DOJ Investigations Into the Airline Ticket Business Could Reduce Consumer Costs

[T Gold]

The DOJ's antitrust division initiated a probe of airline fare distributors.
Gina Talamona, a DOJ spokesperson, said the agency is investigating possible
anticompetitive practices in the global-distribution system (GDS) industry.

This comes on the back of US Airways (LCC) filing a claim against Sabre
alleging anticompetitive and anticonsumer practices. Sabre, owner of
Travelocity, and Travelport, owner of Orbitz Worldwide Inc. (OWW), are the
two largest U.S. GDS operators.

US Airways claimed that Sabre's distribution of airline fares and content to
travel agents shows a pattern of exclusionary conduct that prevents others
from competing with what they allege is monopoly pricing power and a
technologically-obsolete business model. Sabre responded to the complaint by
stating that the claims are baseless.

The DOJ also sent AMR Corp. (AMR)'s American Airlines, Delta Air Lines Inc.
(DAL) and US Airways Group Inc. Civil Investigative Demands in relation to
the GDS investigation. The DOJ is looking for evidence of anticompetitive
and/or anticonsumer action, including monopoly pricing power. The DOJ will
likely demand more records from other parties.

This investigation will add some legal costs that will be passed on to the
consumer, but any resulting changes to the current GDS business model should
lower prices to consumers and/or or streamline the industry. They could also
create new regulations to this already heavily regulated industry. The long
term result should likely be a net positive for consumers. Of course,
overall airline costs will continue to be more heavily affected by fuel
costs.

source:

http://seekingalpha.com/article/271717-doj-investigations-into-the-airline-ticket-business-could-reduce-consumer-costs
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