Feds investigate airlines for price fixing
WASHINGTON D.C. – Right at the peak of the busy summer travel season, major U.S. airlines are now under investigation, accused of possibly working together to keep ticket prices high.
The U.S. Justice Department sent subpoenas to airlines Tuesday, demanding copies of all communications among the airlines, analysts and shareholders.
The investigation began back in December when a New York senator noticed jet fuel prices falling, he thought that if the airlines highest expense had fallen, then why haven't ticket prices?
"You look at the websites Expedia, Travelocity, it's interesting how all the prices seem to be close together. So it would be surprising to me if these airlines are doing that," Scott Lara, manager of Air Sea Travel, said.
It's no surprise that when you're looking for a flight that most airline prices are similar, or competitive. But according to a recent investigation by the Department of Justice, those similar prices have caused concerns over possible unlawful coordination that could mean higher prices for passenger.
"Over the last several years, airlines have consolidated so there's only a few players in the market. So they're trying to save a penny any way they can. If it includes jacking up the prices on airline bags, whatever it takes, they're going to make money," Lara said.
The feds are also looking into whether major airlines intentionally limited the number of available seats to keep airfares high.
According to financial filing, jet fuel prices, which are the airlines highest expense, dropped 40 percent last year, helping carriers save $3.3 billion in the first quarter.
But those savings haven't exactly trickled down to passengers with the average domestic flight coming in at $391.
Recently the government allowed two major airline mergers to occur, United and Continental as well as American and US Airways. According to industry groups, those are just two examples that business has gotten tougher for consumers.
"Because of consolidation, airlines have had to tighten costs and make profits No. 1. So that is the No. 1 reason that they're doing this, and I think the public needs to comparison-shop to make sure they're getting the best price," Lara said.
A United Airlines spokesperson confirmed to CNN that the airline has received a letter from the DOJ "and we are complying with their requests." None of the other airlines have commented yet.
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