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BTC Applauds U.S. DOJ Investigation of Airline Coordination on ‘Capacity Discipline’

July 2nd 2015

The Business Travel Coalition (BTC) applaudes the decision of the U.S. Department of Justice (DOJ) to investigate recent public communications by major U.S. network airlines that could prove to represent illegal coordination among industry competitors to restrict capacity in domestic U.S., transatlantic and other international markets for the purpose of maintaining and/or increasing upward pressure on ticket pricing. DOJ is no doubt observing the reduction in competition and concomitant increase in total air travel prices and decrease in product innovation and declining customer service satisfaction levels. The DOJ investigation is coming at a critical time for consumers. U.S. Senator Richard Blumenthal's (D-CT) recent leadership on this problem is welcomed, and the European Commission should join in on this investigation. There is precedent for this investigation per previous U.S. Federal Trade Commission investigations and rulings with respect to tacit competitor coordination – especially on analyst calls. The number one concern that antitrust experts have - with no close second - as with regard to radical consolidation of any industry, is the risk of tacit competitor coordination on policies, practices and prices among a reduced number of industry participants. Since recent U.S. airline mega-mergers, we have witnessed near constant airline CEO calls for 'capacity discipline' during industry gatherings and analyst earnings calls only to be echoed by analysts in follow-on earning calls with other airlines. This represents perhaps the darkest hours of airline coordination as well as a too-cozy harmonization between airlines and Wall Street. Sadly, this apparent tacit coordination on capacity is accompanied by an even more aggressive and widely coordinated attack on price transparency, consumer protections and competition.


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