North American airlines accused of capacity collusion by US senator

A US senator has asked his country’s justice department to investigate whether some US airlines have colluded to limit capacity and drive up fares.

It comes as the big three US carriers – United, Delta and American Airlines – are knee-deep in a row with their Arabian Gulf rivals, with each side alleging that the other has benefited from external financial support.

According to The New York Times, the US senator Richard Blumenthal wrote a letter to William Baer, the assistant attorney general for the US department of justice antitrust division, saying that the chief executives of American Airlines, Delta Airlines and Air Canada could be agreeing on “capacity discipline” to raise airfares.

“Consumers are paying sky-high fares and are trapped inside an uncompetitive market with a history of collusive behaviour,” wrote Mr Blumenthal, according to the newspaper.

Capacity discipline is a term used in the airline industry to describe the practice of cutting the number of seats on unpopular routes.

“In a low fuel price environment, it’s easy to see why some in the US, such as Mr Blumenthal, are irked at seeing passengers paying higher fares,” said Saj Ahmad, the chief analyst at StrategicAero Research. “It’s difficult to gauge just how much change is really capacity change-driven and how much is demand-driven.

“Any anti-competitive or restrictive fare movements through capacity cuts will have a heavier and punitive impact on US airlines if the government intervenes,” he said.

American, Delta and Air Canada did not immediately respond to requests for comment.

selgazzar@thenational.ae

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