Let me add my thanks, djlawman. I doubt that you're boring anyone, and there are probably a lot of readers who don't comment but still find your contributions valuable. As an example of competition, US Airways recently announced a one-way fare from BWI to the west coast - $99. This was obviously an attempt to challenge Southwest in the BWI market, and Southwest almost immediately matched the fare. "Almost immediately" seem to be the operative words. Since one action followed the other, it would probably be hard to make an anti-trust case. If, however, the promotions had been announced simultaneously, we'd have a CAT of a different color.

Djlawman, thanks for the posts. I will read them in more detail later, and more of my comments may follow. I have a question regarding antitrust as it relates to frequent flier programs. Some frequent flier changes by the airlines seem to stick. For example it seemed like last time all the airlines (except TWA) decided that it was time to raise mileage award levels. Or they all decided to do away with plateau/threshhold bonuses. Some of these do not stick - as an example United's decision to require 14 day advance with Sat night stay for FF tickets. Do the airlines test beforehand which way the winds are blowing?

You're not boring anyone, Djlawman. This is a VERY interesting subject. Thanks for your valuable time and expertise on our behalf!

Thanks, Djlawman. I am still convinced that there is price coordination going on in the ailine industry outside of the realm of price point competition, but I think it would take a very-high level whistle-blower to ever make a decent case.

BTW, if the airlines want to coordinate LOWER fares, that fine with me! It's situatiuons like flying United out of Denver and USless out of Pittsburgh that get to me. The dominant sets high fares and the "challenegers" dont try to compete..at least until a cut-rate comes to town.

And after my posting last saturday, I read that ASTA (American Society of Travel Agents) HAS made antitrust cases against the airlines in the past, although there were no details in the article I was reading...

Well, thanks very much for reading, everyone. I will try to get to more of the topics (travel agency commissions, for example) in the near future. Glad to be able to contribute to the general knowledge of the readers of the board. As always, please feel free to post on any related subject, and I will try my best to answer. (and I apologize if the answers are too technical.)

Oaky, now I'll try to get to travel agent commissions and FF program changes.

As to changes in travel agent commissioning, what has typically happened is that one of the airlines has publicly announced a change to occur at some time in the future. They then have the ability to sit and wait to see whether anyone follows their lead. If no one follows their lead, they have the luxury of cancelling the proposed change, which has not yet taken effect, so that they do not lose any market share or actual sales to the other airlines.
As mentioned before, this constitutes "price signalling." Many years ago, the Department of Justice was more active in prosecuting price signalling cases (either as implicit price-fixing, or as attempted monopolization), but it has not been as active in this area in recent years.

As to changes in FF programs, much the same thing is occurring. However, there is a significant difference. First, the airlines have an "embedded base" of customers who already have huge investments (of earned FF miles) in their accounts. Therefore, those persons are, to some extent, economic hostages, i.e., they can only change allegiances by losing some or all of the value of the FF miles they have already earned.
As to the propriety of changing FF programs, that is really just a contract issue. What did the airline promise in its earlier agreements with the travelers, and did it reserve to itself the discretion to change the program at any time in the future. There was a successful class action against American when it first tried to apply its 3-year expiration policy to all old miles (which had been earned under then program rules saying they would not expire). American lost, having argued that state contract or fraud claims were preempted by the federal laws regulating airlines and fares. Thus, some ofus have those AA miles still in our accounts that have no expiration date.

And that, I think, answers all of the questions to date. Any more, let me know.

Thanks for all of your imput and answers
DJLawman. You are a busy man like most of us
and I think your answers have to be detailed
to thoroughly explain the law. (I don't thing
anything is a clear cut, one line answer.)

Just a suggestion: Have you ever thought of
putting together a pamphlet or small book on
"Frequent Flyer travel... under the law" or something like that? It might have a few buyers among us. CATMAN

Tell me about being an "economic hostage." I'd really like to switch my allegiance from Delta to some other airline, but the practicalities of the situation say I can't. Even though I'm lifetime Silver Medallion with Delta, It would tak eme so long to equal that status with any other line that it's just not practical.

