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British Airways in price fixing turmoil

The airline said it had suspended two senior executives after a raid on its headquarters near Heathrow airport.

india Updated: Jun 23, 2006 23:03 IST

UK flag carrier British Airways is facing criminal investigation by the Office of Fair Trading and US Justice Department for alleged cartel activities involving three other airlines.

The inquiry, a joint effort between the OFT and the Justice Department is focusing on ticket pricing and particularly the fuel surcharges imposed by BA, Virgin Atlantic, American Airlines and United Airlines.

The airline said it had suspended two senior executives after a raid on its headquarters near Heathrow airport on June 13 by the Office of Fair Trading.

Virgin Atlantic, American Airlines and United Airlines said they had also been assisting the investigation into the existence of a possible cartel.

BA has been widely criticised for raising its surcharge on long-haul return flights six times in the past two years.

The surcharge was last raised to 70 pounds in April, shortly before the airline announced its annual profits to 620 million pounds, a rise of 21 per cent.

On three occasions, Virgin increased its surcharge by exactly the same amount at BA on the same day. On two other occasions, the airlines matched each other's surcharges within 48 hours.

Both airlines have claimed that their surcharges were merely a response to the rising cost of rising cost of fuel, which had doubled since 2004.

BA and Virgin increased their surcharges on the same day by 50 per cent from 32 to 48 pounds in June last year, despite the oil price having rises by less than five per cent since the previous hike.