Airlines deny price collusion, say they 'compete vigorously'

Airlines deny price collusion, say they 'compete vigorously'
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The group that lobbies for U.S. airlines in Washington said Thursday it is confident that industry will be cleared of collusion allegations in an investigation by the Obama administration.

The Department of Justice said on Wednesday that is launching an investigation of potential antitrust law violations by airlines, after a string of high-profile mergers reduced the number of major U.S. carriers to about four.

The Washington, D.C.-based Airlines for America (A4A) group said Thursday that investigators will not be able to find any signs of collusion among U.S. airlines, despite the recent trend of consolidation within industry. 

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"We are confident that the Justice Department will find what we know to be true: our members compete vigorously every day, and the traveling public has been the beneficiary, as domestic fares are actually down thus far in 2015," the group said in a statement. 

"It is customers who decide pricing, voting every day with their wallets on what they value and are willing to pay for," A4A continued.

"Because there so many options among air carriers, with low cost carriers being among the fastest-growing segment, more people can afford air travel, as 222 million people are projected to fly this summer, including a record number of international travelers and the highest number of people flying domestically since the recession." 

Consumer groups have complained about the string of mergers that began around 2008, arguing that the consolidation of the airline industry has reduced competition for passengers that had been credited in past years for lower airfares. 

Some lawmakers have also called for a federal investigation into alleged anti-competitive behavior among airlines.

"What airlines publicly call 'discipline' is just a fancy term for constraining the flights available to consumers and raising prices and profits-- which should be the investigation's sharp focus," Sen. Richard Blumenthal (D-Conn.) said in a statement that was released after the DOJ announcement. 

Blumenthal added that federal regulators have played a role in the creation of the current state of the nation's airline industry by approving the string of mergers that eliminated a number of carriers. 

"Just four major airlines now account for eighty percent of all domestic air travel," he said. "DOJ itself played a part in this consolidation by approving several mergers and now consumers are paying sky-high fares, as airlines keep capacity artificially low in a market with a history of collusive behavior.”

The airline group argued the number of passengers who are flying on U.S. airlines has increased, even though the number of carriers they have to choose from has gone down in recent years. 

"Capacity is at a post-recession high with airlines increasing the number of available seats by 4.6 percent, or 126,000 per day during the summer travel period (June 1 – Aug. 31) to accommodate the growing demand for air travel," the A4A group said. 

The Justice Department sought for about a year in 2013 to block the most recent major airline merger, between U.S. Airways and American Airlines. But the DOJ ultimately relented after the companies agreed to give up the right to flights at airports in Washington, D.C., and New York City, which were historically difficult for low-cost airlines to gain access to.

The US Air-American combination was preceded by mergers between Delta and Northwest, United and Continental, and Southwest and AirTran airlines. The mergers have cut in half the number of major airlines that carry passengers in the United States.