Airline-gouging probe: Airline Price Gouging Investigation

Published: July 24, 2015

Airline-gouging probe: Airline Price Gouging Investigation, Update 10:59 a.m. American, Southwest, JetBlue and Delta have responded to reporters’ queries about the investigation. Those responses have been included below.

Update: 9:40 a.m. CST: The DOT has released a copy of the letter (included below) sent to U.S. airlines, which the DOT clarified includes United as well as four previously mentioned. “The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable,” Transportation Secretary Anthony Foxx said in a statement accompanying the letter. “This department takes all allegations of airline price-gouging seriously and we will pursue a thorough investigation of these consumer complaints.”

Original story: WASHINGTON–The Obama Administration has opened a formal investigation of four U.S. airlines, including Fort Worth-based American Airlines, into whether they unfairly boosted fares in the Northeast in the days after the deadly Amtrak crash near Philadelphia.

“We have opened an investigation into [possible] price-gouging following the tragic accident of Train 188 in the Philadelphia area,” Foxx told a group of reporters at a Friday breakfast sponsored by the Christian Science Monitor. “We have sent letters to four airlines: Delta, American Airlines, Jetblue and Southwest.”

U.S. Transportation Secretary Anthony Foxx. (Michael Bonfigli/The Christian Science Monitor)

He said the action is unrelated to an ongoing criminal investigation tied to the crash by the Department of Justice. Since word of the DOJ inquiry became public July 1, attorneys have filed at least 49 lawsuits in 12 federal district courts accusing American, United, Delta and Southwest of antitrust violations, including four cases filed in U.S. District Court in Dallas.

The North Texas-based airlines among the five said they are cooperating.

“We have been notified by the DOT that they are conducting an investigation, and we will cooperate with that investigation,” Southwest spokesman Brad Hawkins said.
American spokesman Casey Norton said that it added capacity following the rail crash. “We added capacity and our fare structure remained the same,” Norton said. “We are cooperating with the DOT and we are confident there will no finding of wrongdoing by American.”

Among the airlines, Delta issued the most specific rejection of the suggestions it had engaged in price-gouging.

“Following the May 12 Amtrak crash in Philadelphia, Delta Air Lines took steps to ensure affected travelers could affordably and conveniently reach their destinations. Delta did not increase air fares following the crash – to the contrary, Delta lowered its highest Shuttle prices by nearly 50 percent, to about $300 each way, for travel between New York, Boston and Washington, D.C.,” Delta spokesman Trebor Banstetter said.

“In addition, Delta honored existing Amtrak tickets for travel between Washington, D.C., Boston and New York; waived change fees for travel on Delta Shuttle flights between those markets; and increased seat capacity in the region by adding flights and operating larger aircraft,” he said.

“JetBlue has received a letter from the U.S. Department of Transportation related to its investigation, and we will cooperate fully,” JetBlue spokesman Philip Stewart said.

Foxx said the responses are due in 30 days. “The letter is going out today. We expect within a reasonable time we will have that information back and we will go where the information takes us. … Our review shows that following the accident, there were higher prices in that corridor than you would normally expect, and our investigation is into whether there were unfair practices involved in setting prices at that time.”

He said that the investigation follows a request from Sen. Chris Murphy, D-Conn., who asked the department to look into the airlines’ pricing behavior after the crash. “There were a flurry of concerns raised in wake of accident in Philadelphia. We’ve been asked to consider an investigation by Sen. Murphy in Connecticut and we are doing our best to answer those questions.”

He said the initial review of pricing by those four airlines after the crash gave the administration confidence to move forward with the investigation.

“We have sufficient information to be concerned,” Foxx said this morning. “But part of the investigation is drilling down into what the fact are.”

The accident killed 8 people and temporarily shut down the popular Washington to Philadelphia Amtrak service. Air fares, he said, jumped in the days after.

“We are looking at his from a consumer point of view. Yes there is natural shift in prices depending on demand (following a rail shut down.) But the question is, was that beyond the pale? And we will find that out.”

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