U.S. airlines lose bid to dismiss
price-fixing lawsuit
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[October 31, 2016]
By Jonathan Stempel
(Reuters) - A federal judge rejected a bid
by the four largest U.S. airlines to dismiss nationwide antitrust
litigation by passengers who accused them of conspiring to raise fares
by keeping seating capacity artificially low.
In a decision late Friday afternoon, U.S. District Judge Colleen
Kollar-Kotelly said she could "reasonably infer the existence of a
conspiracy" among American Airlines Group Inc <AAL.O>, Delta Air Lines
Inc <DAL.N>, Southwest Airlines Co <LUV.N> and United Continental
Holdings Inc <UAL.N> to fix prices.
Kollar-Kotelly, who sits in Washington, D.C., did not rule on the merits
of the proposed class-action case, which combines 105 lawsuits filed
around the country and seeks triple damages.
The U.S. Department of Justice last year began its own probe into a
possible conspiracy among the airlines, which, according to government
data, command a roughly 69-percent domestic market share.
Passengers claimed that the conspiracy began in early 2009, and has
resulted in higher fares and reduced flight choices.
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They said the conspiracy, together with low fuel prices and higher fees
for checking bags and other services, helped the airlines post a record
$21.7 billion combined profit in 2015.
The airlines said the litigation should be dismissed because there was
no proof of an agreement to collude, or that they reduced capacity in
tandem.
But in her 41-page decision, Kollar-Kotelly pointed to statements by
several airline executives about the need for "discipline" in seating
capacity.
"Starting in 2009, the industry experienced limited capacity growth,"
the judge wrote. "Notably, as defendants' executives acknowledged, this
restriction on growing capacity was a marked change within the industry.
The court is satisfied that at this stage, plaintiffs sufficiently pled
parallel conduct."
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An American Airlines Boeing 757 aircraft takes off at the Charles de
Gaulle airport in Roissy, France, August 9, 2016. REUTERS/Jacky
Naegelen
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Kollar-Kotelly said this was true even for Southwest, though its use
of a single aircraft type and other factors gave it a "limited
ability" to reduce capacity.
American spokesman Matt Miller called the plaintiffs' claims
"plainly deficient," and said the carrier is confident they will be
found meritless.
Delta had no immediate comment. Southwest spokesman Brad Hawkins
declined to comment. United did not immediately respond to requests
for comment.
Michael Hausfeld, a lawyer for the plaintiffs, called the decision a
"substantial victory" for passengers. "We look forward to moving
forward aggressively to secure the relief the public deserves," he
added.
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 Nick
Zieminski)
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