British Airways, Korean Airlines fined over price-fixing

British Airways and Korean Airlines have been fined heavily as a result of price fixing fuel surcharges and the prices of passenger and cargo flights over a period of some years.

British Airways' total penalty for colluding over flight pricing has amounted to around GBP270 million (US$548.3 million). The penalty includes a fine of GBP121.5 million from the UK's Office of Fair Trading (OFT), after admitting to price collusion with rival airline Virgin Atlantic on surcharges on at least six occasions, reports the UK's Press Association.

On top of that fine, the US Department of Justice (DoJ), which has also been investigating the collusion which took place during 2004-06, will fine BA US$300 million. The fine comprises $100 million for passenger fuel surcharge offences and $200 million for cargo offences.

The penalty came after the OFT found that on at least six occasions between August 2004 and January 2006, BA and Virgin discussed and/or informed each other about proposed fuel surcharges on long-haul flights. During the collusion periods, the surcharges varied between GBP5 and GBP60 for a long-haul return flight.

The scam came to light after Virgin in the winter of 2006 came clean by informing the OFT of their fuel charge conspiracy. Under the OFT's leniency policy, a company involved in cartel conduct, and which is the first to give full details, is eligible for immunity from penalties. Thus Virgin is expected to escape any fine.

In addition, Korean Airlines has pleaded guilty to the DoJ and agreed to pay $300 million dollar criminal fines for its role in conspiracies to fix the prices of passenger and cargo flights". The DoJ also charged that Korean Air reached an agreement with Lufthansa to fix certain passenger fares for flights from the United States to Korea between January 2000 and July 2006.