|Airlines Fixing Fares? Naahhhhh....|
|Subject||British Airways and other airlines are under investigation for allegedly fixing passenger fares and fuel surcharges.|
|Key Words||cartel, airlines, British Airways, price-fixing.|
|News Story||The U.K.'s Office of Fair Trading and the U.S. Justice Departments are jointly investigating British Airways, Virgin Atlantic, United Airlines and American Airlines for colluding in passenger fares and fuel surcharges. The investigation comes as British Airways stands accused of operating a cartel for cargo fares.
In this post-September 11 environment, the airlines are accused of coordinating passenger prices, fuel surcharges, and higher war risk insurance fees charged to passengers. The four airlines listed above are the only airlines allowed to fly between the U.S. and London's Heathrow Airport under current bilateral treaties. All four airlines indicate that they are cooperating with the investigations and are not guilty of any wrong-doing.
Analysts indicate that under the worst-case scenario, British Airways and others will be forced to forego up to 10% of turnover on routes between the U.S. and U.K. In other words, the antitrust agencies in both countries may require additional competition going into and out of Heathrow Airport in London. In fact, the two countries are already discussing ways to open up competition on trans-Atlantic flights. Such competition bodes particularly ill for British Airways, though, as it could mean a fine of up to 350 million pounds (U.S. $637 million).
|Source||Smith, Michael. "US, UK Investigate Airlines Price Fixing." Reuters Press. June 22, 2006.|
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