Fuel Surcharges Lawsuit

British Airways and Virgin Atlantic agree to $200 million price fixing class action settlement.

Fuel Surcharges

New York, NY: (Feb-14-08) Several passengers brought a class action lawsuit against British Airways (BA), alleging that the carrier fixed ticket prices. Sources stated that the suit was filed by a US law firm on behalf of passengers who lost out as a result of BA and Virgin Atlantic conspiring to set the level of fuel surcharges, which is a supplemental fee added to air fares to cover rising oil prices. The suit claimed that BA and Virgin held discussions over 18 months from August 2004, regarding when and by how much to increase surcharges. The suit was filed after Virgin’s lawyers uncovered the conspiracy and blew the whistle, which led to a raid on BA’s offices by the Office of Fair Trading (OFT) in 2006. The passengers’ lawsuit sought compensation for the airline’s involvement in price fixing.

Sources close to the case stated that the parties had reached a settlement, in which British Airways will pay $140 million in compensation to passengers affected by the carrier’s fixing of ticket prices. Virgin’s action of reporting the misdemeanor saved it from censure but BA was fined £121.5 million by the OFT for breaching competition law. The US Department of Justice fined the airline a further $300 million for passenger and cargo price fixing. Officials say that Virgin is thought to be paying $60 million, but BA will have to pay triple damages because it did not expose the conspiracy. [BUSINESS TIMES: FUEL SURCHARGES]

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