A fare conspiracy at 30,000 feet?

Everything you need to know, in four paragraphs

Gaining altitude — and revenue
(Image credit: ALEXANDER KLEIN/AFP/GettyImages)

Here's everything you need to know, from all perspectives, in four paragraphs:

"Packed planes and rising fares" could be part of the airline industry's master plan, said James Queally at the Los Angeles Times. The U.S. Department of Justice last week announced it is investigating whether U.S. airlines have been colluding "to keep prices high and planes full" by limiting their available seats. Domestic ticket prices were up 2.5 percent and passengers filled a record 84.5 percent of seats last year, while fuel prices, the largest expense for most airlines, plunged 41 percent. Frustrated fliers are "cheering the government on," said Hilary Stout at The New York Times. Travelers often feel "powerless and infuriated" in the face of cramped seats, ever-changing baggage rules, and endlessly inventive add-on fees. Meanwhile, airline profits soared last year to $12 billion, most of that going to the Big Four — American, United, Delta, and Southwest — which control 80 percent of the market, up from 60 percent in 1999.

Government investigators were tipped off to the possibility of clandestine collusion by poor word choice, said Diane Bartz at Reuters. At a recent trade conference, at least three senior airline executives stressed the need for "discipline" in adding seats on competitive routes. "Such remarks are catnip for regulators." Fears of fare coordination were one reason the Justice Department sued to stop U.S. Airways from merging with American Airlines in 2013. But without proof of an actual deal in the proverbial "smoke-filled room," said Mariah Summers at BuzzFeed​, the government will have a very hard time making its case. "Was there a real conspiracy? And how do you prove it?"

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE
https://cdn.mos.cms.futurecdn.net/flexiimages/jacafc5zvs1692883516.jpg

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The Justice Department has its work cut out for it, said Dan Reed at Forbes. But investigators' ultimate aim may be to "bully the airlines into changing their behavior." Regulators were "outmaneuvered and outsmarted" by the airline industry in the run-up to the mergers that created today's Big Four carriers. Now they're looking to undo some of the damage they think has been done to competition. What they don't understand is how "ruinously competitive" the airline industry already is. Yes, airlines racked up record profits in 2013 and '14, but the industry is hardly accustomed to healthy margins. In the 2000s, losses totaled nearly $60 billion across U.S. carriers. And while fares have gone up over the past five years, they're still 20 percent lower than they were in 1975, after being adjusted for inflation. If the airlines are cheating, "they're doing a pretty mediocre job of it."

The airlines will argue that any talk of "capacity discipline" was an assurance to their shareholders that they're trying to maximize profits, said The Kansas City Star in an editorial. But we all know it's "code for fewer flights, squashed seating, and unreasonable fares." There needs to be more competition from low-cost start-up carriers, and maybe even "minimum comfort requirements" for passengers. Let's start with seats we can actually fit into. "Collusion or not, the U.S. airline industry has succeeded in making flying an expensive, often miserable experience for the public. Any inquiry aimed at changing that reality is welcome."