British Airways and Virgin Atlantic May Compensate for Levies
The Sunday Times | Mar. 18, 2007
British Airways and Virgin Atlantic have begun talks on compensating hundreds of thousands of passengers worldwide over alleged price-fixing.
The negotiations, arising out of a Californian court action, could potentially benefit any passenger who has flown on a longhaul flight with either airline since May 2004.
However, Australian officials for both companies said last night it was unlikely that the legal wrangle would result in compensation for travellers who may have flown on a ticket purchased in Australia.
The companies are under investigation in Britain and the US for allegedly colluding on raising a fuel surcharge added to ticket prices in May 2004.
The allegations led to a class-action compensation case in the US. Earlier this month, at a hearing before a judge in San Francisco, lawyers for the airlines disclosed that they had entered "mediation" over the compensation claim.
According to a draft transcript of the hearing, Virgin's lawyer said: "For both of the defendants here, British Airways and Virgin ... it is our hope to be able to resolve this as globally as possible."
The judge encouraged the companies to reach a settlement that "allows defendants to get on with their business, and allows victims to be compensated".
No figure for the suggested compensation has been disclosed, but the maximum level of the surcharge under dispute was 35 pounds for each flight.
The price-fixing row dates back to May 2004, when BA introduced a supplement of pound stg. 2.50 each way on long-haul flights to offset high fuel prices. The surcharge later rose to 35 pounds each way, its current level.
Virgin introduced a fuel surcharge a week after BA and it is alleged that the two airlines' surcharges rose in a "lockstep" pattern, both repeatedly rising within days of each other.
The civil case has been running alongside a criminal investigation by both the Office of Fair Trading in Britain and the US Justice Department.
If either airline is found guilty, it could be fined up to 10 per cent of annual turnover. In the case of BA, this would be about 850 million pounds. The maximum sentence for directors is five years' jail and an unlimited fine.