Airlines fined for price-fixing, $1.7 billion so far

by Chris Owen on
U.S government prosecutors have fined 21 airlines $1.7 billion to date in a price-fixing scheme that has cost America’s flying public and cargo shippers millions in a case that dates back to 2000.

Rather than fix problems plaguing the airline industry a decade ago, executives at global carriers scrambled to find an easy way out and avoid financial ruin reports the Associated Press. Between 2000 and 2006 airlines artificially raised passenger and cargo fuel surcharges to make up for lost profits.

“As an example of the impact of the conspiracy, fuel surcharges imposed by some of the conspirators rose by as much as 1,000 percent during the conspiracy, far outpacing any percentage increases in fuel costs that existed during the same time period,” said former Associate Attorney General Kevin J. O’Connor.

They might have not been caught either had it not been for two airlines coming forward to turn in their conspirators. Admitting their “mistake” allowed Lufthansa and Virgin Atlantic to take advantage of a Justice Department leniency program for helping in the investigation. Still, the two airlines were fined over £120 million after admitting to fixing prices on fuel surcharges.

From fines to prison time for airline executives, penalties vary among individual airlines.

Gadling has been following this story all along and in 2008 told of Qantas airline’s involvement . In the case involving Qantas, the price fixing scheme had a focus on their freight division.


It was the freight division of China Airlines too that earned the airline a $40 million fine in the price fixing conspiracy just last September.

Announcing four guilty pleas in June 2008, O’Connor told the Associated Press that the cases “conservatively, has affected billions of dollars of shipments. Estimates suggest that the harm to American consumers and businesses from this conspiracy is in the hundreds of millions of dollars.”

Airlines fined for price-fixing include British Airways, Korean Air, and Air France-KLM but no major U.S. carriers as the case continues. So far, two former executives have been sentenced to six months in prison and two others were ordered to prison for eight months.

Ongoing charges are pending against 15 executives, nine of whom are considered fugitives.

Flickr photo by BriYYZ

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Video: Airbus A380 contrails as seen from the cockpit of a 747 at 35,000 feet!

by Scott Carmichael on

Apologies for the slightly confusing title – this is a video you need to see to really understand how cool it is. If you don’t have the time (or patience), scroll ahead to the forty second mark and watch the beauty of the Airbus A380 as it passes under this KLM Boeing 747 – just 1000 feet away.

This really was a rare opportunity for the crew of the KLM to record this event, and we’d like to thank them for taking the time to shoot it.

Delta Air Lines announces Delta Assist for Facebook

by Justin Delaney on

Delta Assist on Twitter has been a winning investment for the nation’s largest carrier. By utilizing the social networking site, Delta has been able to cater a niche customer service product to a vociferous audience — a product well lauded by the travel community.

Now, they’re taking that success to Facebook. With the program that launches today, Delta plans to be the world’s first mover in what could one day be a standard in customer service – completely comprehensive customer support without having to leave the social networking site. A special tab will be used within Facebook to allow for customers to communicate their service issues with Delta representatives.

Reached for comment, Allison Ausband, the VP of sales, reservations, and customer service for Delta, said:

“Our Facebook community told us that in addition to listening, we also needed to offer a way for customers to give feedback and get help with any travel issue. This feedback challenged us to reshape our online customer support strategy to establish Delta Assist as a comprehensive social media customer support program operating beyond just Twitter and into other social media channels where our customers are engaged.”

On the surface, this is a small change to a moderately comprehensive customer service approach being pioneered by Delta. But it’s an indicator of the industry movement. More and more people online are using social media as a means to communicate as consumers, and if Delta can see this demand quickly and respond to it then they’re going to quickly have an advantage over the competition.

flickr image via eisenbahner

Flight attendant weight restriction causes uproar

by Justin Delaney on

Thai Airways International imposed body mass index and waistline restrictions on its 6,000 flight attendants last June. According to the Bangkok Post, all flight attendants, both male and female, were given six months to comply with the weight restriction. For female attendants, a BMI of 25 and a waistline maximum of 32 inches was implemented. The male attendants had restrictions of 27.5 BMI and a 35 inch waistline. To compute BMI, check out this handy calculator.

Those that did not meet the standards are now limited to domestic flights and same day service. They will be further relegated to ground crew if they fail to comply within a year. 41 flight attendants, 28 of them male, did not meet the guidelines and have filed a complaint with the Thailand Labour Protection and Welfare Department for the regulation which “violated their human rights, hurt their feelings, and decreased their incomes.” Although less than 1% of the Thai Airways flight attendant work force was affected, the Draconian measure has stirred up a debate regarding weight restrictions for flight attendants.

The vice president of products and customer services for Thai Airways, Teerapol Chotechanapibal, had this to say about the restrictions:

“…the regulation was aimed at improving the personality of flight attendants, who were an essential part of boosting competitiveness with other airlines, while their health had an impact on services and the safety of passengers. Flight attendants had to be agile and able to evacuate passengers from a plane within 90 seconds in the event of an accident. He said airlines worldwide had implemented similar standards. Stewardesses who are 160cm (5’3″) tall must not weigh above 66kg (145 lbs) while stewards who are 165cm (5’5″) tall must not weigh over 74.8kg (165 lbs).”

Asian air lines are notorious for hiring tall and rail thin flight attendants. A couple years ago, Air India even fired ten employees for being fat. I recall walking through Incheon airport in South Korea and passing a group of Korean Air stewardesses striding along the auto-walk like a gaggle of graceful storks. While I do not mind the inherent rule that flight attendants should be fit enough to assist with potential emergency situations, seeing an explicit weight restriction (an unnecessarily strict one at that) makes the whole enterprise feel cold, calculating, and inhuman. What do you think?

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flickr image via kalleboo

Airline profits hit by high oil prices, rise in fares possible

by Chris Owen on

High oil prices cost us at the pump, play into the prices of most consumer goods and will cut 2011 airline profits in half in spite of the recent growth in air travel says a new forecast out today.

In a revised profit forecast, International Air Transport Association said it was downgrading its airline industry profit outlook for 2011 to $8.6 billion from the $9.1 billion it had estimated just last December.

“This is a 46 percent fall in net profits compared to the US$16 billion earned by the industry in 2010,” IATA said in a statement.

The new forecasts were based on oil priced at a average of $96 per barrel of Brent crude over the year, compared to $84 a barrel used in the December forecast. The price of oil spiked to $115 today, shy of last weeks high of $120.In February, responding to unrest in Egypt, American Airlines added fuel surcharges of as much as $5 each way on many routes with United Continental Holdings Inc. adding a $3 each-way surcharge. At the time, British Airways said they would increase the fuel surcharge they already have in place.

Now, with this latest announcement signaling an approaching hit on profits, airline shareholders are already in pain. The 2008 spike in oil prices sent airlines into a 2-year profit tailspin.

Flickr photo by L.C.Nottaasen

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