NEW YORK ( TheStreet) -- The U.S. Justice Department may not want to hear it but a leading airline analyst said American Airlines (AAL) - Get Report utilizes a pricing strategy that keeps fares low throughout the industry.

The strategy, which offers "Advantage Fares," involves American sharply undercutting competitors' non-stop fares with deeply discounted connecting fares.

"We believe AAL is mainly responsible for domestic pricing weakness in part due to its use of Advantage Fares," wrote Wolfe Research analyst Hunter Keay in a report issued Friday.

Keay's conclusions seem to contradict both an ongoing Justice Department investigation, which is reviewing whether the major airlines are colluding on pricing, as well as the department suppositions  that underscored a 2013 lawsuit intended to block the American/US Airways merger.

"By ending the Advantage Fares program, the merger would eliminate lower fares for millions of consumers," the Justice Department said the August 2013 press release announcing its lawsuit.

According to Keay, Advantage Fares are very much alive.

"We examined 50 city pairs in the U.S. where AAL probably shouldn't be trying to win business (non-AAL hubs) and found that AAL offered multiple deeply discounted connecting fares vs. the cheapest nonstop (49% discount, on average) in 44 of the 50 markets," Keay wrote.

As an example, according to Keay's study, in 24 markets involving Delta (DAL) - Get Report hubs where Delta offers the cheapest non-stop fare -- averaging $350 -- American offered a one-stop connection averaging $154. That represents a 56% discount.

Also, in 15 markets involving United (UAL) - Get Report hubs where United offers the cheapest non-stop fare, averaging $287, an Advantage Fare can be found for an average price of $148, which represents a 48% discount.

Keay also found that Delta and United and other airlines are retaliating against American. The way they retaliate is to offer deep discounts on one-stop connections in American's non-stop markets. Thus, in 24 markets involving an American hub where American has an average non-stop fare of $233, Delta is offering one-stop connections at an average price of $152, representing a 35% discount.

Similarly, in 23 markets involving an American hub where American has an average non-stop fare of $277, United is offering one-stop connections for an average of $157, representing an average discount of 43%.

Keay said he believes "this competitive pricing dynamic can continue as long as crude oil stays cheap." However, he said the impact of Advantage Fares is diminishing because non-stop fares have been falling due to the lower oil prices. Keay assigns outperform ratings to all three global U.S. airlines.

In August 2013, the Justice Department filed an antitrust lawsuit challenging the proposed lawsuit between American and US Airways. The suit was later settled with a deal that primarily broadened access to Washington Reagan National Airport.

"US Airways competes vigorously for price-conscious travelers by offering discounts of up to 40% for connecting flights on other airlines' nonstop routes under its Advantage Fares program," the Justice Department said in a press release announcing its antitrust lawsuit.

"The other legacy airlines -- American, Delta and United -- routinely match the nonstop fares where they offer connecting service in order to avoid inciting costly fare wars," the department said. "The Advantage Fares strategy has been successful for US Airways because its network is different from the networks of the larger carriers.

"If the proposed merger is completed, the combined airline's network will look more like the existing American, Delta and United networks, and as a result, the Advantage Fares program will likely be eliminated, resulting in higher prices and less services for consumers," the department said.

Although the merger case was settled, the Justice Department is currently conducting two investigations of airline pricing. One concerns whether carriers jacked up fares in response to the May 12 Amtrak crash near Philadelphia, which shut down rail service for several days.

A second ongoing investigation, which precedes the Amtrak-related investigation, concerns whether the four largest airlines are colluding on pricing by tightly controlling capacity.

Airlines have denied wrongdoing in both cases.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.