DOT Investigating Airlines For Price Gouging After Amtrak Accident
Joe Cortez July 24, 2015
Airlines are being investigated by the Department of Transportation for possible consumer violations days after Amtrak accident.
The Department of Transportation will probe five American airlines about their pricing practices, under suspicion that the carriers may have taken advantage of an Amtrak derailment in May. USA Today reports Transportation Secretary Anthony Foxx announced the move during a breakfast organized by the Christian Science Monitor.
The investigation stems from the Amtrak Northeast Regional train crash between Washington and New York on May 12. Eight people were killed in the crash and train service was suspended between for six days between the two cities. During this time, the airlines are accused of increasing ticket prices to take advantage of travelers who would be utilizing airline service instead of train service.
According to Foxx’s comments, the probe was requested by Sen. Christopher Murphy of Connecticut, who reported “anecdotal evidence” of those in his state forced to pay abnormally high airfare in the wake of the accident. According to USA Today, Murphy claimed one flyer paid over $2,300 for airfare between LaGuardia International Airport (LGA) and Washington.
“The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable,” Foxx told the breakfast, according to USA Today. “This department takes all allegations of airline price-gouging seriously, and we will pursue a thorough investigation of these consumer complaints.”
The department has sent letters requesting information to five airlines, including all three legacy carriers, Southwest Airlines, and JetBlue Airlines. While no timetable has been announced for response, Foxx told the breakfast that responses are expected “to be returned promptly.”
The DOT announcement comes on the heels of another federal investigation of airlines. Earlier this month, the Justice Department announced an investigation of alleged price collusion between the four biggest airlines in the U.S.
[Photo: Patrick Semansky, AP via USA Today]
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funny thing about airfare that so many people feel the need to bend over for the rest of us. always ranting about supply and demand, capacity, blah blah blah. these are nothing more than squeezing by airlines. they will ALWAYS raise prices in their attempts to satisfy wall street. it is an industry based on pinching the customer until who knows? imagine if utility companies did the same. imagine your electric bill doubled year over year based on what the utility CLAIMED was supply and demand. Imagine if your electric bill tripled during the summer. would you defend the utility because demand increased? to all the airline apologists: stick it! your logic is flawed.
How terrible prices between two cities go up due to reduced capacity between two cities in driving distance for nearly 6(!) days. The end is near. We need the giant Apparatchik form a gender and orientation neutral committee that will deliver a decisive explanation - 18 months later - how everything was perfectly in order and a consequence of complex demands of the God the Market and that consumers were screwed by force majeure.
Seems any spike in airfare could be the result of the airlines pre-existing yield management software automatic based on increased demand.
The immediately above is logical if the additional profit is used to increase capacity. It is not, if it does not result in significant re-investment in facilities / capacity. (One wonders if the airlines switched more planes to the routes). There is such a thing as true gouging here, raising prices dramatically in unusual demand. My take would be that Sen. Murphy is intent on finding out if the latter occurred and addressing it if so. If anyone has anything significant to add, I'd be glad to give him a call, but I'm not sure there's anything to see, or if his action is unusual, until we have more facts and details. But Chris is not a grandstander, thank you.
The premise of this "investigation" is deranged. In a free market if there is a sudden increase in demand, prices should go up. So if Amtrak is out of commission, their customers will switch to air....so demand will go up and so should prices. Moreover, since airlines reservations systems price according to demand, the Amtrak customers will be buying the last remaining seats, which always are more expensive. So what should we investigate next: lodging rates in the Super Bowl city at the time of the game compared to the year before? It makes a person cringe to hear the kind of nonsense spouted by these Obama Demorats.