Southwest Airlines Just Paid $15 Million to Settle a Lawsuit Accusing Them of Price Gouging
The airline denies any wrongdoing.
Southwest Airlines has settled a collusion lawsuit for $15 million.
The latter three airlines have also denied wrongdoing and have vowed to continue fighting the lawsuit, while Southwest has agreed to cooperate in the case against the other three airlines.
“While we have always had full confidence in our ability to prevail in this case, we believe this decision is in the best interest of our company, employees and shareholders by allowing us to return our focus on doing what we do best — providing friendly, reliable, and low-cost service to our customers,” Southwest said in a statement on Wednesday.
The lawsuit combines more than 100 private suits filed across the country, Reuters reported. The suits allege that the four airlines had worked together to keep prices high by reducing capacity and raising bag fees starting in 2009 when fuel prices were low.
American, Delta, Southwest and United together accounted for nearly 70 percent of the U.S. domestic air traffic market in the period from from October 2016 to September 2017, according to government data.
Collusion in this case essentially means that the airlines are accused of violating the antitrust laws that aim to prevent a single entity or a small group of companies from dominating a market and taking power away from the consumer.
Airline collusion would be objectively bad for passengers, as it reduces competition and gives large corporations the power to determine fares using knowledge of each other's strategies. Collusion is also extremely difficult to prove, short of records demonstrating that airline executives were discussing their plans with each other or promising other airlines to raise or lower their own fares.