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June 23, 2006

Airlines Investigated for Price Fixing

British and US authorities have launched an investigation into possible price fixing for flights across the Atlantic.  British Airways seems to be the main target of the probe, but American Airlines has received a subpoena, while United and Virgin both said they're cooperating with authorities.  These 4 airlines all fly from the US into London Heathrow.  The investigation is looking into whether airlines colluded on fuel surcharges, which have now reached GBP35 ($65).  If you've ever wondered how it happened that airlines were charging the exact same amount for fuel surcharges at the exact same time, this may help answer that question.

June 23, 2006 | Permalink: Airlines Investigated for Price Fixing


While the competitive situation at LHR is deplorable (the British gov't itself has essentially set up a cartel), the fact that all the airlines charge the same fuel charges is scant evidence of collusion. With access to real-time pricing, airlines often (indeed, usually) charge the same fares. I'll be surprised if the airlines were actually talking to each other about fares because it would be so incredibly stupid. With so few competitors (and all of them traditional legacy carriers), they could easily accomplish the same thing by simply posting their fares/surcharges and waiting for their "competitors" to match.

: iahphx at Jun 23, 2006 11:27:30 AM

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