The Department of Justice is snooping on the airlines for possible collusion?
Say it ain’t so.
Code sharing, certain immunities, dynamic pricing, capacity control and airline alliances all can raise eyebrows—and SHOULD!
But isn’t it a little late for all of this?
With DELTA buying NORTHWEST, UNITED acquiring CONTINENTAL, USAIRWAYS picking up AMERICAN (but keeping the AA nameplate) and SOUTHWEST merging AIRTRAN into its fold, how could the DOJ not expect trouble ahead?
What were eight carriers just a few years back have been clipped down to just four winged powers.
Some routes have been doubled or tripled, while others have been eliminated all together resulting in fewer discounted seats and crowded planes.
And despite much lower jet fuel prices, fares in most instances have not been adjusted downward accordingly.
Each airline has a special statistical department whose sole mission it is to squeeze the most possible revenue out of every available seat on everyone of its flights. They use historic as well as advance purchase data to make capacity pricing predictions.
And make no mistake, these “stat squads” are damn good at what they do.
Code sharing?
It’s actually several airlines sharing the same aircraft and, of course, ultimately its expense and revenue.
Say you’re flying on DELTA # 14 from Atlanta to Frankfurt.
That DELTA flight also sports three additional flight numbers—or codes.
DELTA # 14 also does business as VIETNAM AIRLINES flight # 3068, AIR FRANCE # 3617 and KLM flight # 6114.
So what maybe would have been four flights from Atlanta to Frankfurt, are now paired into just one.
You do the math.
It’s also my understanding that in some instances, the government has even extended immunity to certain carriers from discussing what really should qualify as competitive pricing on particular routes.
And then there is ATPCO.
That’s The Airlines Tariff Publishing Company which acts as a central clearing house of sorts.
The minute one airline changes a ticket price or frequency on a particular route that information flows into ATPCO’s giant computer brain which, in turn, makes it available INSTANTLY to ALL carriers.
Nice system….
Is ATPCO a free floating island within the aviation jungle?
Some would suggest that it is—except that it’s owned BY the airlines themselves!
I could go on, but I won’t.
The airlines really don’t have talk to each other these days. There are far too many tools available to them to keep a grip on business.
What it REALLY comes down to is SUPPLY and DEMAND. Period.
Is Starbucks going to lower your price for a cup of java just because they’ve negotiated a better deal with their national bean distributor? I don’t think so.
The bottom line is, what the flying public is willing to pay for that privilege. And these days it sure seems like it’s a lot.
So good luck with the DOJ and their investigation of the not so friendly skies.
As for YOU? Don’t expect much beyond the status quo.
Interesting stuff.
Hmmm…
jack….deregulation and the mergers created this deal. Are you surprised that
this all came about? I’m not. They figured out how to squeeze more money out
of every flight with baggage fees….packing each flight…offering early boarding
for extra charges.
This is not something that I could not see happening. It was bound to happen
when you saw that one line was taking over an0ther.
I saw all this years ago when the airlines planned to consolidate and raise
fares. this is what’s happening in every American industry right now.
Look for the shippers to follow suit.
Look for the auto dealers to follow suit.
It’s the American way. Make more money any way you can!!!!!!!!!!
Not since Judge Hand ruled in Alcoa, has the Justice Department had such an appetizing target, definitely not airline food. Then there is the concept of jurisdiction. It probably plays well with domestic flights but International Flights? There are two illustrious antitrust staples used by the Justice Department, Sherman ad Clayton. Clayton is tied good, like Polaroid selling you a camera for $18 that uses only their film also $18 per pack. Sherman is different. Sherman is collusion. However, before a charge can be brought, they have to define the market. Was this the market of all air carriers in the US or just air carriers going from KCM to ATL. Most of the court cases in today’s world are argued on market share. The airline lawyers will want all air carriers, including China Air to reduce market share, while Justice Department Attorneys, the ones who couldn’t get jobs representing airlines, will attempt to narrow the market, US carriers. Finally the Justice Department will look to see if there is proof that air carriers talked to each other. Really? Perhaps they talked to travel planners or had their rates published, say in Orbit, Hotels.com, or some other venue. Don’t hold your breath. It will end up like the oil investigation where gas stations merely looked up the street to see what their competition charged, definitely not collusion. Did they collude? Yes, but proof is hard to come by, especially when you’re a Justice Department Attorney who graduated at the bottom of your class at Pete’s School of Law, and your facing the top ten from Harvard. Treble damages would have been nice, but if there is no conviction, it’s hard to see how Justice could figure the damages of sitting in a seat designed for a four year old child for three hours could be monetized. In this case, nobody fears Justice.
+1
Although I do think Police Departments all over America fear the Justice Department.
The DOJ is a multifaceted organization with links to the Hip/Hop/Holocaust.
http://www.thenewamerican.com/usnews/crime/item/19792-justice-department-grants-linked-to-cop-killing-rap-video
Ah, for the good days, when every carrier (except SW) went through multiple bankruptcies, airlines failed, and customers were stranded with worthless tickets.
Now they have the audacity to actually provide their shareholders with a return on investment. Not the margins that the Apples, Verizons, or Time Warner Cable earn but at least there is a pulse.
Let me ask you, what has gone up more? Your telecommunications, car prices, sports tickets, Royals beers, or air fare?
Flying just sucks, period. I still do it but I can’t stand it. In addition to all the usual complaints about the airlines I find myself complaining about fellow passengers almost as much. Crying kids, big fat people not buying two tickets, rubes in cut off t-shirts with the accompanying BO, old people that act like they’ve never been through a security line, assbags who recline in their seats, etc, etc, etc.
It’s gotten to the point where you call the whole venture successful if you and your bags eventually arrive at your destination.
And I assume you are perfect in every way? Sounds like you need to be living on a desert island allllll my yourself.
My sister travels all the time and I’ve never heard her complain like this. Guess, like everything, it’s all
in your viewpoint.
That being said, you do have a point. The days of airline travel being pleasurable and special are long gone. Unfortunately, couth and gentility followed closely behind.
“And I assume you are perfect in every way?”
Hey, I’m no Glazer but I am an experienced traveler and I see the things I described on almost every flight I take. The majority of the people I see have lost respect for themselves and their fellow travelers.