Transportation Industry

Company Watch - Virgin Group

AirGuide Business, Feb 18, 2008

Feb 18, 2008

British Airways and Virgin Atlantic will together pay about USD$203 million to settle a lawsuit brought by passengers who said the airlines illegally fixed the price of fuel surcharges on long-haul trips. The agreement announced on Friday settles a two-year-old case pending in US District Court in the Northern District of California contending that customers overpaid for fuel surcharges, which were meant to help airlines cope with the rising cost of jet fuel. Under the deal, US ticket purchasers will receive USD$59 million, while British purchasers will get GBP73.5 million pounds (USD$144.4 million) in refunds, according to lawyers representing the plaintiffs. The agreement, which still requires court approval, covers 8 million passengers in the US and Britain who bought tickets from either BA or Virgin between August 11, 2004, and March 23, 2006. The airlines will pay one-third of the fuel surcharge the passengers paid per ticket. Feb 15, 2008

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Virgin's V Australia, which is 62 percent owned by Toll Holdings, has asked US transport officials for 10 weekly flights, having already placed an order for six long-range Boeing 777-300ERs with options to buy another six. Australia's former conservative government rejected repeated requests from Singapore Airlines for permission to fly from Australia to the United States. Australia's Labor government, elected in November, has not yet said if it supports the entry of Singapore Airlines on the route. Singapore Airlines wants access to new markets to help offset competition from low-cost carriers in Asia. Australian travel agents predicted a price war on US routes as competition increased. Singapore Airlines estimates that opening the Pacific route to more competition could increase the number of travelers between the United States and Australia by up to 8 percent. Feb 15, 2008

Virgin Atlantic said it "deeply regrets its involvement in this matter and believes the provisional settlement reached now draws a line under this episode." It said that it "quickly began settlement negotiations" after the case involving passenger fuel surcharges came to light. Last year, British Airways agreed to pay roughly USD$247 million in a settlement with British authorities for discussing fuel surcharges with Virgin. Friday's deal resolves a civil lawsuit, brought in the United States as a class action, that contended that passengers were overcharged on the fuel surcharges and were told that the added fees were necessary to cover the rising cost of fuel, but in reality were used to increase the airlines' profits. The amount to be refunded to passengers will be up to GBP10 pounds (USD$19.65) for each flight segment, according to a Washington-based law firm which represented the plaintiffs. The exact refund will depend on the amount of the surcharge paid. Feb 15, 2008

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