November 30, 2021

Airline seats antitrust case heads for takeoff

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An airplane approaches to land while another awaits departure

An airplane approaches to land while another awaits departure

By Sue Reisinger, From Corporate Counsel

More than 75 class action lawsuits have been filed across the country so far against the four major airlines that are the targets of an antitrust investigation by the Department of Justice, which is exploring whether the airlines kept ticket prices high by limiting the number of available seats.

A federal judicial panel on multi-district litigation has scheduled an Oct. 1 hearing to consider requests to combine the cases before one federal court. All four airlines – American, Delta, United and Southwest — have denied the antitrust allegations and said they will vigorously defend themselves.

A list of the known lawsuits and their locations was published in the aviation blog of the Dallas Morning News earlier this month.

On July 1 Justice Department spokeswoman Emily Pierce told the Associated Press that the department was looking into potential “unlawful coordination” among some airlines. She declined to comment further or say which airlines were being investigated. But a DOJ letter sent to the carriers demanded copies of all communications the airlines had with each other, with Wall Street analysts and with major shareholders about their plans for limiting passenger-carrying capacity, or “the undesirability of your company or any other airline increasing capacity,” according to the AP story.

American, Southwest and United acknowledged receiving the civil investigative demand (CID) from the Antitrust Division of the Justice Department in their most recent quarterly reports to the Securities and Exchange Commission.

Although Delta did not mention a CID in its own quarterly filing, the other airlines identified Delta as also being a defendant with them in the class action suits. American also said one case was filed in Canada against Air Canada.

Southwest indicated in its quarterly report that the collusion on capacity idea is not new. It first discussed a lawsuit filed in Atlanta in May 2009 against Delta and AirTran, which was acquired by Southwest. That suit alleged those two airlines conspired to impose $15 per-bag fees on travelers who checked their bags. The filing goes on to say the suit was later amended to accuse Delta and AirTran of conspiring to reduce capacity on competitive routes and to raise prices. But in 2012 the parties filed a stipulation and order that the plaintiffs abandoned their capacity claim. AirTran and Delta denied all the claims.

The Southwest filing then goes into the new investigation by the DOJ and the CID regarding passenger capacity dating back to shortly after the AirTran case began. “The CID seeks information and documents about the company’s capacity from January 2010 to the present including public statements and communications with third parties about capacity,” the Southwest filing said. “The company also received a letter from the Connecticut attorney general requesting information about capacity.”

Two days before that quarterly filing, Southwest’s chief legal and regulatory officer Ron Ricks said he was retiring, but that he would remain with the company as a non-officer employee and as vice chairman of the board of directors “to assist with the transition of complex legal projects and specialized governmental affairs issues.” Southwest included the Ricks information in an Aug. 3 filing with the SEC that was signed by general counsel Mark Shaw.

As for Delta, its quarterly SEC filing in July was less forthcoming. It said that no legal matters had changed since the filing of its annual report in February—even though the DOJ investigation had begun and the class action lawsuits had started over the capacity issue.

The February filing merely discussed the bag fee antitrust lawsuit, saying that the case was “based upon certain public statements [about imposing a bag fee] made in October 2008 by AirTran’s CEO at an analyst conference.”

And there’s one more lingering airline headache: On July 24 the Department of Transportation said it was starting an inquiry into possible price gouging by Delta, American, United, Southwest, and JetBlue.

DOT sent a letter to the general counsel of those airlines asking for information on their fares immediately after the May 2015 Amtrak derailment in Philadelphia that stymied travel in the Northeast Corridor. The inquiry is ongoing.

IMAGE: Lars Lindblad/iStockphoto.com

For more on this story go to: http://www.corpcounsel.com/id=1202735676408/Airline-Seats-Antitrust-Case-Heads-for-Takeoff#ixzz3jveo9N5r

 

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