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Price-fixing class action remains in play against Delta, United

Filing suit in 2015, a class of customers accuses major U.S. airlines Delta and United of conspiring to artificially drive up domestic flight prices.

WASHINGTON (CN) — Finding that a class of airline customers have solid evidence to accuse Delta and United Airlines of conspiring to increase their own profits on domestic flight prices, a federal judge on Tuesday kept alive an antitrust case against several major U.S. airlines.

The case began in 2015 when three customers — Ethan Brodsky, Jeffrey Robb and Valbona Alla — filed an antitrust class action against airlines Delta, American, Southwest and United.

From January 2009 to mid-2015, they said, the airlines conspired to keep flight capacity the same while gas prices dropped, resulting in airfares and profits skyrocketing.

On Tuesday, U.S. District Judge Colleen Kollar-Kotelly found the class of airline customers presented enough evidence to survive summary judgment motions from defendants Delta and United.

“Plaintiffs have proffered a fair amount of circumstantial evidence to demonstrate an alleged conspiracy by Defendants to restrict capacity in order to drive up profits,” the judge wrote.

Kollar-Kotelly added that the airlines engaged “admittedly and openly in the practice of capacity discipline on domestic flights.”

The D.C. federal court judge seemed unpersuaded by the airlines’ justification of the resulting higher industry profits.

“Moving defendants proffer business justifications as the reason for this practice, first, because of economic conditions, and later, to appease their investors,” Kollar-Kotelly wrote in the 70-page ruling.

“Plaintiffs point out however that this practice results in higher industry profits only if there is a coordinated effort among airlines controlling a majority share of the domestic market; otherwise, it makes little economic sense for airlines to elect not to compete for market share.”

The airline customers wrote in the complaint that "collusion among major airlines to limit routes, information and available seats to keep airfares artificially high,” and the airlines “illegally signaled to each other how quickly they would add new flights, routes, and extra seats."

The customers also said in the 2015 complaint that, although the U.S. economy grew about 2.2% per year from January 2010 to January 2014, domestic flight capacity remained virtually the same. And that at the same time, the average domestic airfares rose 13% from 2009 to 2014, when adjusted for inflation.

Additionally, they said, U.S. airlines grew by 5.5% from January 2014 to January 2015, and earned a combined $19.7 billion, as the price for jet fuel — the airlines' single highest expense — dropped 34%, to $1.94 per gallon in April 2015. The defendant airlines controlled more than 80% of seats in the domestic travel market.

In 2018, Southwest Airlines paid $15 million to settle out of the lawsuit. The Dallas-based airline denied it broke the law, saying it was settling to avoid the cost of more litigation. The following year, American settled for $45 million.

The multi-district lawsuit was originally filed in Milwaukee Federal Court in July 2015.

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Categories / Business, Consumers, Economy, Travel

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