26 June 2008

$504 million fine to conspiring airlines

After a probe carried out by the US Justice Department, five airlines have been fined more than $500 million after their admission of conspiring to fix cargo rates, a move that breaks anti-trust laws.

Air France and KLM, now operated by a single company, are to pay $350m, Cathay Pacific $60 million, Dutch airline Martinair is to pay $42 million and Scandinavia's SAS $52 million. Statements from the justice department's anti-trust division mention that the fine paid by the single company now running KLM and Air France is one of the highest ever imposed.

The meetings carried out by these airlines consisted of them conspiring to and then imposing higher levies for the air transport of various goods, the result of which was unfair competition and increased prices for consumers. This conspiracy continued from mid 2001 to early 2006.

The US Justice Department has been carrying out investigations on airlines that have been fixing fuel surcharges to customers, and other companies that have had to pay fines include British Airways, Qantas and Korean Airlines.

Funnily enough, fuel surcharges are increasing anyway after soaring fuel prices, with crude oil reaching a new high of $140 a barrel. Unfortunately, (for the airlines) that fuel surcharge does not increase their profits.

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