Airlines Used Mergers as an Excuse to Hike Up Ticket Prices
The U.S. airline industry used mergers to hike up ticket prices, a new report from ProPublica found.
The report, published Tuesday, delves into the political dealings behind the 2013 American Airlines and US Airways merger, suggesting that those against the combination of airline companies faced tremendous pressure while trying to block the deal.
Staff attorneys with the Justice Department who had built a case against the merger had documents showing airline executives bragging about how the mergers allowed them to jack up prices for travelers.
“Three successful fare increases—[we were] able to pass along to customers because of consolidation,” Scott Kirby, who would become the president of the new American Airlines, wrote in a 2010 internal company presentation.
While it is difficult to prove the price increases are a direct result of the merger, other concerns voiced by government investigators are now playing out among American Airlines, ProPublica reported.
For example, although U.S. airlines profited with nearly $26 billion in 2015 after fuel fare went down by 4% in 2015, the airline industry has kept most of the savings for itself. American Airlines has also increased prices on the planes. While in 2013, seats in the so-called Main Cabin Extra cost an extra $8 to $159, now the same seats cost additional $20 to $280.
American Airlines maintained the merger “delivered significant benefits to customers, employees and communities,” according to a statement provided to ProPublica. The airline said it has upgraded its fleet and is investing $3 billion to improve customer experience.