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U.S. to investigate airlines for price gouging after Amtrak crash

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The U.S. Transportation Department is investigating five of the nation’s largest airlines for potential price gouging in the aftermath of May’s deadly Amtrak crash, the agency said Friday.

The department on Friday sent letters to American Airlines, Delta, JetBlue, Southwest and United asking for information about what they charged customers in the weeks after the crash, when Amtrak service in the Northeast was disrupted.

The Transportation Department, which regulates the airline industry, says travelers complained about “irregular fares.”

When contacted, the airlines said they were cooperating with investigators. American Airlines, Delta and United denied wrongdoing, saying they didn’t raise prices.

In the days after the Amtrak crash, some airlines said they would add flights or fly bigger planes to meet the surging demand, but tickets were selling for upwards of $1,000.

“The idea that any business would seek to take advantage of stranded rail passengers in the wake of such a tragic event is unacceptable,” Transportation Secretary Anthony Foxx said in a statement. “This department takes all allegations of airline price-gouging seriously, and we will pursue a thorough investigation of these consumer complaints.”

The announcement marks a shift for the Transportation Department, which has had fairly limited oversight over the prices airlines can charge since the industry was deregulated in the 1970s. The department can penalize airlines for activity it finds unfair or deceptive.

“We have not investigated an airline for this type of conduct in at least the last 12 years, if ever,” a department spokeswoman said in an email.

The investigation was prompted in part by a letter from Sen. Chris Murphy (D-Conn.), who in May asked federal authorities to look into reports of unusually high fares after constituents who travel by train complained that they couldn’t afford a ticket.

In an interview, Murphy said he didn’t think the airlines purposefully raised prices, but that the airlines’ computer systems reacted to a fast-rising demand.

“I’m not suggesting that there was some executive sitting in a room twiddling his thumbs, hoping to make millions of dollars off of a tragedy, but this won’t be the last time that the Northeast rail corridor will shut down for a handful of days,” Murphy said. “To the extent that their technology by default runs up prices when there’s spikes in demand, I want them to pay attention to what’s causing that demand.”

The investigation includes flights between 11 airports between Washington and Boston, including six of the nation’s 20 busiest, according to the department’s request.

The prices paid by travelers forced to make last-minute accommodations were likely exacerbated by a cardinal rule of buying a place ticket, said Charlie Leocha, founder of the consumer advocacy group Travelers United: Booking late almost always costs more.

The case highlights the complicated, and sometimes baffling systems airlines use to set prices. Experts say airfare often has little to do with the price of flying a plane and far more to do with demand. That’s why a cross-country flight filled with budget-conscious tourists might cost less than a regional flight full of business travelers with expense accounts.

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Last month, the Justice Department launched an investigation into whether airlines colluded to offer fewer flights and keep prices high. That investigation covered American Airlines, Delta, Southwest and United, which combined account for about 80 percent of all U.S. air travel.