British Airways Broke the Law
Britain's Largest Airline Fined $300 Million in US Court
British Airways is charged with breaking antitrust and price-fixing laws, and was fined $300 million. The airline cooperated with the courts, and saw its fines reduced.
British Airways is having a rough year. First came the news that this airline loses more luggage than any other airline in the world. While the folks at BA suggest that this is due in part to their restricted carry-on policy of one bag per passenger (so British Airways has more stowed baggage than other airlines for transatlantic flights), this unwanted record still is quite a black eye for the company. British Airways is still scrambling to improve its public image - and now the news breaks that British Airways PLC has been fined $300 million on antitrust charges and price-fixing.
According to the Associated Press, the $300 million antitrust fine is the second-largest by the Justice Dept. since 1995. F. Hoffman-La Roche received the largest criminal fine, $500 million, in 1999. British Airways PLC price-fixing charges involve fuel surcharges on transcontinental and transatlantic flights. Fuel charges, which had been around $10 per ticket for round-trip flights, bumped up to approximately $120 for the same tickets between 2004 and 2006. British Airways justified this steep increase by stating it reflected higher oil prices in general: The airline broke antitrust laws by attempting to collude with Virgin Atlantic on the fuel surcharge price-fixing. Virgin Atlantic reported this to airline industry authorities and the Office of Fair Trading, and is not facing similar fines.
This is the second fine British Airways has received for price-fixing, although it's the first upheld by a US court. Britain's Office of Fair Trading, which first heard of the crime from Virgin Atlantic, has fined BA 125.5 million pounds for its part in breaking antitrust laws. That is somewhat less than the US fine of $300 million dollars, but still a substantial fine.
The Justice Department told the AP that British Airways would have faced an even steeper fine, closer to $900 million, but the airline cooperated in the case. US District Judge John D. Bates explained, "The company has produced hundreds of thousands of pages of documents of all kinds." These documents would not have been available to authorities in the US without British Airway's new-found transparency. BA's plea deal also involved admitting guilt regarding breaking these antitrust laws between 2004 and 2006. While its doubtful that the airline is grateful to the whistle-blower at Virgin Atlantic, $300 million should certainly convince the airline to feel - or at least express - remorse. To its credit, BA was one of the first - after Virgin Atlantic - to start cooperating in what has turned into a global investigation of ticket price-fixing in the airline industry. Korean Air Lines Cargo Co. Ltd is facing a similar $300 million dollar fine, and representatives from that airline will also appear before Judge Bates. Like British Airways, Korean Air is both cooperating and pleading guilty to antitrust conspiracy charges.
The record-holder for Most Lost Luggage of any Airline is now, also, the record-holder for largest antitrust violation of any airline. Forget British Airways' bad year. In truth, it's their passengers that suffer.
Related, on Suite 101:
Airline Travel Satisfaction is Low
