U.S. Probes Tactics of Big Airlines

Higher air fares are attracting increasing attention from federal regulators who fear large airlines are competing unfairly with smaller, cheaper carriers.

Two small airlines confirmed Thursday they had received subpoenas from the Justice Department seeking information on the behavior of large carriers at big hub airports.

Separately, the Transportation Department is close to issuing proposed guidelines against unfair competition in the airline industry.

Frontier Airlines and Reno Air confirmed receipt of civil investigative demands from the Justice Department. The Wall Street Journal reported Thursday that AirTran and Spirit Airlines had also received requests.

Justice Department spokesman Michael Gordon declined to go into the specifics of the probe but did confirm the investigation.

Prodded by complaints from the public and start-up carriers, the Transportation and Justice departments have been working together to define what constitutes unfair competition in the airline industry.

If a large airline matches a competitor’s lower fares, that’s good for the consumer and not necessarily evidence of illegal behavior.

But officials are interested in instances where a large airline swamps a market with cheap fares when a competitor arrives, only to raise them to even higher levels than before once the competitor exits.

Those who have seen the subpoenas say the Justice Department is particularly interested in markets that low-cost carriers have exited and those they have been too intimidated to serve.

The questions apply to flights to and from Chicago, Dallas, Denver, Detroit, Minneapolis and Atlanta--all hubs where a large carrier controls the majority of flights. New York’s crowded LaGuardia airport was also named.

The Justice Department’s probe started when Frontier complained early last year about the behavior of United Airlines at its Denver hub.