Air Filter

August 1, 2007 10:14 AM

Airway Robbery. Another summer, another disaster for British Airways. The company has just received the largest fine ever issued by Britain’s competition agency (nearly £270m / $547m) for price fixing on fuel surcharges. BA admitted to colluding with rival airline Virgin Atlantic (who won immunity in the UK) on at least six occasions. The allegations are thought to be linked to the resignation of commercial director Martin George and communications chief Iain Burns. Although BA said fuel surcharges were "a legitimate way of recovering costs", in May 2007 it put aside £350 million for legal fees and fines. Criminal proceedings against individuals in both countries are a distinct possibility.
posted by chuckdarwin (19 comments total)

Korean Air Lines will pay a 300-million-dollar fine as part of a guilty plea in a US court for fixing prices on passenger and cargo flights, the US Justice Department said Wednesday.

The US alleges that between January 2000 and July 2006, Korean Air conspired with competitors to fix rates charged for cargo on routes between the Unied States and South Korea. Conspirators agreed to increase a fuel surcharge for cargo, the Justice Department said.

The airline is also charged with fixing rates for passengers on flights between the US and South Korea. Both tickets sold by the airline and those sold to clients through travel agents are involved, the US said.

The plea deal must still be approved by a US district court in Washington.

Here's a little hint for any corporate thugs reading this: robbery is illegal.
posted by chuckdarwin at 10:17 AM on August 1, 2007

Here's a little hint for any corporate thugs reading this: robbery is illegal.

Robbery? Corporate thugs?

The biggest part of the airplace tickets I buy is the TAX. If you fly RyanAir, the tax often costs more than the ticket. If you want to complain about robbery, "green" government is the real thug.
posted by three blind mice at 10:51 AM on August 1, 2007

I wonder if the fines preclude class action suits on behalf of the overcharged customers.
posted by srboisvert at 10:58 AM on August 1, 2007

srboisvert: according to the lawyer I heard on interviewed on the radio, currently preparing a class action lawsuit over this, no they don't.
posted by flashboy at 11:09 AM on August 1, 2007

RyanAir should be taxed twice as much as they are already.
posted by i_cola at 11:16 AM on August 1, 2007

the tax often costs more than the ticket

Or the airport fees. It costs me more to walk through Pearson (YYZ) then to fly on the plane. In 2004 Pearson was second only to Tokyo Narita in landing fees. Plus the recent improvement fees.

So screw a $30 fuel surcharge. It's the $250 charge to use the gate that pisses me off.
posted by GuyZero at 11:16 AM on August 1, 2007

lolantitaxnutjobs
posted by DU at 11:20 AM on August 1, 2007 [3 favorites]

I'd like to say in defence of British Airways that it's probably the best way to fly between America and Europe. Every passenger has an individual screen and can order up a whole slew of different shows and movies. Last time I saw Futurama, Extras, and that new movie Hot Fuzz. The time never passed so quickly. This is very important for people who can't sleep on planes. I don't care if they ripped me off slightly.
posted by creasy boy at 11:25 AM on August 1, 2007

I don't care if they ripped me off slightly.

The DoJ and OFT *do* care. A lot, apparently.
posted by chuckdarwin at 11:32 AM on August 1, 2007

I'd like to say in defence of British Airways that it's probably the best way to fly between America and Europe. Every passenger has an individual screen and can order up a whole slew of different shows and movies. Last time I saw Futurama, Extras, and that new movie Hot Fuzz. The time never passed so quickly. This is very important for people who can't sleep on planes. I don't care if they ripped me off slightly.
posted by creasy boy at 11:25 AM

Yeah but that 31 inch seat pitch is a total bitch.
posted by iamabot at 11:35 AM on August 1, 2007

I'm curious how the fine is a deterrent, if the fine is less than or equal to the revenue generated from price fixing.

Any interest generated from that revenue from point of ticket purchase to the end of the line, when the government takes it, remains with the airline.

The government keeps the fines, as near as I can tell. Or are customers being refunded?
posted by Blazecock Pileon at 11:38 AM on August 1, 2007

I'd only ever crossed the Atlantic with BA or Virgin so assumed that all transatlantic carriers had individual in-flight entertainment...until I went GTW-JFK with Delta earlier this year. Jeez...welcome to the 70's.
posted by i_cola at 11:52 AM on August 1, 2007

The DoJ and OFT *do* care. A lot, apparently.

Yeah I understand this but I think it would be sad if BA were to be significantly damaged by this. It would be sad for me, that is. I have a festering hatred for every company I've ever had truck with except two: BA and Fielmanns (they make glasses).
posted by creasy boy at 12:01 PM on August 1, 2007

Under the OFT's leniency policy, a company involved in cartel conduct and which is the first to give full details is eligible for immunity from penalties. So Virgin is not expected to face any fine.

Correct me if I'm wrong, but is this not an awesome way to set up, then rat out, your competitors?
posted by hoverboards don't work on water at 12:26 PM on August 1, 2007

Air travel is still too cheap, rail travel is still too expensive. It'd be nice if the fines could be put towards corridor rehabilitation.
posted by seanmpuckett at 12:37 PM on August 1, 2007

I'd like to say in defence of British Airways that it's probably the best way to fly between America and Europe. Every passenger has an individual screen and can order up a whole slew of different shows and movies

I've just flown Europe/USA/Europe with them, on the first flight the movie distribution software crashed and most of the passengers couldn't watch dick, the other time it crashed and had to be restarted and stopped for, like, 40 minutes. a guy behind me complained that his reading light didn't work. a small boy, about 5 or 6, horribly crapped his pants (maybe it was the slimy, frothy chicken's fault) creating a pants-changing emergency situation.

on the small bus between Heathrow terminals, an old, 4-feet-tall Indian lady puked her guts out barely, just barely missing me. she didn't miss an American lady's carry-on luggage, though.

we were also 1 hour late.
posted by matteo at 12:49 PM on August 1, 2007

(I also assume you've never dragged your luggage back and forth through the LAX terminal because BA is unable to check your fucking luggage securely, so you have to take it to another desk across the hall for security checks)
posted by matteo at 12:51 PM on August 1, 2007

My opinion of BA might be based on merely anecdotal evidence.
posted by creasy boy at 1:09 PM on August 1, 2007

Robbery? Corporate thugs? The biggest part of the airplace tickets I buy is the TAX. If you fly RyanAir, the tax often costs more than the ticket.

You have fallen for Ryanair's misleading marketing. They advertise very cheap fares but disguise much of what you are paying them as "taxes, fees, and charges." Their hope is that people will simply view this as "taxes" and blame the government for the expense, but the reality is that most of it goes straight to Ryanair to cover expenses that they are not billed on a per-passenger basis.

Take a look at the breakdown of this STN-CRL one-way I just looked up:

26.99 GBP Adult Reg Fare
10.00 GBP Government Tax
11.40 GBP PSC - Non Refundable
3.80 GBP Ins & Wchr Levy
2.00 GBP Credit Card Fee

Now even if this were one of their famed GBP 0.01 fares, and even if you used a debit card (save GBP 1.30!), the bogus fees are still more than the actual tax. The passenger service charge is a cost of doing business for the airline, not a tax or an extra choice by the consumer. They might as well charge you a "pilot payroll surcharge" or a "airplane maintenace fee." But even the PSC and "government tax" amounts quoted have allegedly been inflated.
posted by grouse at 3:33 PM on August 1, 2007