US lawyers have negotiated a $200 million settlement against British Airways and Virgin Atlantic Airways after passengers filed a class action suit in the wake of the carriers’ participation in anti-competitive behaviour over fuel surcharges.
Law firm Cohen, Milstein, Hausfeld & Toll says the settlement will provide £73.5 million ($144 million) for UK purchasers and a further $59 million for US purchasers who bought tickets from the airlines between August 2004 and March 2006.
Between those dates the two carriers exchanged information several times over plans to increase their fuel surcharge. Virgin Atlantic eventually notified authorities of the illegal activity – and in doing so escaped a penalty – while British Airways was subsequently fined heavily in August last year.
The law firm filed a claim on behalf of passengers who, it says, overpaid for tickets as a result of the price-fixing. British Airways had insisted, after the fines were imposed, that passengers had not been overcharged.
Passengers will be able to claim refunds over a dedicated Internet site. More than 8 million, say the lawyers, could ultimately be affected.
But customers will only be entitled to one-third of the surcharge levied – giving them around £1 to £11.50 per long-haul sector – and it is unclear how many will go to the trouble of claiming. Unclaimed US settlements will be donated to charity.
Cohen Milstein senior partner Michael Hausfeld says: “British Airways and Virgin overcharged their customers for almost two years and this settlement recovers 100% of that unlawful overcharge, with no deductions for attorneys’ fees or other costs.
“Customers should demonstrate that such behaviour is unacceptable by making a claim to recover the amount they overpaid.”
The firm adds that the case marks the first time that a class action suit has been collectively resolved under both US and UK law. Parties will sign the settlement agreement today and submit it for US court approval within 30 days.
A spokesman for Virgin Atlantic says: “We deeply regret our involvement in this matter and believe the provisional settlement reached draws a line under it.”
British Airways chief Willie Walsh says: “As we have previously said, we absolutely condemn any anti-competitive activity by anybody.
“This settlement, which British Airways and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable. BA can now move on and do what we do best – delivering excellent customer service.”
Source: flightglobal.com's sister premium news site Air Transport Intelligence news