US can’t require airlines to be forthcoming, then penalize transparency

Delta Air Lines CEO Richard Anderson was reluctant to talk about any specifics regarding the US Department of Justice’s investigation into “possible unlawful coordination” on capacity planning by major US airlines while speaking with reporters and analysts Wednesday to discuss Delta’s second-quarter earnings. But he did bring up a point that highlights just how hard it would be for DOJ to make the case that major US airline executives’ public comments on capacity amount to collusive signaling to each other.

Anderson noted that, by law, US airlines have to be enormously forthcoming with information about their operations. Indeed, because of regulations intended to protect investors and consumers, US airlines actually can’t legally keep much to themselves.

“I think that we’re going to always be transparent with our investors,” Anderson said. “I don’t think that there’s any legal prohibition on being transparent—unilaterally that is—with our investors. And if you think about the data that’s available on airlines, our schedules are public … And under DOT regulations, we’re required to file huge amounts of data with the government in addition to all the public data that’s made available through the GDS systems. So bottom line is we’re going to continue to comply with the law, act unilaterally and do our best to give our investors visibility into our business.”

If there’s some sort of smoking gun evidence of secret communications on capacity or pricing strategy, or coordination of public comments on capacity or pricing, between top executives at two or more US airlines, then DOJ could make a collusion case. While it’s possible such evidence exists, it is hard to find someone following the US airline industry closely who believes that it does. And US airlines appear confident nothing of the sort will be found.

Instead, any collusion case would likely be made on the “signaling” front, whereby DOJ would claim public comments made by Anderson and his management team and their counterparts at American Airlines and United Airlines are improper signals to each other. But if US laws require airline executives to be extremely forthcoming, as they do, how can DOJ legitimately penalize the executives for being forthcoming?