British Airways fined for illegal fuel surcharge
British Airways has been fined nearly $550 million by British and US authorities for fixing the prices on long-haul flights.world Updated: Aug 02, 2007 09:19 IST
British Airways was on Wednesday fined nearly $550 million by British and US authorities for fixing the prices of fuel surcharges on long-haul flights.
Britain's Office of Fair Trading (OFT) said its fine of 121.5 million pounds ($245.9 million) was the highest yet imposed for an infringement of competition law.
The OFT charged that BA colluded with rival Virgin Atlantic to fix the levels of fuel surcharges on long-haul flights. BA has admitted that representatives held talks with Virgin Atlantic over the surcharges, aimed at compensating for rising oil prices.
Virgin, which first reported the BA approach to the OFT, has been given immunity and is not expected to be fined, the competition watchdog said.
The US Department of Justice (DoJ) said BA has agreed to pay an additional $300 million fine for what it described as an "illegal cartel" that forced up the extra fuel charge on Atlantic flights from $10 in 2004 to almost $110 by 2006, when the cartel was first investigated.
The DoJ said the British airline had also colluded on fuel surcharges for passenger and cargo flights with Korean Air, which has separately agreed to pay $300 million for its role in the price fixing scandal.
"When British Airways, Korean Air and its co-conspirators got together and agreed to raise prices for passengers and air cargo fares, American consumers and businesses ended up picking up the tab for illegal conduct," said US acting Associate Attorney General William W Mercer.
The plea deal with BA and Korean Air was filed on Wednesday in the US District Court for the District of Columbia and must still be approved by the court.
BA earlier this year said it had set aside 350 million pounds to cover fines and the costs of legal action.