Britain and U.S. Probe Air Pricing
The Justice Department said Thursday that it was investigating possible anticompetitive practices involving airline passenger fares and cargo shipment charges, hours after British authorities raided British Airways as part of what was described as a transatlantic probe.
“The antitrust division is investigating the possibility of anticompetitive practices involving surcharges and rates for passenger fares and air cargo shipments,” the Justice Department said in a statement.
U.S. officials declined to say which airlines were under investigation.
Earlier Thursday, British Airways said Britain’s Office of Fair Trading and the U.S. Justice Department were investigating ticket prices and fuel surcharges. Two airline executives were suspended during the probe.
British officials said that they visited the airline’s offices June 13 as part of a civil and criminal investigation into alleged price coordination and that the probe was “at an early stage.”
AMR Corp.'s American Airlines, UAL Corp.'s United Airlines and Richard Branson’s Virgin Atlantic said they too were involved in the probe but were not direct targets. The four are the only carriers allowed to fly direct between London’s Heathrow Airport and the U.S.
In February, the U.S. Justice Department and the European Union’s executive arm raided several airlines on both sides of the Atlantic in a probe involving surcharges on cargo shipments.
With oil prices near record highs, airlines have been able to cover 15% to 20% of their additional costs with supplemental charges, according to the International Air Transport Assn.
British Airways’ nonfare revenue, which includes fuel surcharges, increased 65% in the fourth quarter, the airline said May 19. British Airways in April raised the fuel surcharge for long-haul flights by 17%.
The British probe marks the first time the Office of Fair Trading has used criminal law powers that can target individuals, said David Strang, a London lawyer.
Reuters and Bloomberg News were used in compiling this report.