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Feds Scrutinize Airlines for Price-Gouging

On May 12, Amtrak’s Regional Train Number 188 went off the rails in Philadelphia, forcing many passengers on the heavily-traveled New York-Washington route to continue their trips by air. What the stranded travelers found when they attempted to book flights, however, was a sudden spike in airfares from area airports.

Enough of the affected travelers made their anger known to the DOT that the agency couldn’t help but detect a pattern of malicious behavior on the airline’s part. Price-gouging, that is.

According to DOT Secretary Anthony Foxx: “The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable. This Department takes all allegations of airline price-gouging seriously, and we will pursue a thorough investigation of these consumer complaints.”

The first step in that investigation was a letter, sent to American, Delta, JetBlue, Southwest, and United, on July 24. The five airlines are to provide the DOT with data on any pricing changes during the period surrounding the Amtrak derailment. In addition to seeking evidence of price-gouging, the letter includes this:

State whether [Airline], through its management, agents, or counsel, ever initiated or participated in a conversation with another air carrier about passenger demand, fares, flight frequencies, or equipment, in relation to the derailment of Amtrak 188. Provide a description of these conversations, if any.

That’s clearly an attempt by the DOT to determine whether the airlines engaged in collusion as well as gouging.

Even before the Amtrak incident, American, Delta, Southwest, and United were under investigation by the Justice Department for colluding to fix prices by signaling their intent to exercise “capacity discipline,” widely understood to be code for limiting flights.

So today, the country’s largest airlines are suspected, in separate cases, of engaging in collusion and price-gouging, by the Departments of Justice and Transportation.

Which brings to mind that kernel of folk wisdom: Where there’s smoke, there’s fire.

Reader Reality Check

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