Southwest Airlines agreed to pay $15 million to settle an antitrust lawsuit that charged the four largest US airlines with collusion.
The case, In re Domestic Airline Travel Antitrust Litigation, claimed that American, Delta, Southwest and United airlines conspired to keep fares unnaturally high by keeping capacity low.
Southwest denied any wrongdoing but said it agreed to settle to avoid the expense of litigation, which could last for years.
The carrier also agreed to provide “significant cooperation to Plaintiffs in pursuing their case against the non-settling Defendants,” although a Southwest spokesman said requests for cooperation “will now be more limited and targeted.”
Judge Colleen Kollar-Kotelly of the US District Court of Washington DC gave preliminary approval to the settlement, which was reached over the course of three months of “hard-fought, arm’s length transactions,” according to court papers, and said the plaintiffs will be given an opportunity to object to the settlement.
The lawsuit was filed in 2015 at a time when the term “capacity discipline” was being bandied about by airline executives as the key to profitability.
With the exception of Southwest, the carriers had little familiarity with consistent profitability; their strategies were based largely on market share. It was a strategy more to do with ego than with financial well-being.
With the Great Recession, that mindset changed. Airlines became more willing to allow their competitors to self-immolate while they charged fares that were often out of the reach of budget-conscious travelers.
But as the term “capacity discipline” was heard more often, the US government started to take notice.
So did an army of lawyers across the country who organized no fewer than 23 lawsuits against the airlines, charging that their frequent use of the term was meant to remind competitors to fall in line or face the consequences.
The lawsuits were eventually consolidated into a single case filed in the Washington court.
In response to the settlement, Delta Airlines said:
"Delta has built its business success through an unwavering commitment to its customers and employees. The assertion that our success is due to anything more than the hard work of our people is not only ridiculous, it is offensive. The simple fact is that Delta has not engaged in any illegal behavior."
United Airlines said:
"We will continue to defend ourselves against these claims, which we have always maintained are without merit."
American Airlines said:
"We will continue to defend against the claims, which we believe are without merit."