Economic and Financial Consulting and Expert Testimony
Spirit Airlines, Inc. v. Northwest Airlines, Inc.
Spirit Airlines alleged that
Northwest Airlines engaged
in predatory conduct on two
domestic routes from
Northwest’s Detroit hub.
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Retained by Kenny Nachwalter
Spirit Airlines alleged that Northwest Airlines engaged in predatory
conduct on two domestic routes from Northwest’s Detroit hub.
These allegations related to Northwest’s decisions to cut prices and
raise capacity while Spirit competed against it, and its later reversal
of these actions once Spirit had been forced to exit these routes.
The panel quoted the work of our experts at
length in its opinion.
On behalf of Spirit, Cornerstone Research supported Professor
Kenneth Elzinga of the University of Virginia, who presented an
overall framework for the liability analysis, and Professor David Mills
of the University of Virginia, who addressed recoupment. Dr.
Michael Keeley of Cornerstone Research analyzed Spirit’s damages.
The district court awarded summary judgment to Northwest, but a
panel of the Sixth Circuit unanimously reversed the district court’s
decision. The panel quoted the work of our experts at length in its
opinion, stating:
a reasonable trier of fact could find that at the time of predation,
Northwest’s prices were below its relevant costs for these routes,
the market in the two relevant geographic routes was highly
concentrated, Northwest possessed overwhelming market share,
and the barriers to entry were high. Accordingly, a reasonable trier
of fact could conclude that Northwest engaged in predatory
pricing…in order to force Spirit out of the business.
After the favorable appellate ruling, Northwest filed for Chapter 11
protection in the U.S. Bankruptcy Court for the Southern District of
New York. This resulted in a reorganization plan and four years later,
all related cases closed.
Spirit Airlines, Inc. v. Northwest Airlines, Inc., continued

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