The US Department of Justice (DOJ) has obtained the first plea agreements from its ongoing investigation of price fixing among commercial passenger and cargo air carriers. UK-based British Airways Plc and South Korea-based Korean Air Lines Co. Ltd. each agreed to plead guilty and pay separate criminal fines of US$300 million for their roles in the conspiracy.
British Airways was charged with two counts of conspiracy to restrain trade, in violation of Section 1 of the Sherman Act. According to charging documents, between August 2004 and February 2006, British Airways conspired with other airlines to fix prices on passenger fuel surcharges for long-haul international air transportation including between the US and the UK. During the relevant period, the fuel surcharge on roundtrip passenger tickets between the US and the UK increased from around US$10 per ticket to nearly US$110 per ticket. British Airways was also charged with conspiring to fix fuel surcharges for air cargo between January 2000 and March 2006. Fuel surcharges for cargo allegedly increased from 4 cents per kilogram to as much 72 cents per kilogram during the conspiracy. In addition to the DOJ’s US$300 million fine, British Airways will pay the UK Office of Fair Trading US$246 million to settle similar charges pending in that country.
Korean Air was similarly charged with fixing prices for fuel surcharges for flights from the United States to Korea, and for international air cargo shipments, between January 2000 and February 2006. Korean Air is the largest passenger carrier between the US and Korea, averaging more than US$250 million per year on those flights.