BA Fine Could Precede Further Action Against Airlines
Further investigation could be in store for British Airways, along with its equivalents/counterparts, following last week’s historic price-fixing fine of £270 million. This news comes alongside warnings that watchdogs intend to ensure that the trend for forging inter-airline alliances is scaled back, or it could be banned altogether.
The month of August 2007 got off to a pretty discouraging start for British Airways. On the 1st it was fined £270 million, in light of it being found to have colluded with Virgin Atlantic over the price of fuel, in respect of international flights. Virgin’s notification to authorities of the situation ensured it emerged financially unscathed, while BA was levied a record-breaking demand for payment.
According to the author behind the publication ‘The World’s Major Airlines’, David Wragg, “code-sharing” deals, in which routes are shared amongst airlines, involve a wide network of cross-communication – above and beyond the series of telephone calls exposed to have taken place between Virgin and BA. Commenting further, Mr Wragg stated: “Code-sharing airlines must have conversations about prices. Here we are in an age where the consumer has more power than ever before, yet somehow this slipped through. It must be tackled soon."
Currently, code-sharing agreements exist between BA and a whole multitude of other carriers. These include Qantas, American Airlines and the Spanish airline, Iberia. It is additionally a Oneworld member – the alliance which umbrellas a band of airlines, positioned globally and serving 700 airports.
The way in which airlines become, effectively, interchangeable, is, to Mr Wragg, a source of unease within consumers. "At least the customer knows where he is with fuel surcharges. But with code-sharing, customers often don't know who they will be flying with", he said.
The principle of code-sharing is that airlines agree to advertise one unique flight under their own terms (code). This is intended to give the public the impression that aircraft can be changed within the one carrier. Additionally, the procedure appears to show that each airline seems to have a broader range of destinations than is the case. The major concern connected to code-sharing is that arrival and departure boards allow a monopoly to be created, by which competing airlines, quite literally, are being pushed off.
According to Mr Wragg, the action recently taken against British Airways could open the floodgates on further regulatory enforcement against the airline industry. “The authorities were looking for an easy issue to attack. The rule now is not to talk to your competitors", he added.
Source – Airport International’s Assistant Editor
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