Are Airlines Colluding To Keep Ticket Prices Up?

Packed planes and rising fares have pushed up airline profits -- along with costs for cramped and harried travelers. Federal investigators are now looking into whether airlines planned it that way.

The Justice Department on Wednesday confirmed a probe into alleged collusion by airlines to keep prices high and planes full by limiting the number of seats.

The department's antitrust division is "investigating possible unlawful coordination by some airlines," agency spokeswoman Emily Pierce said. She wouldn't name the airlines and declined further comment.

Several airlines confirmed they had been contacted by the Justice Department, which requested internal documents from the last two years. The carriers denied unlawful behavior, saying that the industry has been highly competitive.

Airlines for America, a trade group for the largest U.S. airlines, said travelers are benefiting from strong competition and the growth of low-fare airlines.

"It is customers who decide pricing, voting every day with their wallets on what they value and are willing to pay for," the group said.

News of the inquiry follows a request for an investigation last month by Sen. Richard Blumenthal (D-Conn.). He said he suspected collusion after reading that several airline executives at a trade group meeting in Miami talked about staying "disciplined" when adding more seats.

In his letter to the Justice Department, Blumenthal asked for "a full and thorough investigation of anti-competitive, anti-consumer conduct and misuse of market power in the airline industry, evidenced by recent pricing patterns as well as remarks made at the [International Air Transport Assn.] conference."

As word of the investigation spread Wednesday, airline shares dropped. American Airlines fell 2.8% to $38.80; United Continental Holdings Inc. declined 2.5% to $51.69.

Analysts say the industry is strong and would weather possible antitrust fines.

"We remain positive on demand in the sector and think summer travel will be strong," said Jim Corridore of S&P Capital...

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