US probing possible airline collusion to keep fares high

WASHINGTON (AP) — The U.S. government is investigating possible collusion among major airlines to limit available seats, which keeps airfares high, according to a document obtained by The Associated Press.

The civil antitrust investigation by the Justice Department appears to focus on whether airlines illegally signaled to each other how quickly they would add new flights, routes and extra seats.

A letter received Tuesday by major U.S. carriers demands copies of all communications the airlines had with each other, Wall Street analysts and major shareholders about their plans for passenger-carrying capacity, or "the undesirability of your company or any other airline increasing capacity."

On a day when the overall stock market was up, stocks of the major U.S. airlines ended the day down 1 to 3 percent on news of the investigation.

The department had tried to block the most recent merger, the 2013 joining of Fort Worth, Texas-based American Airlines and US Airways, but ultimately agreed to let it proceed after the airlines made minor concessions.

Cheap fuel has led airlines to make money-losing decisions in the past, rapidly expanding, launching new routes and setting unrealistically low fares to lure passengers.

Airline stocks plunged in May after the chief financial officer of Dallas-based Southwest said at an industry event that the carrier would increase passenger-carrying capacity by 7 to 8 percent, an increase over an earlier target.

Wolfe Research analyst Hunter Keay, who hosted that May 19 conference, told investors in a note afterward that the big airlines are unhappy to be restraining growth while low-cost airlines like Spirit grow much faster.