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U.S. DOT Requests Information on Airline Pricing Response to Amtrak Derailment

In response to consumer complaints about irregular fares in the period after the May 12 derailment of Amtrak Northeast Regional Train Number 188 in Philadelphia, the U.S. Department of Transportation has sent an inquiry to five carriers –Delta, American, United, Southwest and JetBlue.  The letter (attached) seeks pricing information for air travel routes most likely affected by the temporary shutdown of trains along Amtrak’s Northeast Corridor.

“The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable,” said U.S. Transportation Secretary Anthony Foxx. “This Department takes all allegations of airline price-gouging seriously, and we will pursue a thorough investigation of these consumer complaints.”

The text of the letter is immediately below.


Certified Mail - Return Receipt Requested

[General Counsel]
[Airline]
[Address]

Re:  Potential Violations of 49 U.S.C. § 41712

Dear Mr./Ms.:

This letter concerns allegations of pricing irregularities on air routes that compete with Amtrak’s Northeast Corridor service in the aftermath of the derailment of Amtrak Northeast Regional Train, No. 188 (“Amtrak 188”), on May 12, 2015.[1] Specifically, we are investigating whether air carriers engaged in unfair practices (e.g., price gouging) affecting air travel during the period of time that Amtrak service along the Northeast Corridor was delayed or suspended as a result of the May 12th derailment.

Pursuant to 49 U.S.C. § 41712, the Department may investigate and decide whether an air carrier has been or is engaged in an unfair or deceptive practice in air transportation and may prohibit such conduct. Generally, a practice is unfair if it (1) causes or is likely to cause substantial injury to consumers, (2) cannot be reasonably avoided by consumers, and (3) is not outweighed by countervailing benefits to consumers or to competition.[2] In order to investigate the allegations, we require that [Airline][3] provide us with complete and accurate responses to the questions below.

  1. For each route segment served by [Airline] that is referenced in the enclosed list of routes, provide the following information in a Microsoft Excel spreadsheet format:

    a) State the average fare by market, by day, and by fare class, offered by [Airline] on each day from April 28 to May 26, 2015. Include a complete description of any and all restrictions associated with each fare class.
    b) State the number of tickets purchased by market, by day, and by fare class, on each of the dates referenced in question 1.a.
    c) State the number of passengers carried by market, by day, and by fare class, on each of the dates referenced in question 1.a.
    d) State the average fare by market, by day, and by fare class, offered by [Airline] on each day from April 29 to May 27, 2014. Include a complete description of any and all restrictions associated with each fare class during the relevant period.
  1. Provide an explanation for any increases in average fare (by market and fare class) that occurred between the period April 28 to May 11, 2015 and the period May 12 to May 26, 2015.
  1. Identify, if any, other routes that [Airline] serves whose demand and fares were affected by the derailment of Amtrak 188.
  1. State whether [Airline] made any adjustments to schedule, frequency, or equipment on the routes discussed in questions 1 and 3 following the derailment of Amtrak 188. Describe the adjustments made, if any, and explain the reasons for the adjustments.
  1. State whether [Airline] made any adjustments or exceptions, whether temporary or permanent, to the carrier’s pricing structure or change, cancellation, or refund policies following the derailment of Amtrak 188. Describe the adjustments or exceptions, if any, and explain the reasons for the adjustments or exceptions.
  1. State whether [Airline] made any adjustments or exceptions, whether temporary or permanent, to the carrier’s frequent flyer program, including mileage accrual or redemption policies and availability, or membership benefits policies, following the derailment of Amtrak 188. Describe the adjustments or exceptions, if any, and explain the reasons for the adjustments or exceptions.
  1. State whether [Ailrine], through its management, agents, or counsel, ever initiated or participated in a conversation with another air carrier about passenger demand, fares, flight frequencies, or equipment, in relation to the derailment of Amtrak 188.  Provide a description of these conversations, if any.
  1. State whether [Airline], through its management, agents, or counsel, communicated in writing with any other air carrier regarding the derailment of Amtrak 188.  Provide a copy of these communications, if any.
  1. State whether [Airline] received any consumer complaints about Delta’s price for flights on routes affected by the derailment of Amtrak 188 during the period May 12 to 18, 2015. Provide a copy of these complaints, if any.
  1. Provide [Airline's] revenue forecasts as of 12:00 p.m. on May 11, 2015, by day for the period May 12 to 26, 2015, for each market listed in the enclosed list of routes for which [Airline] offers service.

We request that [Airline] provide any other information that it believes should be taken into account in our investigation of this matter.  We ask that this information be provided within 30 days of the date of this letter. If you have any questions about this matter, please do not hesitate to contact Ryan Patanaphan, Trial Attorney, or Kimberly Graber, Chief, Consumer Protection and Competition Law Branch, at (202) 366-9342. 

Sincerely,

[Signature]

Blane Workie
Assistant General Counsel
Aviation Enforcement and Proceedings


[1]  See letter from Senator Christopher S. Murphy, dated May 19, 2015.  A copy is enclosed.

[2]  The statute providing the Department authority to regulate unfair and deceptive practices, 49 U.S.C. § 41712, is modeled after Section 5 of the FTC Act, 15 U.S.C. § 45; see e.g., EPIC v. Northwest Airlines, DOT Order 2004-9-13 (noting that the Federal Trade Commission Act, 15 U.S.C. § 45, served as a model for 49 U.S.C. § 41712).  In analyzing whether a practice of a carrier or ticket agent action is unfair, we use a standard similar to the Federal Trade Commission’s standard for unfairness.  See http://www.ftc.gov/public-statements/1980/12/ftc-policy-statement-unfair....

[3]  When referenced in this letter, “[Airline]” refers to [Airline] and any subsidiaries affiliated with [Airline].

Friday, July 24, 2015
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