavior has simply gotten so bad that they had no choice but to stop looking the other way.

NewportGuy

What I saw of the investigation is the issue of collusion, which is illegal in any industry. Yes, an airline can keep cutting flights, but they are not allowed to conspire with other carriers to do it, or to not compete. For example, United may cut capacity from ORD-DEN, therefore raising fares. In this case another airline may see that and step in with lower fares to take the customers away. But if the airlines agree not to do that on similar competing markets, and keep fares high on their individual routes, THAT'S illegal.

Fanjet

Classic!! What does the DoJ propose airlines should do? Flood the market with capacity so that the airlines can go back to losing money? I'm sure the government can come up with that perfect business metric so that there is the ideal price harmony.

And this notion that they are co-ordinating with each other is rediculous. If that were the case, AA would not be building up at LAX, nor DL at SEA.

MSPeconomist

The airlines call it capacity discipline.

MSPeconomist

Please, let's not base our antitrust policy on what a few people say on FT,