Southwest Airlines Settles Suit but Denies Colluding to Keep Ticket Prices High
Posted January 6, 2018 2:18 p.m. EST
A federal judge has approved a $15 million settlement between Southwest Airlines and members of a class-action lawsuit who allege that the company, along with three other airlines, conspired to limit the number of seats available to customers and keep ticket prices high.
In a statement, Southwest said the settlement “does not constitute any admission of wrongdoing” and denied having entered into any unlawful agreements with its competitors.
The move appeared to represent a break of sorts between Southwest and the other three defendants named in the lawsuit: American Airlines, Delta Air Lines and United Airlines. Those companies have also denied doing anything illegal, and they continue to fight the allegations.
As part of the agreement preliminarily approved Wednesday, Southwest agreed to make the $15 million cash payment and also to provide what court documents called “extensive cooperation.” Those cooperative efforts, according to the court documents, will include a “full account of facts” relevant to the plaintiffs’ case as well as a series of informational meetings and interviews with industry experts and Southwest employees facilitated by the company.
“We’re entering into this settlement to avoid considerable distraction and expense of protracted class-action litigation,” Southwest said in a statement. “For decades, we have consistently set our capacity planning with a goal of offering our lowest fares.”
The company did not immediately respond to specific questions about why it decided to provide information to the plaintiffs and whether that information would damage the other defendants.
In their lawsuit, the plaintiffs allege that a conspiracy began in 2009. They argue that since then, the cost of airfare with Southwest, American, Delta and United — which they say collectively controls about 80 percent of domestic passenger seats — “rose substantially compared to those of other domestic air carriers, despite stagnant or decreasing demand and declines in the cost of jet fuel.”
The plaintiffs say airline officials repeatedly assured one another on earnings calls and at conferences that exercising “capacity discipline” was good for the industry. And as a result, the lawsuit said, “Passengers have been injured by paying higher airfares and facing reduced flight choices.”
“The conduct at issue constitutes a violation of federal antitrust laws,” it continued.
A spokesman for American Airlines said Friday that Southwest’s settlement had not changed its position.
“We will continue to defend against the claims which we believe are without merit,” the spokesman, Matt Miller, said. United issued a statement that echoed those sentiments almost verbatim.
Delta said it had not engaged in any illegal behavior, adding, “The assertion that our success is due to anything more than the hard work of our people is not only ridiculous, it is offensive.”
None of the airlines answered specific questions about whether Southwest’s pledge of “extensive cooperation” merited their concern.
Citing media reports, court documents say that the Justice Department began investigating “possible unlawful coordination” between airlines in 2015.
About a week before President Donald Trump took office last January, The Wall Street Journal reported that despite a lengthy inquiry, Obama-era Justice Department officials had not found enough evidence to bring an antitrust case against the airline industry. The Journal reported at the time that the case had not been formally closed, but that the odds of one materializing were minimal.
The Justice Department did not immediately respond to a request for comment Friday night.