U.S. Travel Association Sees Connection Between Airline Consolidation and Price Collusion

Earlier today the Associated Press reported that the United States Justice Department is investigating price collusion among U.S. carriers.

According to the AP, The civil antitrust investigation focuses on whether airlines illegally signaled to one another how quickly they would add new flights, routes, and extra seats.

The U.S. Travel Association (USTA) is using the investigation to highlight ongoing issues the organization has had with the airline industry, namely consolidation and its relationship with U.S. airports, which has become fraught owing to disagreements over airline passenger fees that would be paid to offset the costs associated with running airports.

Shortly after news broke of the investigation, USTA President and CEO Roger Dow issued a statement, below, that framed these issues in light of the Justice Department’s investigation.

“We fervently hope that the U.S. airlines targeted by the Justice Department’s inquiry are cleared of these allegations. American consumers are already jaded enough about flying that we’ve been wondering for awhile how many more gut-punches they could absorb before we see a dip in air travel demand–and therefore a dip in the related econometrics for cities and businesses across the country.

“If not for the radical consolidation we have seen in the airline industry in the last few years, we probably would not even be having this conversation. Now that four carriers control 85 percent of domestic routes, ‘collusion’ is a thought that’s constantly going to be in the back of the minds of federal regulators.

“Congress has a remedy at its fingertips: make adjustments to airport financing so that individual airports can raise funds to expand terminal space and allow new carriers into their markets. More competitors significantly lessens the possibility that collusion can occur, and the pressures upon prices and service would be tremendously favorable to travelers, and therefore the broader economy.

“We urge our partners in the airline business to cooperate fully with this investigation, and for Justice officials to bring it to the fastest possible conclusion so that the summer and fall travel seasons can go on unimpeded.”