In a report released on Thursday from Bank of America, analyst Andrew Didora assesses how the Department of Justice’s recent antitrust investigation against U.S. airline carriers could impact the airline sector. The purpose of the DoJ’s probe is to determine whether airline carriers engaged in indirect price fixing through illegal communication of flight capacity.
Unlikely Timing
In the report, Didora comments that the timing of the investigation is unexpected, given that the DoJ performed a thorough review of the airline industry only 18 months ago prior to the American Airlines Group Inc AAL 1.79%/U.S. Airways merger. This review should have included regional capacity information from the major airlines (American, Delta Airlines, Inc. DAL 1.2%, United Continental Holdings Inc UAL 4.56% and Southwest Airlines Co LUV 1.6% since January 2010.
Currently, airline capacity is up 5 percent for July-October, with average fares down 0.4 percent year-to-date.
Scope Of The Investigation
According to the report, the DoJ’s probe appears to be…
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