BA faces class action threat after US fine

British Airways has been fined another £148 million by the US Department of Justice for colluding on fuel surcharges.

In total, it is now having to pay out just under £270 million after receiving a £121.5 million fine from the Office of Fair Trading earlier today.

The figure is less than the £350 million the airline had set aside when the inquiry began.

But the airline and Virgin Atlantic now face the prospect of a £300 million class action lawsuit brought by millions of passengers. Top US litigator Michael Hausfield told The Guardian a lawsuit would be filed on behalf of millions of air passengers and the damages could exceed BA’s punishment.

“Collective action will be brought in London, so that consumers that were victims of this cartel have the opportunity to recover that which was robbed from them,” he was quoted as saying.

Consumer group Which? was also reportedly understood to be consulting lawyers about bringing a separate action against the airlines.

BA admitted to allegations of colluding with Virgin Atlantic at least six times between August 2004 and January 2006. During that time, surcharges rose from £5 to £60 per ticket.

Earlier, BA chief executive Willie Walsh assured passengers they had not been 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.”

He said Virgin Atlantic and British Airways exchanged information on proposed changes to their respective long-haul passenger fuel surcharges in response to fluctuating oil prices.

But last year Virgin Atlantic went to the OFT and revealed its part in these conversations. As the first applicant under the terms of the OFT’s leniency policy, Virgin qualified for conditional immunity and as a result has not been required to pay any penalty.

OFT fines could be up to 10% a company’s worldwide turnover, but this one represents just over 1% of BA’s group turnover.

When the allegations were first made, BA commercial director Martin George and communications chief Iain Burns went on leave of absence. Last October, they both quit.

The OFT and DoJ continue with their criminal investigation into the conduct of individuals.

By Bev Fearis and Phil Davies