- The Washington Times - Thursday, June 22, 2006

LONDON (AP) — British and U.S. authorities are investigating reputed price-fixing of passenger fares and fuel surcharges by British Airways PLC and other airlines, the carrier said yesterday, and two senior executives have been placed on leave.

BA said it was assisting the Office of Fair Trading (OFT) and the U.S. Department of Justice, but it provided no other details. Other airlines including Virgin Atlantic, United Airlines and American Airlines said they were cooperating with the probe.

Two BA executives — commercial director Martin George and head of communications Iain Burns — have been given leaves of absence. BA declined to provide any information beyond its brief statement, including whether Mr. George and Mr. Burns were asked to leave or ordered out.

High fuel prices have led airlines to raise the surcharge that passengers pay on long-haul flights. For instance, BA customers pay a $129 surcharge on a round-trip ticket from London to New York, the airline said.

OFT said it was conducting “both a criminal and civil investigation into alleged price coordination by airlines in relation to fuel surcharges for long-haul passenger flights to and from the U.K.” OFT said its officials visited BA offices on June 13.

The probe is in its early stages, OFT said, and “no assumption should be made that there has been an infringement of competition law” until the investigation is complete.

The agency said it has named only British Airways at this point because it’s the only airline that issued a statement saying it was a target of the probe.

BA shares tumbled 5.6 percent to $6.40 on the London Stock Exchange.

Virgin Atlantic spokesman Paul Charles said the airline is aware of the investigations and “assisting with inquiries” from the two agencies. Mr. Charles declined to say whether the carrier is being investigated but that none of its staff had been placed on leave.

AMR Corp.’s American Airlines said it “has received a United States federal grand jury subpoena in connection with a government investigation into alleged price fixing in the air passenger industry. The airline has been informed that the company is not a target of the investigation.”

UAL’s United Airlines received an inquiry and is cooperating with authorities, a spokesman for the airline told Dow Jones Newswires, declining to comment further. United did not immediately return a call for comment from the Associated Press.

Other airlines — Delta Air Lines Inc., Ryanair Holdings PLC, bmi, Continental Airlines Inc., Lufthansa, Finnair, KLM, Icelandair and SAS — said they were not being investigated.

In February, more than a dozen airlines were drawn into an investigation by U.S. and European Union officials of suspected collusion in the air cargo industry to fix prices on surcharges for fuel, security and insurance.

European and U.S. officials refused to provide details about the probe. But one of the airlines targeted, SAS AB’s SAS Cargo in Copenhagen, said the European Union charged that cooperation among airlines began in 2000 and involved agreements about surcharges imposed by airlines to offset certain external costs.

SAS said the costs included surcharges on fuel, added security after the September 11 terrorist attacks and premiums for war-risk insurance after the start of the war in Iraq.

Raids were conducted at the offices of several airlines, and several cargo carriers said they had been contacted by authorities or issued subpoenas.

BA confirmed at the time that it had received a request for information from the European Commission and the U.S. Department of Justice “relating to alleged cartel activity involving BA and a number of other airlines and cargo operators.”

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