Southwest to Pay $15 Million in Price-Fixing Lawsuit
Southwest Airlines has agreed to pay $15 million to flyers who claim that the airline and three of its competitors illegally teamed up to keep airfares high. Despite the settlement, Southwest maintains that it's innocent of the accusations.
Once a Washington, DC, federal judge gave her preliminary OK to the settlement agreement on Jan. 3, Southwest became the first of the four airlines named in the class-action suit to agree to cooperate with the plaintiffs against the others — Delta, American and United. Those three have also denied that they reduced the number of available seats in order to keep the prices of those seats artificially high.
A final approval is expected in a few months.
According to the plaintiffs, the airlines entered into a conspiracy in 2009, using their clout (together, they control about three-quarters of the domestic market) to gouge customers while offering them fewer choices in seats and routes. Airline executives allegedly couched their shared price-fixing strategy in terms like "capacity discipline."
Southwest said in a statement that it only agreed to settle to "avoid considerable distraction and expense of protracted class-action litigation," but the terms of the agreement mean that it will help the plaintiffs' with their case against the remaining airlines, including letting key Southwest employees be interviewed and providing a "full account of facts."
Spokespeople for American, Delta and United said the Southwest settlement didn't affect their plans to fight the lawsuit.