New York Senator Charles Schumer has called for a federal investigation into airlines refusing to provide flight information to OTAs, such as Expedia, TripAdvisor and Orbitz, the New York Post reports.
The move follows the early July announcement that the U.S. Department of Justice would investigate whether or not U.S. airlines are coordinating the supply of seats in order to influence airfares. Sen. Schumer is now calling for that investigation to be expanded to include the practice of not providing OTAs with flight information, which he says could cost travelers as much as $6 billion in higher airfares annually.
"The ability to bargain shop on these websites…is facing some serious turbulence," Sen. Schumer told the Post. "If we do nothing they might be gone in a year or two."
Airlines for America spokesperson Jean Medina responded, "Airlines like any other company that sells consumer goods, should be able to sell their products where they believe they are best suited for their customers. Eliminating a third-party channel isn’t going to change the wide-aperture nature of airline distribution."
This isn't the first time Sen. Schumer has criticized airline policies. Earlier this summer he called on airlines to scrap a controversial proposal aimed at reducing the size of carry-on luggage. The "IATA Cabin OK" initiative was a voluntary, opt-in plan aimed at getting International Air Transport Association (IATA) members to agree on an optimum size of 55 x 35 x 20 cm (or 21.5 x 13.5 x 7.5 inches) for carry-on bags, a move the IATA argued would help to make sure every passenger has space in the overhead bin. Sen. Schumer (and some travel agents) said the move was aimed at driving revenue through more checked bag fees. IATA Cabin OK has since been put on hold.
Back in 2013, Sen. Schumer asked airlines to reverse a then-new policy that increased change fees to $200 per ticket, following a few weeks in which four major U.S. airlines had increased change fees from $150 to $200.
Antitrust Investigation
The current federal antitrust probe is investigating alleged coordination of seat supply to influence airfares among U.S. airlines, a move that industry experts say faces some tough challenges in moving forward. An analysis by Scott Mayerowitz of the Associated Press noted that that government would have to prove that the airlines were "deliberately signaling business decisions to each other."
Similar antitrust investigations in the past have relied "smoking gun" testimony, such as a recording of a call in a 1982 investigation between Robert Crandall, then a senior executive at American Airlines, and Howard Putnam, then-CEO of Braniff Airways. During that call, Crandall said, "Yes. I have a suggestion for you. Raise your goddamn fares 20 percent. I'll raise mine the next morning."
While airline executives and Wall Street analysts have been open about discussing the need to restrict passenger capacity in recent years, according to the AP analysis, it remains unclear whether any airline crossed the line into illegal activity.
The federal antitrust investigation has since spawned a number of class-action lawsuits seeking damages on behalf of passengers harmed by the alleged collusion with higher airfares.
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