Southwest Airlines Wants Out of Price-Fixing MDL

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Southwest Airlines continues to seek a way out of a massive antitrust multidistrict litigation alleging it and other airlines colluded to fix airfares.

In July, the airline submitted a supplemental reply supporting its motion to dismiss the plaintiffs’ claims against it.

Plaintiffs in the price-fixing antitrust MDL allege that Southwest and several other airlines colluded to control ticket prices by limiting the number of available flights.

Such a price-fixing scheme violates the federal Sherman Act, the plaintiffs argue.

Southwest Airlines contends that its business model is fundamentally different from those of other airlines in a way that precludes Southwest from plotting with them in a price-fixing scheme.

Southwest points out that it “flies a single type of jet; flies its planes in a different type of route system; sells the vast majority of its tickets only through its own direct-sales channel; and offers customers all-inclusive fares in a single class of service” (footnotes omitted).

With this simpler, lower-cost structure, Southwest Airlines says it has fewer ways to fine-tune capacity compared to traditional network carriers. The airline argues it therefore could not coordinate its capacity with other carriers in the way that would be required to establish a conspiracy.

Far from resembling anti-competitive behavior, Southwest Airlines argues, its business strategy has been recognized by U.S. antitrust enforcement authorities as “a competitive, disruptive force in the airline transportation market.”

The airline claims the Department of Justice approved a 2013 merger between American Airlines and US Airways partly because of Southwest Airlines’ presence in the market as “an aggressive rival that would compete with the merged airline and other carriers.”

“Plaintiffs do not allege facts suggesting that Southwest took some action plausibly reflecting a shared objective in common with any other airline,” the Southwest Airlines motion said.

The current MDL is a consolidation of 23 separate antitrust class action lawsuits that raise similar or related allegations. It was created in October 2015 when the federal Judicial Panel on Multidistrict Litigation transferred these actions to a single federal court in Washington, D.C.

Besides Southwest Airlines, these actions also name as defendants Delta Airlines, United Airlines, American Airlines and many others.

The plaintiffs allege that these airlines all purposely dropped their carrying capacity in recent years, in an effort to drive up prices by decreasing supply. In their communications with each other, the airlines allegedly used the term “capacity discipline” as a sort of code word to refer to the practice.

The plaintiffs are represented by co-lead interim class counsel Michael Hausfeld, Hilary K. Scherrer, Jeannine Kenney, Michael P. Lehmann and Bonny E. Sweeney of Hausfeld LLP and Steven N. Williams, Adam J. Zapala and Elizabeth Tran of Cotchett Pitre & McCarthy LLP.

The Airline Price-Fixing Class Action Lawsuit MDL is In re: Domestic Airline Travel Antitrust Litigation, MDL No. 2656, in the U.S. District Court for the District of Columbia.

UPDATE: On Oct. 28, 2016, four of the largest airlines in the U.S. lost their bid to dismiss a nationwide antitrust litigation alleging they conspired to fix ticket prices by artificially limiting the number of seats available for travelers.

UPDATE 2: On Dec. 29, 2017, Southwest Airlines reached a $15 million settlement resolving claims that it conspired with other airlines to raise ticket prices.

UPDATE 3: On June 15, 2018, American Airlines agreed to pay $45 million to settle the price-fixing claims against them.

UPDATE 4: March 2019, a website has been established for consumers who purchased a domestic airline ticket on American, Delta, Southwest, United, Continental, or US Airways to find out about a pending class action lawsuit. Click here to learn more.