Word: antitrusters
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Frustrated flyers who insist that air travel is more costly, crowded and chaotic than ever won a powerful ally last week: the U.S. Justice Department. In an antitrust suit that stunned major U.S. carriers, Justice accused No. 2, American Airlines, of driving three small discount rivals out of Dallas-Fort Worth International Airport. Trustbusters said American flooded routes served by upstarts Vanguard, Sun Jet and Western Pacific with its own new flights and illegally slashed fares below the cost of providing the seats--a practice known as predatory pricing. American, which carries 77% of all passengers who fly nonstop from...
...suit--unveiled by Attorney General Janet Reno and antitrust chief Joel Klein--was the first to target alleged abuses at so-called fortress hub airports created by carriers like American after Congress deregulated the airlines in 1978. While consumer advocates welcomed the suit, legal experts said it would be tough for Justice to prove predatory pricing. "We didn't undercut," argues American spokesman Chris Chiames. "We matched fares set by others and added seats when the demand went...
This announcement is for airline bosses sitting in the first class section: Fasten your seat belts -- you are about to encounter turbulence. Yes, on Thursday Attorney General Janet Reno announced the launching of a major antitrust suit against American Airlines. The charge: predatory practices by American at its Dallas-Fort Worth hub -- such as the calculated use of lower fares and more flights -- to push out start-up airlines. "This is the first major action of its kind since deregulation of the industry in 1978," says TIME senior business writer John Greenwald. And together with the department?s announcement that...
...used deregulation to concentrate their power around key travel hubs, which they then use to chase out competitors and raise prices. "Justice?s move squarely addresses one of the major tactics large carriers have used to create fortress hubs," says Greenwald. It is also another indication that the resurgent antitrust division, under the activist leadership of Joel Klein, is determined to have an impact on the conduct of the nation?s business. Though the division has been tolerant of most mergers, says Greenwald, "it has been wary of large amounts of power once they exist and has gone after what...
WASHINGTON: Like calling in the cat to get rid of the mouse, federal antitrust regulators are pleased with at least one aspect of AT&T's new role as the Cable Guy -- AT&T will be using its cable lines to provide local phone service, creating needed competition for its old kin, the Baby Bells. But regulators are worried about how to bell the cat. "Overnight, AT&T has not only become the No. 1 cable company but also the de facto standard-bearer for the future of telecom," says TIME senior economics reporter Bernard Baumhol. "They...