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TravelPulse founder and CEO Mark Murphy appeared on Fox Business Network's Risk and Reward Friday in the wake of another U.S. government airline investigation announcement. A Department of Justice probe is already underway to determine whether the country's major carriers colluded to limit the number of available seats, which would drive up costs for fliers. And just announced on Friday is an investigation by the Department of Transportation into whether the five major airlines engaged in price gouging after the Philadelphia Amtrak crash in May.
Fox Business Network anchor Gerri Willis cited airfares for flights between New York and Washington as evidence to support the DOT's claims. Before the derailment, Prices were between $500 and $550. Right after, fliers were seeing such fares as $700, $1,100 and $1,700.
But Murphy asserted this wasn't gouging.
"It's called supply and demand," he said. "So, what happened was a lot of these routes have very few seats, so therefore, those few seats that were left got taken, and then those remaining seats shot through the roof, because they do 'yield management,' and they basically price the last few seats at the highest possible price that someone will actually pay. And they're very smart about how they do that."
Addressing the collusion investigation, Willis commented that the DOJ "say they have all kinds of data, all kinds of information, even public statements by executives at these airlines…"
Where the DOJ sees possible collusion, Murphy sees actions that are good for business. "They say that they're colluding. How? Because they're going to put a cap on the number of seats they put out there, so that they don't have too many seats, and therefore have the same cycle where it's boom and bust in the airline industry?"
Murphy also pointed out that the government itself is responsible for the current conglomeration of major domestic airlines. "Keep in mind, this same government … approved the mergers that went through, that have now consolidated the airline travel in this country to four major carriers for 85 percent of all flights."
You can view Murphy's appearance on Fox Business Risk and Reward below:
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