Six major airlines have agreed to settle price-fixing allegations that they used a central ticket information system to raise fares as much as $1.9 billion, the Justice Department said Thursday.
The airlines agreed to implement a new fare system that would bar them from offering new fares available only at a future date, the Justice Department said. The department said that once a fare is posted in the centralized computer system, the airlines must immediately begin selling tickets at that price.The carriers that signed the consent decree were: American, Delta, Northwest, Continental, Trans World and Alaska Airlines. The consent decree, filed in federal court here, was also signed by the Airline Tariff Publishing Co., which the Justice Department said airlines used to signal fare increases.
Two other airlines, United and USAir, had entered into a consent decree in December 1992 after the Justice Department first filed the lawsuit against all eight carriers.
In the lawsuit, the Justice Department had alleged that the airlines had used the centralized fare information system to signal price increases. The Justice Department said the carriers used the system "to conduct a detailed electronic dialogue to raise prices and eliminate discounts."
The Justice Department's antitrust division charged that airline carriers had used the system to raise fares by as much as half a billion dollars between 1988 and 1992.
Airline Tariff Publishing Co., known as ATP, is a computerized fare information system owned by the airlines.
Airlines would post fare increases as trial balloons, then adjust the ticket prices after receiving counterproposals from their competitors, the Justice Department said.
"The airlines used the ATP fare dissemination system to carry on conversations just as direct and detailed as those traditionally conducted by conspirators over the telephone or in hotel rooms," Assistant Attorney General Anne K. Bingman, said in a statement. "Although their method was novel, their conduct amounted to price fixing, plain and simple."
The consent decree bars airlines from posting fares with a "first ticket date," at which tickets would be sold at that price. The posting of fares in advance of their availability to consumers would enable competitors to "signal their intentions either to challenge or accept the fare increase, or propose modifications and linkages."
The consent decree requires that once a fare is posted in the computer system it must be available for immediate purchase by consumers, the Justice Department said.
It also bars airlines from withdrawing changes in fares once posted in the computer.
The Justice Department said that as a result of the price fixing, passengers paid as much as $138 more for a trip between Dallas and Chicago.
In one instance, airlines agreed to raise discount one-way fares by $20, the department said.
The proposed consent decree must be approved by a federal judge before it becomes final.
In a statement, Attorney General Janet Reno said the Justice Department "is determined to challenge price fixing or other anti-competitive conduct no mater how sophisticated the tools or technology employed."