British Airways Fined
Posted on 06 August 2007
British Airways has received fines totalling £270m for its part in a price fixing cartel in which the airline agreed to raise its fuel surcharges on the basis that its competitors would do the same. Virgin Atlantic, the other airline involved, has so far escaped punishment.
The £270 million fines, levied by the UK Office of Fair Trading and the US Department of Justice may only be the start of BA’s problems. They now face class action lawsuits both in the UK and United States on behalf of the millions of air passengers who were affected by the hike in fuel surcharges. Some estimates place the potential compensation BA may have to pay at £300 million or more.
Air passenger consumer groups have highlighted the fact that these fines may ultimately hit passengers in the pocket if BA raise their fare prices to cover the losses. The £270 million pound fine is roughly equivalent to £8 per passenger who flies with BA in a year.
Fuel surcharges are additional costs added to fares to cover the cost of aviation fuel.