5 Airlines Being Investigated For Alleged Price Gouging Following Deadly Amtrak Derailment
NEW YORK (CBSNewYork/AP) -- The federal government has launched an investigation into reported price gouging by five airlines that allegedly raised airfares in the Northeast following a deadly New York City-bound Amtrak train derailment that disrupted rail service.
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.
5 Airlines Being Investigated For Alleged Price Gouging Following Deadly Amtrak Derailment
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.
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.''
"We had sufficient information to be concerned about it, I'll just put it that way," Transportation Secretary, Anthony Foxx said.
Airfare Watch Dog, George Hobica said that if airlines price-gouged during a crisis they should be investigated.
"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."
Connecticut Sen. Chris Murphy said he heard nightmare travel stories.
"We started seeing reports of airline tickets going through the roof, sometimes in excess of $2,000," he told Haskell.
So Murphy asked the feds to look into the reports.
"Well, I hope that the DOT does a thorough investigation," Murphy said.
The lack of access and options were a huge deal for many who rely on Amtrak in the Northeast.
"When the corridor shuts down, it really is a crisis for a lot of people that I represent in Connecticut," Murphy said.
The senator did however note that some airlines "self-corrected after I initially expressed concern.''
"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. The airline said it also honored existing tickets for travel between Washington, Boston and New York, waived change fees for travel on Delta Shuttle flights between those markets, and increased seat capacity in the region by adding flights and operating larger aircraft.
American said it added capacity and its fare structure remained the same after the crash. United, JetBlue and Southwest said they are cooperating with the investigation.
Murphy said he hopes the fare increases were generated by computer programs and not collusion, Haskell reported.
Eight people were killed and about 200 were injured in the Amtrak crash in Philadelphia.
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.
In the last few seconds the brakes were applied with maximum force, but the train was still traveling at over 100 mph when it left the tracks.
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