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The DOJ’s Airline Investigation: A Primer

Last month, the Associated Press was the first to report that the DOJ is investigating whether American Airlines, Delta Air Lines, Southwest Airlines, and United Airlines have engaged in collusion.  Since that time, there has been much speculation in the press about the DOJ’s investigation.  But given that the investigation is not a public proceeding, what do we really know?

• The DOJ is investigating whether the airlines coordinated air passenger capacity. According to three of the airlines’ public filings, (United’s July 23 10-QAmerican’s July 23 10-Q, and Southwest’s July 31 10-Q), the airlines received civil investigative demands (“CIDs”) that sought information about the companies’ passenger capacity.  So rather than investigate straight price-fixing, the DOJ appears to be investigating whether the airlines have colluded to limit passenger capacity, which would have had the effect of inflating prices.

• The DOJ may be investigating whether the airlines publicly signaled their capacity decisions to each other. Southwest’s 10-Q stated that the DOJ’s CID “seeks information from January 2010 to the present including public statements and communications with third parties about capacity.”  This disclosure comports with reports from media outlets that the DOJ is investigating whether the airlines have engaged in collusion through public comments.

• The DOJ’s investigation does not appear to have expanded beyond the big four. No other airlines have disclosed that they have been targeted by the DOJ. Jet Blue issued a statement immediately after the launch of the investigation that it had not been contacted by the DOJ, and JetBlue’s recent public filings have not disclosed that it is a target of the investigation.

• The DOJ’s airline investigation is not the only game in town. July has been a tough month for the airlines.  On July 24, 2015, the Department of Transportation (“DOT”) announced that it is launching its own pricing investigation.  DOT has sent letters to Delta, American, United, Southwest, and JetBlue to investigate whether they had engaged in price gouging in the wake of a May 2015 Amtrak derailment in Philadelphia.