Sponsored by
British Airways in price-fixing probe
UK and US officials investigate surcharges
Chris Benfield
Allegations that long-distance travellers are being conned into paying over the odds by a price-fixing agreement between airlines are under investigation on both sides of the Atlantic.
British Airways and other airlines are involved in the inquiry and, if found guilty, could face fines of many millions of pounds.
Two senior BA employees – commercial director Martin George and communications chief Iain Burns – have been "given leave of absence" during the inquiries by the UK's Office of Fair Trading (OFT) and the United States Department of Justice.
The OFT said: "We can confirm that we are investigating British Airways about alleged price co-ordination by airlines in relation to surcharges on long-haul flights to and from the UK. The investigation is at an early stage so no assumption can be made at this stage as to whether there has been an infringement of competition law."
In February, the European Commission announced it had raided the premises of air cargo carriers in several EU member states, on suspicion they were part of an illegal agreement to fix cargo prices. That investigation is still continuing.
Yesterday, Sir Richard Branson's airline Virgin Atlantic could not confirm that it was one of the airlines being investigated but added it was helping the OFT and the justice department with its inquiries, while major US carrier, American Airlines, said it had received a US federal grand jury subpoena "in connection with a government investigation into alleged price fixing in the air passenger industry". But it added that it had been informed that it was "not a target of the investigation".
Industry analysts say price convergence is not necessarily significant. At the low-budget end of the market, a difference of 20 or 50 between fares is likely to be crucial. On longer flights, the big carriers are more likely to arrive at comparable prices in response to the same market forces.
However, the explosion in fuel prices over the past year might have caused more cut-throat competition than it has. It has forced all airlines to put up prices and most have done so by adding "fuel price surcharges", in keeping with their claims that the rises will be reversed as soon as possible.
Because they can buy fuel all over the world, there might have been an outbreak of competition over these surcharges. But when all the extras – including local taxes and fuel surcharges – are added to basic fares, the results are often very close together.
Last month BA announced better-than-expected annual profits of 620m – 21 per cent up on the previous year. The fuel surcharge component of BA's long-haul fares is about 70 for a return trip and the American Airlines figure is about the same.
A spokesman for low-fare airline Ryanair, said: "British Airways collected more in fuel surcharges than its entire profit after tax last year. It is about time surcharges were investigated."
Email to a friend
Print this page- Three-inch blanket of snow heading our way today
- Alan Shearer in list of favourites for Leeds and England jobs: Latest odds
- Barnsley’s Keith Hill invokes Fawlty Towers over link with Leeds job
- McCormack feels United search can be narrowed down
- Redfearn throws down gauntlet as queue builds at Elland Road
- Rival chips in with £500,000 to restore the original Harry Ramsden’s
- Visit from Princess as Serbian culture celebrated
- SportsTalk: Leeds United’s manager search, Super League and Calcutta Cup
- Libraries aren’t like supermarkets, they are magical places where dreams begin
- Strategic review will lead to job losses at Yorkshire Bank
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Yorkshire
Saturday 11 February 2012
Today
Cloudy
Temperature: -1 C to 1 C
Wind Speed: 9 mph
Wind direction: South east
Tomorrow
Light rain
Temperature: 1 C to 6 C
Wind Speed: 8 mph
Wind direction: North west
