American Airlines has agreed to pay $45 million to settle a three-year-old lawsuit accusing four domestic carriers of collusion and anti-trust practices.
The suit claims American, Delta, Southwest and United illegally signaled to one other information about managing capacity in order to keep airfares elevated, despite stagnant demand and decreasing fuel costs.
A spokesperson for American, Matt Miller said the airline was admitting to no wrongdoing in settling the case, according to Bloomberg. In fact, he said, the airline "dramatically increased" capacity during the time period in question, while fares fell to near all-time lows.
"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," Miller said. "So while it is difficult to agree to a settlement when we believe we were right on the law and the facts, settling this case is a prudent decision for American."
In The issue came to light in June 2015, when U.S. Senator Richard Blumenthal (D-Conn.) filed a complaint with the Department of Justice (DOJ), asking the agency to investigate anti-competitive behavior after the New York Times reported on a meeting of the International Air Transport Association (IATA), in which numerous airline executives used near-identical language when discussing their approach to a "disciplined capacity" strategy.
In July the DOJ announced it was looking into "possible unlawful coordination by some airlines."
Meanwhile, various non-governmental consumer groups filed anti-trust lawsuits in federal courts throughout the nation. Eventually, these consumer cases were consolidated before U.S. District Judge Colleen Kollar-Kotelly in Washington.
By 2017, the DOJ was reportedly taking "a step back" from its investigation in 2017, as rumors flew that the agency couldn't find enough evidence to support the investigation.
American is the second airline to enter into a settlement agreement in the case. In January 2018, Southwest agreed to pay $15 million in the case.
The airline also asserts it never broke the law but settled in order to avoid "the considerable time, expense and inconvenience" of continued litigation.
While Judge Kollar-Kotelly has given preliminary approval to the Southwest agreement, consumers were given a grace period to object, and the agreement remains pending.
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