American Airlines and Southwest Airlines are under investigation by the U.S. Department of Justice as the government looks into whether or not airlines colluded when making capacity plans in order to keep airfares high.
The Justice Department sent “civil investigation demand” letters to several U.S. carriers earlier this week, asking the airlines to provide all documents related to how they determine how many available seats and flights they will operate and if they are talking to each other about capacity.
The letter asked airlines to “submit all documents relating to any actual or contemplated changes in the capacity of your company or any other airline, including all documents relating to your company’s monitoring of the actions or public statements of other airlines regarding actual or contemplated changes in capacity.”
The government also wants to know when airline executives attended conferences with Wall Street analysts and how many available seats airlines had in their networks since January 2010.
The industry has come under pressure from Wall Street analysts about growing capacity too quickly the next two years as airlines get new, larger aircraft and continue to add routes. Shares of airline stocks have declined in the past two months and several airline executives have cut future capacity plans as a result.
Both American and Southwest said they will cooperate with the DOJ on their questions.
“We’ll cooperate fully in answering any questions the DOJ has of us,” said Southwest Airlines spokesman Brad Hawkins in an email.
American spokesman Josh Freed said the demand asks for documents and information from the last two years about capacity.
“We welcome the review as the data shows that the industry remains highly competitive with more people flying than ever before,” Freed said. “Demand has been enabled by a robust and competitive marketplace in which capacity has been added and average fares have decreased.”
Industry group, A4A, said it is customers who are deciding pricing by choosing which airfares to purchase.
“We are confident that the Justice Department will find what we know to be true: our members compete vigorously every day, and the traveling public has been the beneficiary, as the DOT’s own data shows that domestic fares are down in 2015,” A4A said in a statement.
The group added that capacity is at a post-recession high with airlines growing the number of available seats by 4.6 percent this summer to accommodate increased demand.