Four Major U.S. Carriers Named As Defendants

Following the announcement by the Justice Department that the planned to investigate possible collusion between airlines on ticket prices, several class-action lawsuits have been filed by different law firms.

A complaint filed in the U.S. District Court for the Northern District of California accuses American, Delta, Southwest, and United Airlines of taking steps to limit capacity growth in order to keep air fares artificially high. The law firm Keller Rohrback L.L.P says in its antitrust class action suit that because of mergers that began in 2008, those four carriers now control about 80% of domestic air passenger seats.

The complaint claims that with jet fuel prices dropping by 40 percent since last year, ticket prices should have followed. That they didn’t was the result of the airlines’ anticompetitive activities in violation of federal antitrust laws, including the Sherman and Clayton Acts.

The lawsuit seeks damages for individuals who have purchased airline tickets at artificially high prices due to the airlines alleged agreement to restrict capacity.

A separate federal class-action lawsuit has been filed in Dallas also accusing the four major U.S. airlines of violating antitrust laws.

That lawsuit filed July 8 says the four airlines conspired to restrict capacity by limiting routes and the number of available seats in order to charge artificially high prices.

"The defendants are so intent on raising profits that they appear to have colluded to gouge customers' pocketbooks and keep airfares sky high," says Dallas attorney Warren T. Burns of Burns Charest LLP, who represents the plaintiffs. "Agreeing to restrict capacity to keep your profits high marks the very definition of an antitrust violation."

The lawsuit describes a series of economic conditions that should have resulted in more available airline seats and lower ticket prices, including increasing public demand for airline seats and the fact that airlines paid at least $1.50 per gallon less for jet fuel in 2014 compared to 2013. Instead, the supply of seats has remained virtually flat and airline fares skyrocketed at an inflation-adjusted rate of 13 percent from 2009 to 2014, the lawsuit says.

The filings follow last week's announcement from the U.S. Department of Justice that it is investigating the airlines' tactics. The firm says similar lawsuits on behalf of airline customers have been filed in New York, Chicago, San Francisco, and Washington, D.C. Mr. Burns and Burns Charest have moved to transfer and consolidate all the civil cases in the U.S. District Court for the Northern District of Texas.

The case is Cumming, et al. v. American Airlines, Inc., et al., No. 3:15-cv-02253.

FMI: www.justice.gov