What’s DOJ looking for in the airline collusion investigation?

There is not much known right now about the US Department of Justice’s investigation into “possible unlawful coordination” on capacity planning by major US airlines. Here are three possibilities driving DOJ’s probe:

1) The smoking gun: Do DOJ lawyers have reason to believe there is evidence of emails, phone conversations or secret meetings in which, say, a top American Airlines executive and a top Delta Air Lines executive tip each other off to details of capacity planning or coordinate what they will say publicly about capacity planning? It really is hard to imagine American CEO Doug Parker, Delta CEO Richard Anderson or United Airlines CEO Jeff Smisek (or any of their top deputies) would be careless enough to engage in such behavior. But if such evidence emerged, it would present DOJ with the most clear cut path to a make a collusion case.

2) Signaling: What DOJ may believe it can make a case for is some sort of tacit collusion. This AirKarp blog post from earlier this year is worth reading again now. At the time, I was just trying to collect all of the “capacity discipline” comments from American, Delta and United executives in one place for the record. But can a case be made that, particularly with just three full-service international airlines left in the US market, these comments were improper “signals” to each other that it is OK to keep capacity down because you won’t be blindsided by a competitor surging capacity?

3) Satisfying Congress: Check out this letter US Sen. Richard Blumenthal (D-Connecticut) wrote to DOJ just a couple of weeks ago. He does not allege secret collusion, but instead argues that public quotes about capacity discipline by major, legacy North American airline executives at the IATA AGM in early June were possibly intended to pressure and scare Southwest Airlines from increasing capacity too much. The executives’ comments, he said, “may be a strategic attempt to coordinate behavior—specifically designed to encourage Wall Street to punish smaller rival airlines that have announced plans to expand capacity and cut prices.” This would be in line with the signaling case I mentioned above. However, is it possible DOJ is going through the motions of an investigation so that it can credibly tell Blumenthal and other members of Congress complaining about airfares, ancillary fees and US airline customer service that this has all been fully looked into and no collusion case can be made?