JetBlue-Spirit trial revives DOJ claim over air-fare collusion
More than three decades ago, the US Justice Department sued the major airlines for illegally coordinating fares through a shared database that provides travel agents and related websites with schedules and ticket information. The airlines eventually settled the case and promised to avoid colluding on prices. Now antitrust enforcers say the industry is at it again. Justice Department lawyers revived their concern over illegal fare signaling during the antitrust trial to block JetBlue Airways Inc.’s $3.8b merger with Spirit Airlines Inc. The practice is known as “flashing,” when airlines alert each other to price changes by updating and then quickly canceling them on the shared system. All airlines submit fare information to the Airline Tariff Publishing Co., known as ATPCO, a database used by travel agents, distribution systems like Sabre Corp. and online price comparison websites such as those run by Expedia Group Inc. “The airlines use ATPCO to attempt to signal each other,” Gautam Gowrisankaran, an economics professor at Columbia University, said last month during the JetBlue-Spirit trial while testifying as the Justice Department’s main economic expert. “The lowering of fares might seem like it’s good for consumers, but it’s meant as a signal to the other airline. It’s meant to tell the other airline, ‘back off and raise prices.’” ATPCO and JetBlue didn’t respond to requests for comment. In the lawsuit seeking to block the Spirit deal, antitrust enforcers highlighted an instance in February 2020 when JetBlue noticed that Southwest Airlines Co. was offering a cheaper fare on flights from Boston to Baltimore. The airline “flashed” the database to point out the discrepancy and signal that Southwest should increase its prices, the Justice Department said. Evan Jarashow, JetBlue’s manager of international pricing, testified about another instance, captured in a February 2020 email, where his subordinates said they would add and then cancel a fare change in the database to try to “flash American,” which was offering lower prices than JetBlue on Boston-to-Philadelphia flights. But Jarashow denied that his team sought to send a signal on pricing and that he couldn’t recall any other instances of the practice. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-12-11/unaligned/jetblue-spirit-trial-revives-doj-claim-over-air-fare-collusion
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JetBlue-Spirit trial revives DOJ claim over air-fare collusion
More than three decades ago, the US Justice Department sued the major airlines for illegally coordinating fares through a shared database that provides travel agents and related websites with schedules and ticket information. The airlines eventually settled the case and promised to avoid colluding on prices. Now antitrust enforcers say the industry is at it again. Justice Department lawyers revived their concern over illegal fare signaling during the antitrust trial to block JetBlue Airways Inc.’s $3.8b merger with Spirit Airlines Inc. The practice is known as “flashing,” when airlines alert each other to price changes by updating and then quickly canceling them on the shared system. All airlines submit fare information to the Airline Tariff Publishing Co., known as ATPCO, a database used by travel agents, distribution systems like Sabre Corp. and online price comparison websites such as those run by Expedia Group Inc. “The airlines use ATPCO to attempt to signal each other,” Gautam Gowrisankaran, an economics professor at Columbia University, said last month during the JetBlue-Spirit trial while testifying as the Justice Department’s main economic expert. “The lowering of fares might seem like it’s good for consumers, but it’s meant as a signal to the other airline. It’s meant to tell the other airline, ‘back off and raise prices.’” ATPCO and JetBlue didn’t respond to requests for comment. In the lawsuit seeking to block the Spirit deal, antitrust enforcers highlighted an instance in February 2020 when JetBlue noticed that Southwest Airlines Co. was offering a cheaper fare on flights from Boston to Baltimore. The airline “flashed” the database to point out the discrepancy and signal that Southwest should increase its prices, the Justice Department said. Evan Jarashow, JetBlue’s manager of international pricing, testified about another instance, captured in a February 2020 email, where his subordinates said they would add and then cancel a fare change in the database to try to “flash American,” which was offering lower prices than JetBlue on Boston-to-Philadelphia flights. But Jarashow denied that his team sought to send a signal on pricing and that he couldn’t recall any other instances of the practice. <br/>
