Tuesday, July 7, 2015

Labaton Sucharow Files Antitrust Class Action Against the Four Largest Commercial Airlines

Firm Cites Collusion Resulting in Higher Fares and Reduced Service for Consumers 

NEW YORK (July 7, 2015) — Labaton Sucharow LLP filed an antitrust class action lawsuit today on behalf of State-Boston Retirement System in the Eastern District of New York. The complaint charges American Airlines, Delta Airlines, Southwest Airlines, and United Airlines, which together account for nearly 85 percent of air passenger traffic in the United States, with a price-fixing conspiracy through conduct involving the reduction or maintenance of capacity since at least January 1, 2007 to the present. As a result of the conspiracy, these airlines were able to raise prices for air passenger transportation services in the U.S., in violation of Section 1 of the Sherman Act. 

On the heels of the U.S. Department of Justice's investigation of the same conduct, the Firm's team, led by Competition & Antitrust Practice Co-Chair, Gregory Asciolla, alleges that as early as 2007, the airlines, faced with high fuel costs and weakened demand from the global recession, collectively agreed to exercise "capacity discipline," which in industry parlance refers to restraining growth by limiting flights and seats. This conduct had the effect of reducing competition among the airlines, resulting in higher fares and reduced service to consumers, while ensuring bigger profits for the airlines. The complaint alleges that the airlines' price-fixing agreement was reached through their participation in earnings calls with Wall Street analysts and meetings at trade conferences. 

According to Asciolla, "Consumers have grown weary of high airfares, packed or overbooked flights, increased fees, and reduced services. One would expect vigorous competition among the airlines during this economic recovery and period of low fuel prices, resulting in cheaper fares and more services. Yet, just the opposite is occurring, and the complaint we filed today alleges that this is because the airlines have agreed to stop competing in order to line their pockets at the expense of consumers. With today's filing, we intend to bring competition back into the airline industry to the benefit of all travelers in the U.S."