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OFT: BA made millions from price fixing

BRITISH Airways (BA) made back hundreds of millions of pounds a year following a price-fixing scheme on its fuel surcharge, the Office of Fair Trading (OFT) said yesterday in court.

Richard Latham, the OFT’s prosecutor, told a jury at Southwark Crown Court the airline colluded with rivals Virgin Atlantic to increase passenger fuel surcharges at the time when fuel prices started to climb.

He claimed that BA was able to offset some of the additional £400m costs it had incurred from the higher fuel prices with the money it made from price fixing.

Latham said Virgin Atlantic imposed a £6 surcharge to customers to bring it in line with BA’s.

At the centre of the trial are three former BA executives and one current executive who were said by the OFT to have schemed with executives at Virgin Atlantic to set up a cartel on fuel prices.

The former executives Martin George, Alan Burnett and Iain Burns and current BA executive Andrew Crawley are being charged.

But as well as BA management Virgin chief executive Steve Ridgway, and other senior Virgin executives William Boulter and Paul Moore were all named as having involvement in the fuel cartel.

George, Burnett, Burns and Crawley pleaded “not guilty” to the charges, marking the first time in history the OFT faces a court battle disputing cartel charges.

“This is a significant development and a landmark case since the Enterprise Act came into force in 2003. For the first time we will have a proper trial for the cartel offence,” said Patrick Boylan, a lawyer with Simmons & Simmons.

It continues to remain unclear whether Virgin Atlantic’s founder Sir Richard Branson will testify in the case, despite having his name raised a number of times during Latham’s opening summation.

The trial continues.

AIRFARES TO CLIMB BY 5.2 PER CENT IN 2010 CLAIMS NEW CONSUMER REPORT
AIRLINES are to raise air fares by 5.2 per cent this year costing UK passengers a total of £1.8bn, new figures show.

Figures published by price comparison website Kelkoo and produced by the Center for Economics and Business Research (CEBR) show the average airfare will cost UK customers £48 more in 2010 as airlines try to mitigate the costs of rising oil prices and the financial impact from the volcano crisis.

Kelkoo said within the next two years, the average airfare in the UK will soar by 11.5 per cent, pricing an average economy flight between London and New York at £62 more than it currently costs.

“Most airlines were already struggling prior to the crisis, but this, combined with soaring oil prices will have a knock on effect on customers as carriers are forced to pass rising operational costs to passengers,” said Kelkoo UK managing director Bruce Fair.

The online shopping and price comparison group said oil prices have climbed by 74 per cent during the first quarter of the year compared to the same period last year.

Meanwhile, airlines are also struggling with the £1.3bn cost of the volcanic ash disruption last week.