Delta Stock

Did anybody see Delta Airlines stock tank today? down 11% Probably because of this lawsuit.

http://www.courthousenews.com/2009/05/27/Class_Claims_Airlines_Colluded_in_Bag_Fee.htm

Class Claims Airlines Colluded in Bag Fee


By JACQUELINE J. HOLNESS
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ATLANTA (CN) - A federal class action claims Delta Air Lines and AirTran Airways colluded to charge first-bag fees. Both airlines, which are each other's principal competitors, began charging a $15 first bag fee in fall 2008.
Before then, "competition between Delta and AirTran prevented either airline from charging a first-bag fee for fear of losing sales to the other," say named plaintiffs Brent Avery and David Watson.
Earlier that year, Delta Air Lines acquired Northwest Airlines, which charges a $15 first-bag fee. Delta then was asked whether it would charge a fee as well to match Northwest's practices. "Considering that AirTran did not impose a similar fee on consumers, Delta stated that it had 'no plans' to charge consumers a first bag fee,'" according to the complaint.
But the class claims "an agreement between the two airlines was reached in the fall of 2008, after AirTran offered, and Delta accepted, an invitation to collude."
The invitation allegedly was extended during an AirTran conference call. AirTran's CEO Robert Fornaro "stated that AirTran wanted to implement a firs- bag fee, that AirTran had invested in the technological capability to quickly implement the fee and that AirTran would implement the fee if Delta acted first," the complaint states.
Nine days later Delta issued a press release, stating the fee would be implemented. The next day, AirTran "issued a public statement that reassured Delta that AirTran would follow through on its promise to match Delta's fee," according to the complaint.
AirTran Holdings is also named as a defendant in this case. The plaintiffs are represented by Cale Conley with Conley Griggs.



What does collude actually mean? I know that the airlines can't act like a cartel and conspire before hand to raise prices or enact fees, but I have never heard the word collude used before.

What do they want and how are they deserving of money because of this?

The airlines would have started a first-bag fee anyway, that announcement probably just provided perfect timing for Delta to know that AirTran would indeed follow it.

If the people don't want to pay a first-bag fee then go find an airline that doesn't have one. They don't fly into ATL so why don't they drive on down to BHM in the meantime, like many do.

Collusion is illegal and it just means they privately agreed on policy. The problem is, colluding on a bag fee is just like colluding on ticket fares or other pricing schemes: it leaves the consumer with no free choice!

It was beyond inevitable that the bag fee was on it's way.

If their argument was that collusion expedited the arrival of the fee then fine, but not that it created the fee.

I wonder how much money they want an airline to pay them for this.

Go ride the damn bus.

Cheese and Rice.

Related thought

More and more I am inclined to favor partial regulation in this airline industry.

In one sector we have people shocked and awed about the pay of the pilots at a company that just had a crash, and surprised to learn that the pay is not rare in that section of the airline industry.

They complain that safety is not put first and that they pilots should be paid more. They want better training for the crews, better airplanes, bigger airplanes, and better rest rules for the crews that fly them around.

All of those things cost money, and lots of it.

Meanwhile people are trying to sue an airline for implementing a bag fee after it found out it's competitor would probably follow in it's footsteps if it did so. The fee would be an attempt at scrounging up some extra money to pay for leftover losses from record fuel prices and all the stuff that the same consumers want to paragraphs above this one. All the while airlines are being created that will undercut them, so their endless pursuit for safety while remaining competitive is a very steep uphill battle.

If a standard bag fee schedule was created this would not be the case. I'm becoming more of a fan for re-regulation, perhaps not in the same way it used to be but some kind of it would help the situation. I'm all for free market capitalism but this seems to be a different animal.

Raise ticket prices... O wait... it may then technically cost more to fly somewhere in an hour instead of it costing MORE to ride a bus for a day to go the same distance....
:banghead:

I think that Barron's did a piece on Delta and actually said that if you're going to invest in an airline, that's the one.

I wouldn't really look into it. All the airlines were down +5% today and the market was down. Going down .69 isn't "tanking"....

Now.. if you call tanking. (albeit, the whole industry this past year).. But i seem to recall SWA and CAL being in the twenties this time last year... and now its 6.60 and 8.69 for those metal mainliners.

So has practically the whole market with a few exceptions....

Not that my DL stock was worth that much last week anyway anic: