June 8 - U.S. Senators Lee, Klobuchar and Blumenthal Take On Airline Collusion

 

Urge U.S. Justice Department To Investigate And Protect Consumers

WASHINGTON, DC – The Business Travel Coalition (BTC) and AirChannelChoice.travel today applauded U.S. Senators Mike Lee (R-UT), Amy Klobuchar (D-MN) and Richard Blumenthal (D-CT) for writing to U.S. Department of Transportation Secretary Anthony Foxx and Attorney General Loretta Lynch urging them to investigate potentially illegal comments made by Lufthansa Group (LHG) CEO Carsten Spohr regarding his airline’s commercial strategy at a June 8, 2015 International Air Transport Association gathering of LHG competitors in Miami, Florida.

With more that 100 airline executives in the room, Mr. Spohr, while participating on a panel, telegraphed his future business intention to surcharge $18 dollars for tickets purchased anywhere other than through the LHG websites, service centers and airport ticket counters beginning on September 1, 2015. Other airline CEOs on the panel indicated their agreement with the LHG commercial strategy after which an audience poll was conducted among 118 airline executives – 96 said they “might make a similar move.”

Three months before surcharge implementation, LHG had secured the moral support of its competitors, and those competitors witnessed broad enthusiasm among their peers. LHG had the confidence to proceed with implementation with strong assurance that its competitors were supportive. For example, the publication Buying Business Travel reported on June 29, 2015, “Air Astana CEO Peter Foster is in ‘no doubt’ other airlines will follow Lufthansa in charging a fee for non-direct bookings.

The Senator’s letter stated, “Lufthansa’s conduct, encouraging competitors collectively representing the vast majority of the market to follow Lufthansa’s lead in raising prices, raises the question of whether they have run afoul of the Sherman Act.” The Senators continued, “The Federal Trade Commission has interpreted section 5 of the FTC Act to prohibit invitations to collude and has found a reason to believe that an invitation to collude has occurred based on public statements. Based on the facts in public record, it appears that Mr. Spohr may have engaged in an invitation to collude.”

“Since the major EU and U.S. airlines have secured their antitrust immunized global alliances they have waged highly coordinated scorched-earth campaigns to block foreign carrier new entry into their respective markets,” stated BTC founder Kevin Mitchell. “Now that the U.S. airline industry has radically consolidated, it is strongly suspected that airlines tacitly coordinated to limit seat capacity growth and to quietly introduce fare rule changes that can easily triple the price of multi-city tickets,” added Mitchell.

The U.S. Department of Justice is investigating these potential illegal activities and can now add the telegraphing of future business intentions to the list. BTC and AirChannelChoice.travel members urge Secretary Foxx and Attorney General Lynch to investigate this matter thoroughly and to put LHG’s competitors on fresh notice that collusion is an illegal business practice.

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Read the Senator’s letter at http://btcnews.co/1t8M4X5.

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