My point exactly Phil.

Djlawman, any thoughts on this?

This involves an actual case, but I will not mention the airline, because the specific airlines are not important. It is an issue between the BIG 6(American, Delta, United, NW, USAir, & Continental) and the startup airlines, so the actual airlines are not important.

When a new airline started offering service between one airline's hub city and another, the hub airline responded by dropping prices. I don't remember the exact prices, but I think the market without competition was around $400 and with competition was around $100. After a year or more of service, the startup airline decided to pullout of the market, the hub airline immediately raised the round-trip price back to the $400 range. City officials pleaded with the startup airline to restore service - they did, and guess what, the hub airline dropped prices back to match the startup airline - $100.

First, the hub airline claims that they were matching the startup airline's prices in order to remain competitive? At this time, the startup airline did not have a frequent flyer program. As we all know, frequent flyers miles are a valuable rebate that effectively lowers the cost of air travel below that of what we actually pay for a ticket. I would conclude that hub airline did not just match the competing airline, they undercut their prices.

Second, not only were the prices undercut, the prices changed several times to exactly correspond to the presence of competition. I don't buy it that the hub airline was simply being competitive; if they were, all flights of equal range would have been lowered proportionately(some variation due to fuel costs, taxes, airport fees, labor costs, etc). But in other markets of similar distance, but with no competition, the prices had not been reduced. I can only conclude that the established airline changed airfares by 400% or more in order to run-out the new competition

If this practice is allowed to continue, startup airlines will be doomed from the start and this will discourage more startup airlines. The real factor on airfare prices will be the ability for new airlines to get a real start and compete on grounds of efficiency, quality, timeliness, service, etc.

This is the predatory pricing issue asked and somewhat answered above. My own personal feeling is that when competition causes prices to DROP, well, that's competition. But when prices RISE in coordination...that's fishy.

Excellent question, as to established airlines trying to kill off new airlines. I will answer this one later today.

wat es antitrust? thes mean yu knot trust arturo?

You got it, arturo!

Sorry, arturo, but I can't write these answers to be understood on a first grade level. However, for the rest of our loyal readers (who will be receiving 2 law school credits at the end of the semester for their fine course work):

The example which has been described by Aubie is a very typical situation, and has happened all over the country. Here in the Philly area, it happened to at least two airlines (Spirit?) who tried to start up competition on the PHL to Pittsburgh route, which is monopolized by US Air.
There is, in antitrust law, a defense to attempted monopolization through predatory pricing charges called the "meeting competition" defense. Basically, this means that if US Air is charging $400 round trip to Pittsburgh on this route, and another airline starts up and were to charge $300, and US Air then dropped their price to $100, to drive the upstart out of business, then US Air could be charged with attempted monopolization through predatory pricing, and would probably lose (repeat after me, boys and girls, so long as it could be proven that they had priced below AVERAGE VARIABLE COST).
HOWEVER, if the upstart is the one who STARTS the price competition, and US AIR simply meets their price, then US Air can't be found to have engaged in predatory pricing. Unfortunately, this runs in favor of the established airline. After all, if your choice is between the establsihed and an upstart at $100, you will probably choose the established airline. Most passengers will.
The airlines make this even more difficult for the uptart by capacity controlling the discount fare to compete with the upstart. Most people who will use the upstart are leisure travelers, or those who are self-employed and for whom a nickel is tight. So, the established (US Air) will make only some tickets available at this price, and still manage to keep the business of the highly profitable full fare passengers. Upstart then gets many fewer passengers at $100, and no full fare passengers, and goes out of business.
There has been a recent proposal by the US Department of Transportation to try to adopt regulations to prevent the established airlines from driving the upstarts out of business in this fashion. In my mind, they have little chance of succeeding. First, it constitutes economic protectionism, and it will be difficult to sell that to Congress. Second, the sophistication of the airlines in price discriminating through yield management is, I think, beyond the government's ability to seriously attack through some simplified regulations.
Hope this answers your question.