Reports that Justice Department officials are looking into whether the nation’s four largest airlines conspired to keep airline ticket prices high by manipulating capacity come as little surprise to this frequent flyer.
As a person who flies from somewhere in the region to Denver most weeks, I’ve seen first-hand how much the choices for travel across the Rockies have dwindled over the years – particularly when it comes to the larger carriers.
Not so many years ago, travelers flying from Santa Barbara or San Luis Obispo had a choice of carriers to take them to Los Angeles or elsewhere for connections. SLO had United and American competing for service to Los Angeles.
Santa Barbara hosted commuter flights on Delta Airlines to Salt Lake City, on United, now United Continental Holdings, to Los Angeles and Denver, on USAir, now part of American Airlines Group, to Phoenix and American to LAX and, for at least a short time, to Dallas. Santa Maria offered a competing and sometimes less expensive way to get to LAX on United.
Little by little, the choices narrowed. American shuttered its operations in SLO, claiming financial hardships as it grappled with high fuel prices. Shortly after it shut down on the Central Coast, American launched its still not fully completed merger with U.S. Airways.
The Delta flights to Salt Lake were suspended for largely unknown reasons. But Delta and Northwest airlines merged, creating the first of the new generation of airline behemoths.
United has been retrenching, but also extending its monopoly powers, during its merger with Continental Airlines.
It pulled out of San Jose, a gateway to the Silicon Valley, and forced us to fly into San Francisco, where fog often upends early morning flight plans. It forced Santa Maria and, increasingly, SLO passengers to fly north to SFO rather than south for connections.
And in a move that mirrored what it did in SLO, American pulled out of Los Angeles service from Santa Barbara, leaving United with dominance in that market. United controls Los Angeles and Denver while American has the only flights to Phoenix.
Recently, San Luis Obispo and Ventura County’s Oxnard airport have been talking about bringing in new flights, possibly using some taxpayer money to subsidize the marketing or promotion of the new route.
Business travelers are really stymied in their search for air service. Many of us just suck it up and drive to Burbank for cheaper flights on Southwest, or LAX, where fares are more competitive even if traffic is brutal. American Airlines Group, Delta and United Continental Holdings, along with Southwest, are the subject of the Justice Department probe. All four say they are cooperating.
The Justice Department faces a tall order in proving a case of possible collusion by the airlines. It needs to find a smoking gun — a memo or recording of a conversation where executives specifically spell out a quid pro quo.
But just following the route map, it’s clear that something is going on. Whether it is a kind of tacit coordination that doesn’t rise to the level of law-breaking is going to be the multi-million dollar question for the DOJ to answer.
At the same time, separate groups of consumers in New York and Chicago have gone to federal court with civil complaints that the industry has gone too far in controlling prices.
A Bloomberg News article quotes the Chicago complaint as stating that the major airlines “in tandem raised fares, imposed new and higher fees on travelers and reduced their capacity and service.”
Any business flyer on the Central Coast in recent years would not argue with the point that fares and fees have gone up while choices and capacity have been diminished.
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