AA CEO: There Has Been no Illegal Behavior on the Part of American Airlines
Jeff Edwards July 06, 2015
In a message to American Airlines employees, CEO Doug Parker addressed the Justice Department’s investigation into allegations of collusion among the largest US carriers.
Since news broke last week that the Department of Justice (DOJ) had launched a probe into allegations of collusion among U.S. airlines, the industry has been uncharacteristically tight-lipped about the charges. The leadership at the four largest airlines in the U.S. — United Airlines, Delta Air Lines, American Airlines and Southwest Airlines — have been largely and understandably silent about the prospect of a large-scale investigation by federal authorities, only releasing brief statements confirming their unwavering commitment to cooperate with investigators
Over the holiday weekend, American Airlines CEO Doug Parker broke his silence in a letter to the company’s workforce of more than 100,000 employees. In the July 4 letter obtained by the Dallas Morning News, Parker takes an incredulous, and at times defiant, stand on the DOJ probe.
Parker leaves little doubt that he believes his airline has nothing to fear, stating: “On behalf of your entire leadership team, let me be crystal clear: there has been no illegal behavior on the part of American Airlines.”
The CEO admitted that he was surprised by the probe. “Some of you may be wondering why this is occurring now,” wrote Parker. “The short answer is we don’t know.”
Parker speculated that public comments from industry leaders about the need to maintain discipline when it comes to capacity growth may have helped inspire action, but he pointed to several “misconceptions” within the DOJ about the industry that have been unfair to airlines. Parker asserted that the dire predictions many Justice Department officials made about the results of a merger between US Airways and American proved to be unfounded as well.
Parker urged his employees to take the high road in dealing with questions about the pending inquiry, “While this is an unfortunate situation, our request to all of you is to please ignore it.”
[Photo: American Airlines]
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True probably, that there was no exactly illegal actions. But, I find it interesting that prices did not go down right away when oil dropped considering how prices went up right away when oil went up in all the airlines.
The irony of this is kind of incredible. I hope they take the document the US3 have been waving about as evidence of illegal behavior by the ME3 and just apply it to the US3. Subsidisied by airport infrastructure development - yes. Don't meet international standards regarding unionization - yes. Direct subsidies through pension and other offloads to taxpayers - yes. Capacity reductions, anti-trust immunity for joint ventures and other activities to raise prices - yes. You can't have it both ways! Be great to see some solid enforcement here even just of US law.
When there are just four airlines, many times with just one airline on a route, there is no need to collude. Lack of competition makes it easier for airlines to match prices.