British Airways faces a massive damages claim from millions of passengers after the airline was fined for colluding with its rival Virgin Atlantic over fuel surcharges on tickets.
BA was hit with penalties totalling $550 million by competition authorities in the UK and United States yesterday for holding secret discussions with Virgin over a two-year period.
The company admitted contacting Virgin about raising fuel surcharges on long-haul flights – by sums ranging from £5 to £60 per return ticket – five times between 2004 and 2006, rather than acting independently.
Legal experts said both companies faced paying out millions of pounds to aggrieved customers, with the judgment certain to spark class-action claims. Lawyers said passengers could win up to £165 per return flight from BA and Virgin – three times the total surcharge increase – under the US “triple damages” system. As many as 20 million passengers could be affected.
Consumer campaigners urged passengers to write to the airlines to demand their money back and to consider taking action in the small claims courts.
The Office of Fair Trading (OFT) fined BA a record £121.5 million, while the US department of justice (DoJ) announced a $300 million (£150 million) fine, which also covered price-fixing on cargo flights: the DoJ imposed a similar fine on South Korea-based Korean Air. BA said two-thirds of its US fine was for cargo offences.
Virgin escaped fines because it blew the whistle by informing the OFT about the collusion.
Both BA and Virgin denied passengers had been overcharged.
The DoJ said passengers who flew on BA flights between the UK and the US had “paid more for their tickets as a result of the illegal cartel”.
William Mercer, the acting US associate attorney general, said: “When British Airways, Korean Air and their co-conspirators got together and agreed to raise prices for passenger and air cargo fares, American consumers and businesses ended up picking up the tab for their illegal conduct.”
The DoJ said Virgin Atlantic and the German carrier Lufthansa had agreed to co-operate in its investigations and had accepted a leniency clause similar to that introduced by the OFT. But it said both airlines were “obligated to pay restitution to the US victims of their conspiracies”.