Airline Price Fixing


Domestic Air Transportation, Federal District Court, Northern District of
Georgia, Atlanta Division
, 137 FRD 677 NO GA 1991

Reportedly the largest class action ever certified in the United States, the airline price-fixing settlement involved more than 4.2 million claims filed against nine domestic airlines by passengers who purchased tickets between January 1, 1988, and June 30, 1992, for flights to or from certain hub airports.

In August 1991, Federal District Court Judge Marvin H. Shoob of Atlanta granted class-action status to the consolidated price-fixing lawsuits, partly on the basis of testimony of plaintiff's chief economic expert, John Beyer, President of Nathan Associates. Commenting on Dr. Beyer's testimony, Judge Shoob found

[the economic expert's]... extensive study and analysis is helpful to the Court in analyzing not only impact and damages ... , but also for [sic] his conclusions concerning the nature of the airline industry ... and the Court finds that he is a convincing and credible witness ... . The court agrees with Dr. Beyer's analysis of the industry.

Dr. Beyer testified during the class certification proceedings that defendants' fares and fare structures had been similar at certain hubs and in certain origin-destination pairs or city-pairs at those hubs. Therefore, a conspiracy among defendant airlines to charge higher fares would have had a common impact on all class fares and class members. He concluded that the revenue per mile or yield earned by airlines on class passenger traffic at their hubs had been higher than yields derived from corresponding passenger traffic of nondefendant competitor airlines.

In June 1992, the airlines agreed to settle under a plan that provided members of the class with coupons for discounts on future air travel. Judge Shoob approved the proposed settlement in March 1993. In March 1994, the Department of Justice settled its 1992 price-fixing case against the airline industry.

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