China Airlines is the latest carrier to get fined for price-fixing air cargo rates. The Taiwan-based airline plead guilty and now faces a $40 million fine. Northwest Airlines has also plead guilty.
A total of 18 airlines have been snared by the Department of Justice in an ongoing investigation. Eight airline executives have also been charged. The Department of Justice has imposed a total of $1.6 billion in fines and given four executives jail time for a conspiracy that reaches back to early 2000. China Airlines was conspiring with other airlines to fix cargo rates to and from the United States, a violation of antitrust laws. Rates are supposed to be subject to the free market, but the airlines secretly agreed to set a rate in order to maximize profits.
For a complete list of the airlines and executives involved, click here.
Qantas is eager to put this year behind itself. Several mid-air incidents caused the airlines commitment to safety to come into question. Also, their plan to outsource labor caused a ruckus with local unions. Nonetheless, the Qantas is keeping its head above water. It dominates lucrative routes between the US and Australia and holds its own against stiff competition in Asia.
So when a price-fixing scandal involving the airline’s freight division came to public attention, Qantas was only too willing to make amends. Between 2002 and 2006, Qantas was one of over 30 airlines to charge unnecessary fuel surcharges. Virgin Atlantic and British Airways are the two high profile airlines already guilty of price fixing via fuel surcharges. But whereas the two London-based carriers’ scandal involved passengers, Qantas was only accused of fixing prices on air freight. Chief exec Geoff Dixon announced that the issue was settled before the Australian Competition and Consumer Commission (ACCC). A fine of AUS$20 million was paid to the ACCC. Last year, Qantas paid US$61 million for a related price-fixing charge in the US.
With prices at the pump down so much over the past few weeks, people are starting to wonder why the savings have not been passed on to airline passengers. Well, British Airways finally responded to the halving of crude prices by dropping their fuel surcharge £10 to £68 on domestic flights and £109 to £96 on overseas routes. Virgin Atlantic will also institute similar price cuts. The cuts come on the heels of a price fixing controversy involving BA and VA execs. The two airlines were fined over £120 million after admitting to fixing prices on fuel surcharges.
Gadling’s favorite airline CEO (because he’s always saying something outrageous), Michael O’Leary, tried to irk BA last week by criticizing them for not dropping their fuel surcharge after they dropped a similar charge for freight. “BA is using these high and unjustified fuel surcharges as a scam to rip off its passengers.” Surely, O’Leary’s comments didn’t cause BA to drop the surcharges, but with the price fixing scandal still in the rear-view mirror, England’s big two had to do something to get back on the good side of their customers.
[Via Sky News]