Southwest, American agree to pay $60M in price-fixing lawsuit
An ongoing nationwide litigation by passengers who claim that the four largest U.S. carriers – American Airlines (A1G) (AAL) , Delta, Southwest, and United (the “Defendants”), conspired along with US Airways and Continental Airlines to increase fares by limiting capacity on domestic flights, has reached a turning point. Southwest and American Airlines (A1G) (AAL) (the “Settling Defendants”) have agreed to pay a total sum of $60 million to settle the litigation.
“If you bought a domestic airline ticket on American, Delta, Southwest, United, Continental, or US Airways between July 1, 2011 and June 14, 2018 your rights could be affected,” opens the official website for the Domestic Airline Travel Antitrust Litigation Settlements.
According to the website, a class action lawsuit has been filed against the four largest U.S. carriers, claiming the Defendants agreed to limit capacity on domestic flights. The lawsuit alleges that ticket purchasers may have paid artificially inflated prices as a result.
The affected include persons and entities who purchased tickets “for flights within the U.S. and its territories and the District of Columbia from American Airlines (A1G) (AAL) , Delta, Southwest, United, Continental, or US Airways at any time between July 1, 2011, and December 20, 2017, for the Southwest settlement and between July 1, 2011, and June 14, 2018, for the American Airlines (A1G) (AAL) settlement”.
As of October 19, 2018, two settlements have been reached: Southwest has agreed to pay $15 million and American Airlines (A1G) (AAL) has agreed to pay $45 million, settlement documents indicate. The Settling Defendants also agreed to provide certain cooperation against the remaining carriers in the ongoing litigation (the "Non-Settling Defendants"). Both Southwest and American deny that they did anything wrong and have asserted defenses to the Plaintiffs’ claims.
Asked to confirm the news, American Airlines (A1G) (AAL) replied: “American has settled a lawsuit that claimed passengers were harmed by an alleged agreement among airlines to restrict domestic capacity growth. The settlement does not include any admission of wrongdoing, and we continue to deny, without qualification, that American participated in any such agreement,” the company’s October 23, 2018, email to AeroTime reads.
According to American, the “facts” are that the carrier dramatically increased domestic capacity during the period in question, while also taking delivery of hundreds of new aircraft. The airline stated that investments made in its network were beneficial to customers, as reflected in the increase of domestic passenger traffic, which actually led to fares dropping to “near all-time lows”.
The carrier identifies the cost of the litigation as the key reason behind its decision to settle, maintaining that it is up to each individual airline company to decide when and where to add routes or flights. “Despite our firm conviction in the appropriateness of our actions, costs to defend against antitrust litigation often run into the tens of millions of dollars. So while it is difficult to agree to a settlement when we believe we’re right on the law and the facts, settling this case is a prudent decision for American,” the company stated.
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