American Airlines will pay $US45 million to exit a consumer lawsuit accusing it of colluding with other US airlines to limit the number of seats and drive up prices.
It follows a move in January by Southwest Airlines to pay $US15 million in the nationwide antitrust litigation by passengers. Both airlines have promised to cooperate in the litigation, which remains active against United Airlines and Delta Air Lines.
All four carriers have denied any wrongdoing and both Southwest and American cited the high cost of litigation as the prime reason for reaching a settlement.
Th passenger litigation combined more than 100 lawsuits and claimed the collusion began in early 2009.
It alleged it led to higher fares and reduced flight choices at a time fuel prices, a major cost for airlines, were declining and ancillary pricing for items such as checked baggage was boosting profits.
Executives at the airlines were accused of assuring each other about capacity discipline, limiting customer prices and deterring market entry by foreign rivals.
American told Bloomberg it has dramatically increased capacity during the period covered by the claims and fares had fallen to near all-time lows in an intensely competitive US industry.
“Despite our firm conviction in the appropriateness of our actions, costs to defend against antitrust litigation often run into the tens of millions of dollars,” spokesman Matt Miller said. “So while it is difficult to agree to a settlement when we believe we were right on the law and the facts, settling this case is a prudent decision for American.”
The settlement comes as the US Department of Transportation has sought more information on a proposed trans-Pacific alliance between American and Qantas.
Read: US seeks more information on American-Qantas alliance benefits.
The DoT has sought information on a range of issues including the specific levels of service the joint businesses would provide and the extent to which anti-trust immunity is needed to achieve these benefits.
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