Airlines fined for price-fixing, $1.7 billion so far

U.S government prosecutors have fined 21 airlines $1.7 billion to date in a price-fixing scheme that has cost America’s flying public and cargo shippers millions in a case that dates back to 2000.

Rather than fix problems plaguing the airline industry a decade ago, executives at global carriers scrambled to find an easy way out and avoid financial ruin reports the Associated Press. Between 2000 and 2006 airlines artificially raised passenger and cargo fuel surcharges to make up for lost profits.

“As an example of the impact of the conspiracy, fuel surcharges imposed by some of the conspirators rose by as much as 1,000 percent during the conspiracy, far outpacing any percentage increases in fuel costs that existed during the same time period,” said former Associate Attorney General Kevin J. O’Connor.

They might have not been caught either had it not been for two airlines coming forward to turn in their conspirators. Admitting their “mistake” allowed Lufthansa and Virgin Atlantic to take advantage of a Justice Department leniency program for helping in the investigation. Still, the two airlines were fined over £120 million after admitting to fixing prices on fuel surcharges.

From fines to prison time for airline executives, penalties vary among individual airlines.

Gadling has been following this story all along and in 2008 told of Qantas airline’s involvement . In the case involving Qantas, the price fixing scheme had a focus on their freight division.


It was the freight division of China Airlines too that earned the airline a $40 million fine in the price fixing conspiracy just last September.

Announcing four guilty pleas in June 2008, O’Connor told the Associated Press that the cases “conservatively, has affected billions of dollars of shipments. Estimates suggest that the harm to American consumers and businesses from this conspiracy is in the hundreds of millions of dollars.”

Airlines fined for price-fixing include British Airways, Korean Air, and Air France-KLM but no major U.S. carriers as the case continues. So far, two former executives have been sentenced to six months in prison and two others were ordered to prison for eight months.

Ongoing charges are pending against 15 executives, nine of whom are considered fugitives.

Flickr photo by BriYYZ

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Qantas launches “unlimited flights to South Australia” contest

Who doesn’t love free travel? Between now and December 31, 2010, the South Australia Tourism Commission and Qantas Airways have partnered to giveaway unlimited flights for two for one year to South Australia.

The Grand Prize winner will win of unlimited round-trip economy class flights for the winner and one companion between Los Angeles (LAX) and Adelaide (ADL).

A few stipulations make this trip slightly more difficult if you don’t have a significant other – the Grand Prize winner and travel companion must travel on the same itinerary for each trip and the winner’s travel companion must be the same person for each trip.

Still, free trips? We’re all about that.

The contest winner will be selected on January 15, 2011. To enter, visit www.unlimitedflightstoaustralia.com.

The most over-the-top first class cabins

While most coach flyers would kill for a little extra leg room and a free bag of peanuts, first class passengers are often living the good life with free-flowing drinks and fully-reclining seats. But there are some first class cabins that go beyond simply luxury and begin to cross into the land of excess.

For example, according to a post on Divine Caroline, Singapore Airlines offers its first class passengers Givenchy sleepwear, Ferragamo toiletry kits and personalized turndown service. Jet Airways welcomes passengers into their own private room with a door that shuts for privacy, while on Emirates, they get their very own suite, complete with personal lounge and shower.

On Lufthansa, the VIP service starts before you even board, as a Mercedes Benz chauffeurs you to the plane. Qatar Airways’ first class lounge has a Jacuzzi and full-service spa.

Some airlines turn your seat into a cinema or a four-star restaurant. Qantas Airlines’ first class seats offer a 400-channel entertainment center and an eight-course meal with wine pairings. Seats on Cathay Pacific have built massagers and flight attendants cook each passenger’s breakfast to order.

And here I was just hoping for a good in-flight movie and a few free drinks. . .

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