Doug Parker, chairman and chief executive officer of American Airlines Group Inc., Gary Kelly, chief executive officer of Southwest Airlines Co., Scott Kirby, president of United Airlines Holdings Inc., John Laughter, executive vice president and chief of operations at Delta Air Lines Inc., and Sara Nelson, international president of the Acquire Licensing Rights
Sept 13 (Reuters) – Delta Air Lines (DAL.N) and United Airlines (UAL.O) were ordered by a federal judge to face a consumer antitrust class action accusing major U.S. carriers of conspiring to drive up domestic airfares by reducing the number of available seats.
In a decision on Tuesday, U.S. District Judge Colleen Kollar-Kotelly in Washington, D.C., said passengers offered a “fair amount” or circumstantial evidence of a conspiracy to reduce seating capacity in order to boost profit.
“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,” Kollar-Kotelly wrote in a 70-page decision.
Two other defendants, American Airlines (AAL.O) and Southwest Airlines (LUV.N), previously settled for a respective $45 million and $15 million. Neither admitted wrongdoing.
The lawsuit began in 2015 after the U.S. Department of Justice started investigating airlines for potential anticompetitive practices, and continued even though no charges were brought.
Passengers said that a conspiracy beginning in 2009 to enforce what the carriers called “capacity discipline” artificially inflated ticket prices and reduced flight choice.
Delta and United called their seating capacity reductions a legitimate response to reduced demand, rising fuel prices and the 2008 global financial crisis. United called it “perfectly rational Economics 101.”
Both carriers went through bankruptcy not long before the purported conspiracy began, with United emerging in 2006 and Delta emerging in 2007.
Delta on Wednesday said it would continue defending against the lawsuit, and has “always independently determined its capacity based on market demand.”
United said it was disappointed with the judge’s decision, and will seek to have it reconsidered or file an appeal.
The American and Southwest settlements won final court approval in 2019. Payouts will not begin until claims against Delta and United are resolved.
The case is In re: Domestic Airline Travel Antitrust Litigation, U.S. District Court, District of Columbia, No. 15-mc-01404.
Reporting by Jonathan Stempel in New York; editing by Grant McCool
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