Price Gouging Investigation

25 Jul 2015 | Author: | No comments yet »

5 Airlines Being Investigated For Alleged Price Gouging Following Deadly Amtrak Derailment.

Five airlines are being investigated by the US Department of Transportation for price gouging desperate rail commuters after the deadly derailment of an Amtrak train in the Northeast Corridor on May 12.WASHINGTON — The Obama administration is investigating whether five U.S. airlines unfairly raised ticket prices after a fatal Amtrak wreck in May disrupted Northeast passenger rail service, Transportation Secretary Anthony Foxx said Friday. Transportation Department is investigating five of the nation’s largest airlines for potential price gouging in the aftermath of May’s deadly Amtrak crash, the agency said Friday.

On Friday, the Transportation Department sent letters to Delta, American, United, Southwest and JetBlue airlines seeking information on their prices before and after the May 12 train crash in Philadelphia. As WCBS 880’s Peter Haskell reported, Amtrak was forced to shut down key rail lines for five days following the derailment and transportation options were limited. For example, the DOT wants a spreadsheet of the average fare by market, day, and fare class for flights on routes in the corridor from April 28th to May 26th. The department is exploring whether the price hikes violated federal regulations prohibiting airlines from engaging in unfair and deceptive practices. The letters to airlines explain that generally a practice is “unfair” if it “causes or is likely to cause substantial injury to consumers,” cannot be reasonably avoided by consumers and “is not outweighed by countervailing benefits to consumer or competition.” “I’ve been tracking airfares on the route for 20 years and I’ve never seen fares that high,” Hobica said. “We saw fares that were normally $250 or $500 roundtrip skyrocket to $800, $900 or even higher.” “I was glad to see that after their $2,300 flight raised eyebrows, Delta Air Lines announced that it would make every effort to accommodate passengers affected by the service outage along Amtrak’s lines in the Northeast,” Murphy said.

Delta said in a statement that it lowered its highest shuttle prices after the train crash “by nearly 50 percent, to about $300 each way,” for travel between New York, Boston and Washington. For reasons still unknown, the train accelerated to 106 miles per hour in the minute before it entered a curve where the speed limit is 50, according to investigators. (TM and © Copyright 2015 CBS Radio Inc. and its relevant subsidiaries.

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