pounds 121.5m; BA fined after admitting price fixing

Evening Chronicle (Newcastle, England), August 1, 2007

Byline: By GRAEME EVANS

BRITISH AIRWAYS was today hit with a record pounds 121.5m fine after it admitted to fixing the price of fuel surcharges on long-haul flights.

BA colluded with Virgin Atlantic over the surcharges, which were added in response to rising oil prices, the Office of Fair Trading said.

BA is facing a second fine from the US Department of Justice, which will be announced later today. The airline said the combined sum was likely to be consistent with the pounds 350m it set aside in May.

The penalty from the OFT is the highest ever imposed by the regulator for infringements of competition law.

In a statement BA said it had agreed a resolution with the OFT and entered a plea agreement with the United States' Department of Justice.

The statement said: "The sum of the combined fine is consistent with our guidance and provision of pounds 350m."

BA's chief executive Willie Walsh insisted passengers had not been overcharged, but condemned anti-competitive conduct by a "limited number of individuals" in the company.

"I want to reassure our passengers that they were not overcharged. Fuel surcharges are a legitimate way of recovering costs," he said.

"However, this does not in any way excuse the anti-competitive conduct by a very limited number of individuals within British Airways.

"Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly.

"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."

A statement added that criminal investigations by the DoJ and OFT were continuing into the conduct of individuals concerned.

BA said it admitted that between August 2004 and January 2006 it colluded with Virgin Atlantic over the surcharges.

Over that period, the surcharges rose from pounds 5 to pounds 60 per ticket for a typical BA or Virgin Atlantic long-haul return flight. Virgin Atlantic is not expected to pay any penalty.

The OFT and the DoJ have been investigating allegations of price-fixing on long-haul fuel surcharges since June last year.

Mr Walsh told BBC Radio 4's Today programme he expected the US fine to be announced at about 3pm.

"I am happy that the issue has been resolved; I'm clearly very unhappy that this activity ever took place within British Airways," he said.

"I condemn it; there's no excuse for it."

CAPTION(S):

NOT HAPPY: BA's Willie Walsh