22 October 2016
American Airlines is one of four carriers asked to give information to US antitrust investigators. Photo: Bloomberg
American Airlines is one of four carriers asked to give information to US antitrust investigators. Photo: Bloomberg

US probing airline investors for possible fare collusion

Airline executives and investors are being investigated by US antitrust authorities for possible price gouging.

Investigators are looking into communications between executives and between them and certain shareholders, according to Bloomberg.

The Justice Department has asked American Airlines Group Inc., United Continental Holdings Inc., Delta Air Lines Inc. and Southwest Airlines Co. for details about meetings with their major shareholders in which “industry capacity” was discussed.

Antitrust officials have been examining arguments that consumers pay more when the same large investors hold shares in the biggest airlines.

BlackRock Inc. is among the five biggest holders at each of the four largest US airlines, according to Bloomberg data.

State Street Corp., JPMorgan Chase & Co., Primecap and Capital Group Cos., which runs the American Funds group, also fall into that category, with stakes in two or more of the carriers.

Spokesmen for the companies declined to comment.

Officials have examined at least two academic papers arguing that consumers suffer when there is such overlapping ownership, according to people familiar with the matter.

One of the studies shows that airfares are on average as much as 11 percent higher than they would be otherwise due to common ownership.

The antitrust officials’ information demand and their interest in the academic studies provide a clearer view on their current focus as they examine the airlines after years of approving industry mergers.

The officials are looking into allegedly unlawful coordination to control seat capacity, which helps drive ticket prices.

The antitrust department’s civil investigative demand — a formal request for information similar to a subpoena — doesn’t call out any investors or individuals by name or accuse anyone of wrongdoing.

It requests information on meetings at which industry capacity was discussed with investors whose stakes in the airlines exceed 2 percent, a category that includes some of the biggest US money managers.

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