Delta and United Airlines to Face Class Action Over Alleged Airfare Conspiracy
In a significant legal development, Delta Air Lines and United Airlines have been directed by a federal judge to confront a class action lawsuit, alleging antitrust violations by major U.S. carriers. The lawsuit contends that these airlines conspired to inflate domestic airfares by deliberately reducing the number of available seats.
U.S. District Judge Colleen Kollar-Kotelly, based in Washington, D.C., rendered her decision on Tuesday Sep. 12. She acknowledged that passengers had presented a “fair amount” of circumstantial evidence, suggesting a conspiracy aimed at limiting seating capacity to enhance profitability.
Kollar-Kotelly’s 70-page decision articulated, “Defendants engaged admittedly and openly in the practice of capacity discipline on domestic flights, with the effect that diminished capacity resulted in higher industry profits.”
American Airlines and Southwest Airlines, two other defendants in the case, previously settled for $45 million and $15 million, respectively. It’s important to note that neither airline admitted wrongdoing in their settlements.
The lawsuit’s origins can be traced back to 2015 when the U.S. Department of Justice initiated investigations into potential anticompetitive practices among airlines. Remarkably, this legal action persisted despite the absence of formal charges.
Passengers involved in the case allege that a conspiracy, initiated in 2009 and referred to by the carriers as “capacity discipline,” artificially inflated ticket prices and limited flight options.
Delta and United have defended their actions, describing the reductions in seating capacity as legitimate responses to factors such as reduced demand, surging fuel costs, and the global financial crisis of 2008. United characterized it as a manifestation of “perfectly rational Economics 101.”
Both airlines had previously undergone bankruptcy proceedings shortly before the alleged conspiracy commenced, with United emerging in 2006 and Delta in 2007.
In response to the recent developments, Delta expressed its commitment to defending against the lawsuit, emphasizing that it had consistently determined its capacity independently, guided by market demand.
United, on the other hand, expressed disappointment with the judge’s decision and indicated plans to seek reconsideration or file an appeal.
It’s noteworthy that the settlements involving American and Southwest received final court approval in 2019. However, payouts related to these settlements will remain pending until the claims against Delta and United are resolved.
This legal matter is documented under the case name “In re: Domestic Airline Travel Antitrust Litigation,” within the U.S. District Court for the District of Columbia, No. 15-mc-01404.
Sources: AirGuide Business airguide.info, msn.com, reuters.com