Airline price-fixing scandal: the fines flow

They say cheats never prosper, so the hefty fines being meted out today to British Airways over its role in colluding with Virgin Atlantic over long haul fuel surcharges seem suitably just.

BA received a severe £121.5 million ($243 million) rap this morning from the UK’s Office of Fair Trading and it seems likely to take another multi-million hit later today when the US Department of Justice dishes out its part of the fine. BA put aside £350 million in anticipation of the fines a few weeks ago which is apparently enough to cover both these fines and any civil litigation that may follow.

This first hints of a price-fixing scandal first emerged last year when Virgin Atlantic blew the whistle. By being the one to “fess up” (as a radio journalist put it this morning) Virgin receives immunity from the fine.

BA chief Willie Walsh, who vigorously condemned the role a very limited number of his staff played in the affair, said on the UK’s Radio 4 programme this morning that he would have blown the whistle had he uncovered such activity in his airline.

Today’s announcement sends out the strongest signal possible that the authorities are taking an extremely dim and aggressive view on such activity. Another investigation, this time on a global scale, is running in parallel into allegations of air cargo fuel surcharge price-fixing.

Lufthansa has already put aside millions in case it is fined. More multi-million dollar fines could soon be on the way.

For a further analysis of fuel surcharges read our recent story.

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3 Responses to Airline price-fixing scandal: the fines flow

  1. paul sawyer 2 August, 2007 at 7:57 am #

    BA have been rightly condemned for this but Virgin don’t exactly come up smelling of roses considering they were also an active partner in this matter ….a case of “this is all going to blow up in the near future so let’s get someone else to be the fall guy and cover our rear ends with an immunity at the same time” ?

  2. John Band 2 August, 2007 at 8:52 am #

    The airlines have to put up prices when fuel costs rise, so the value of the collusion was not that great. However, the huge fine on BA is a great result for Virgin who get their own back for BA’s earlier dirty tricks in a big way.

  3. J P Morgan 3 August, 2007 at 2:23 pm #

    Well done!

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