Virgin Atlantic (SIA) colluded with BA to fix price

maurizio13 SG

British Airways has been fined about £270m after it admitted collusion in fixing the prices of fuel surcharges.

The US Department of Justice has fined it $300m (£148m) for colluding on how much extra to charge on passenger and cargo flights, to cover fuel costs.

It followed a decision by the UK's Office of Fair Trading to fine BA £121.5m, after it held illegal talks with rival Virgin Atlantic.

Surcharges were added to passenger fares in response to rising oil prices.

Virgin has been given immunity after it reported the collusion and is not expected to be fined, the OFT said.

BA now faces the possibility of legal challenges by customers on both sides of the Atlantic who believe they lost money as a result of the collusion.

The BBC's Adam Brookes in Washington said the airline could face multiple lawsuits for damages in the US from aggrieved passengers.

Record fines

The OFT and the DoJ began investigating BA's price-fixing in June 2006.

However, he acknowledged that the conduct of some of the carrier's employees had been wrong and could not be excused.

"Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly," Mr Walsh said.

"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."

Scott Hammond of the DoJ's antitrust division said that "virtually every American business and consumer was impacted by these crimes".

"American companies rely on competitive shipping rates to export their goods to foreign markets, American consumers rely on imports for so many consumer and household goods, American families flew these airlines on international destinations.

"In every instance American businesses and consumers ended up paying more as a result of these crimes."

'Blatant breach'

OFT chairman Philip Collins said that the hefty fine would "send an important message" to companies and business leaders about its intention to enforce the law.

"This serves to remind companies of the substantial risks involved if they are found to engage in such behaviour," he said.

Virgin Atlantic said that it had informed the OFT as soon as its lawyers were made aware of the nature of contacts that had occurred between individuals from the two airlines.

"We take complying with competition laws extremely seriously and regret that contacts were made between the two companies," it said.

"As a criminal investigation is continuing, we are unable to give further details until the regulators publish their full findings."

BBC business editor Robert Peston said that the collusion between BA and Virgin Atlantic was "as blatant a breach of competition law as it's possible to imagine".

"This was not a careless accident. The two big birds... were not competing properly on price over an extended period: they were giving each other comfort that they would not undercut each other on the fuel surcharge."

He added: "Virgin won't pay a penny in fines and actually emerges as a winner, since all the opprobrium of the rule-breach has been heaped on BA."

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Here is a selection of comments received by the BBC News website.
Willie Walsh states that customers were not overcharged, however, if the surcharges were fixed between Virgin and BA and not competitive then surely the customers must have lost out, they would have paid over the odds. What happens to the money from the fines? Will any customers be re-imbursed?
Andy Sharman, Peterborough

Sir Richard and the Virgin brand won over so many hearts when the details of British Airways` 'dirty tricks' campaign came to light in the early 90s. To me, if there were ever two businesses that wouldn`t have colluded in such a way - it would be these. Shame on you Virgin Atlantic.
Gareth Reid, Wellingborough, Northants

It is an outrage that Virgin are not being penalised in the same way and to the same extent. How can we know that they had not planned this all along, a real possibility given the history between the firms? It takes two to collude and with only BA being fined the message this sends is not constructive for any party or any industry. It sets a dangerous precedent. In no way do I condone the action taken by BA but I think that the fine is excessive - and why are they being fined twice? I would still fly with both companies and probably BA before Virgin.
Chris Cecil, Haddington, East Lothian

I flew BA in June 2006 to India and back. Did the price gouging affect me? If so, then 'B' for British should be replaced with another "B" that stands for illegitimate.
Robert Tavaris, Florida, USA

I have been flying the Atlantic for 50 years and I find the anti-competition laws a joke. The price of a trans-Atlantic ticket has not fallen in real terms since the IATA rules were suspended. All that has happened is that conveniences such as no-charge trip cancellation, free seat selection and inter-airline open-jaw bookings have been withdrawn.
Jim Garner, Ottawa, Canada

Source: http://news.bbc.co.uk/2/hi/business/6925397.stm

maurizio13 SG

Virgin Atlantic baotoa British Airways.

Hehehe....

Smart move.

No wonder Virgin Atlantic made alot more profits in 2006, it's because of price fixing with British Airways to overcharge customers over fuel surcharge.

Virgin Atlantic's profit for 2006 was £41.6 million increased by 100%, double that of 2006, while their sales (turnover) only increased 17%, quite an impossibility unless the profit margins rise considerably.

Looks like SIA's plan to sell Virgin Atlantic at a good price has fallen through, as it known that without the price fixing, Virgin Atlantic's next year's profit will not be as optimistic as this years.

Laughing

I like the way this government controlled company is doing business overseas, it tries to manipulate other markets the way other government controlled company does in Singapore by anti-competitive acts, such as cross holdings of company to gain monopoly or collusion with other competitors to fix price.

Source: Virgin Atlantic

Gazelle SG

the Bear SG

gazelle, you are amenable to being financially screwed by the corporations?

LazerLordz SG

The seagulls thing reminds me of Eric Cantona's cryptic and unintelligible remarks about birds following trawlers.

Atobe SG

The photos is pictorially accurate in having birds attacking the wasteful acts of trawlers that gut the fish and damage the environment with their careless and desrtuctive acts of over-fishing the oceans.

These birds are doing a positive job at following the wasteful acts that a few men has the audacity to continuously abuse the opportunities given to them.

Only a mental handicap will interprete the photo in some other skewed manner to hide the truth - notice the actor that commit the wasteful act has been cleverly removed from this flock of birds doing the positive job that Mother Nature has bequeathed them.