Fuel Price-Fixing Fine for British Airways
An unprecedented fine of £121.5 million has been given to British Airways in connection with its own admission of price fixing. According to the Office of Fair Trading, the fine relates to long-haul flights, on which BA, in tandem with Virgin Atlantic, added supplementary amounts to fuel costs to reflect consistent increases in oil prices. The OFT, in partnership with the US Department of Justice, had been exploring the situation for well over 12 months prior to today’s announcement.
Although strongly connected to the price fixing, immunity has been granted to Virgin Atlantic, reflecting the fact that it first brought the situation to light publically. Today’s fine for British Airways, said the OFT, effectively concludes the civil case against the airline, but an investigation into the criminal side of events remains ongoing. At this stage, the regulator added, it could not be confirmed whether figures within BA would face individual prosecution.
Detailing the facts behind the price-fixing, the OFT highlighted the period between August 2004 and January 2006. During this time, it said, a minimum of six instances were identified in which surcharges were raised from £5.00 to a huge £60.00.
Commenting to the media, the chief executive of British Airways, Willie Walsh, defended the procedure – describing it as “a legitimate way of recovering costs”. In this sense, he stated, overcharging had not been the case. Despite this, he additionally said that the conduct exhibited by certain employees within the firm was inexcusable – stating: “Anti competitive behaviour is entirely unacceptable and we condemn in unreservedly”.
He continued: "We have a long standing competition compliance policy which requires all staff to comply with the law at all times. I am satisfied that we have the right controls in place. However, it is deeply regrettable that some individuals ignored our policy."
In the words of the chairman of the OFT, Phillip Collins, the substantial and historic fine would "send an important message to corporate boards and business leaders about our intention to enforce the law, and serves to remind companies of the substantial risks involved if they are found to engage in such behaviour".
Two months ago, British Airways confirmed that it had reserved a figure of £350 million which was to be used for fines and associated legal action. Following the OFT’s action, a further fine for the UK’s flagship airline is in the pipeline, and will likely be detailed by the US DoJ later on today.
Consequently, Airport International will provide any additional updates to this News Item as the facts become known.
Source – Airport International’s Chief Airlines Analyst
Recent News Concerning British Airways:
British Airways Heathrow Airport Collision Investigated
