Published: 10 Nov 2010
Last Updated: 12 May 2011
Just as things seemed to be looking up for British Airways, more bad news: the airline is one of 11 found guilty of price-fixing by the European Commission. BA was handed a €104 (£90m) fine for participating in a cartel that fixed the prices of fuel surcharges for cargo customers and, after 9/11, security surcharges as well. BA is in good (bad?) company: Air France-KLM, Cathay Pacific and Qantas are all facing fines too. But none of them are embroiled in a crippling row with cabin crew - which, to make matters worse, seems to have blown up again. Poor old Willie Walsh must wish he hadn't bothered getting out of bed this morning...
The investigation into price-fixing activities between 1999 and 2006 has taken three years to complete, and the European Commission was unequivocal in condemning the airlines, calling their behaviour ‘deplorable’. The largest fine of the lot was doled out to Air France-KLM and its subsidiary Martinair, which will have to pay a hefty €340m to the Commission. The airline is, naturally, not happy about that, calling it ‘disproportionate’ because ‘the actions in question had no detrimental effect on the freight shippers’ (difficult though it may be to imagine how that could be the case) and vowing to appeal. German flag-carrier Lufthansa, on the other hand, managed to avoid a fine despite admitting its involvement - because it blew the whistle on the cartel. Being a snitch pays at times like this.
As for BA, it's been slapped with fines from competition regulators in Europe, the US, Australia, Canada and South Korea for its part in the conspiracy. But while the hefty charge will undoubtedly come as a blow for the UK carrier (which scraped back into the black last month), in some ways it's got off lightly. After the investigation began in 2006, BA set aside £350m to pay off the fine – so the £90m fine is actually much smaller than expected. That said, the conviction does expose BA (and the other airlines involved) to legal actions from customers. One civil action has already been launched by London law firm Hausfeld on behalf of two small flower producers, but is backed by the likes of Ikea, H&M and Ericsson. So the financial pain might not be over yet.
To add to BA’s woes, there’s been yet another setback in its long-running dispute with cabin crew. While it’s finally reached a deal in talks with the heads of the Unite union, its Bassa branch (which represents the majority of the crew) is still stubbornly refusing to play ball. A spokesperson said clauses in the deal forcing its members to drop all outstanding legal claims resulting from the dispute are not acceptable. Those travel concessions are also still a sticking point: while BA has agreed to reinstate all its staff’s cut-price flights, it wants the union to acknowledge that it still has the right to withdraw concessions in the future. But the union can’t agree, saying it’s being ‘held to ransom’.
So it looks like BA’s miseries aren’t over yet. Let’s hope it can reach an agreement with those cabin crew in the next few weeks – or Walsh and co won't have a very merry Christmas at all.
The investigation into price-fixing activities between 1999 and 2006 has taken three years to complete, and the European Commission was unequivocal in condemning the airlines, calling their behaviour ‘deplorable’. The largest fine of the lot was doled out to Air France-KLM and its subsidiary Martinair, which will have to pay a hefty €340m to the Commission. The airline is, naturally, not happy about that, calling it ‘disproportionate’ because ‘the actions in question had no detrimental effect on the freight shippers’ (difficult though it may be to imagine how that could be the case) and vowing to appeal. German flag-carrier Lufthansa, on the other hand, managed to avoid a fine despite admitting its involvement - because it blew the whistle on the cartel. Being a snitch pays at times like this.
As for BA, it's been slapped with fines from competition regulators in Europe, the US, Australia, Canada and South Korea for its part in the conspiracy. But while the hefty charge will undoubtedly come as a blow for the UK carrier (which scraped back into the black last month), in some ways it's got off lightly. After the investigation began in 2006, BA set aside £350m to pay off the fine – so the £90m fine is actually much smaller than expected. That said, the conviction does expose BA (and the other airlines involved) to legal actions from customers. One civil action has already been launched by London law firm Hausfeld on behalf of two small flower producers, but is backed by the likes of Ikea, H&M and Ericsson. So the financial pain might not be over yet.
To add to BA’s woes, there’s been yet another setback in its long-running dispute with cabin crew. While it’s finally reached a deal in talks with the heads of the Unite union, its Bassa branch (which represents the majority of the crew) is still stubbornly refusing to play ball. A spokesperson said clauses in the deal forcing its members to drop all outstanding legal claims resulting from the dispute are not acceptable. Those travel concessions are also still a sticking point: while BA has agreed to reinstate all its staff’s cut-price flights, it wants the union to acknowledge that it still has the right to withdraw concessions in the future. But the union can’t agree, saying it’s being ‘held to ransom’.
So it looks like BA’s miseries aren’t over yet. Let’s hope it can reach an agreement with those cabin crew in the next few weeks – or Walsh and co won't have a very merry Christmas at all.
