Airlines Respond To Lawsuit Over Combinable Fare Rules

Photo: InSapphoWeTrust.

The complaint was brought by a group of current and former travel agents in an antitrust lawsuit filed against the carriers by 41 current and former travel agents in U.S. District Court in San Francisco. 

The carriers do not deny changing the rules to protect their fare structures; they just deny agreeing with each other to do so. 

“The Complaint never once alleges evidentiary facts showing an antitrust conspiracy,” United said in its response. “It fails to identify any conspiratorial meetings or communications among the Airline Defendants. It fails to identify when the alleged conspiracy was devised, or by whom, how it operated, when various Defendants supposedly joined or how it was policed.” 

American noted that courts recognize and accept that “in many interdependent markets, companies base their actions in part on the anticipated reactions of their competitors. And because of this mutual awareness, two firms may arrive at identical decisions independently, as they are cognizant of—and reacting to—similar market pressures.”  

Such “consciously parallel” conduct is lawful, not evidence of conspiracy, it said. 

ATPCO also was named as a defendant. Joseph M. Alioto, the attorney representing the plaintiffs, told Travel Market Report that it was included because it “facilitated” the airlines’ alleged collusion. 

ATPCO is owned by the airlines, Alioto said, and is “a puppet.” 

In its response, Delta said the “allegedly unlawful features” of ATPCO—the public dissemination of pricing information—“were long ago examined by the Department of Justice and found to comply with the antitrust laws.” 

It also said the plaintiffs’ allegations of irreparable harm “are limited to the inconvenience of creating multiple, rather than single, tickets for customers (for which they are paid) wishing to purchase itineraries affected by the rule change, damage to or loss of Plaintiffs’ travel agency business and injury to reputation, even though the same rule changes apply to all travel agencies.” 

American explained why it changed the rules. Ultra-low-cost carriers can offer extremely low fares between particular high-demand cities because they do not have the costs of operating an extensive network of connecting flights, it said. 

American often offers fares that are competitive with ULCC fares on the specific routes where it competes. But when those low-fare segments are combined with other segments to create an itinerary that is served nonstop by American—a transcontinental route, for example—the combined fare may undercut what American is offering to nonstop passengers. 

“American’s decision to match these low fares was meant to apply only to selected routes with ULCC competitors,” it said in its response. “American never intended to categorically allow these very low fares to be combined to create heavily discounted Combination Fares for connecting service.” 

Alioto and the group of plaintiffs have tangled with the airlines before, from suing the major carriers for cutting commissions in 2003 to attempts to block the four major airline mergers of recent years. 

Their complaint against the American-US Airways merger is still pending.