The Department of Justice announced 18 months ago that they were investigating the US airlines for unlawful collusion to limit capacity and increase airfares.
When the government goes looking for anti-trust violations and can’t find any that’s a pretty strong statement because there’s almost no such thing as not violating anti-trust rules. If your prices are high, you have market power. If your prices are low, that’s predatory pricing. And if your prices are the same as competitors, that’s collusion.
Last year Ben Schlappig and I were extremely skeptical of the government’s claims in a Fox News segment.
It struck me as bizarre to investigate airlines for collusion while prices are falling, and for the government to have been considering taking against Emirates, Etihad, and Qatar for putting too much capacity into US markets at the same time it investigated the major US airlines for withholding capacity.
The investigation came, of course, after the government signed off on the major US airline mergers and granted anti-trust immunity to a variety of airline joint ventures.
I suggested that “absent a smoking gun email any claim by the federal government that it’s “shocked, shocked to find” that there’s less competition in the airline industry is severely lacking in credibility.”
And if you want more competition, the way to get it isn’t a DOJ investigation. It’s making competition legal. Allow foreign ownership of US airlines, then you can have Singapore Airlines and Ryanair come in and fly against United, Delta, and American.
The matter hasn’t been formally closed, there will simply be ‘no action’ before the end of the current administration. And in the absence of evidence it’s not expected the next administration will act either.