BA’s pricey chatter
has to cover possible fines to be levied by regulators and potential damages payable in civil suits for alleged “anti-competitive activity” in respect of the levying of fuel surcharges.
Confused? Well I think what has happened can be paraphrased as “careless talk costs big money.” BA has completed an internal enquiry and has come to the conclusion that certain unnamed employees said things to competitors that – under rules to prevent collusion and price-fixing – shouldn’t have been said.
Whether prices were actually rigged to the benefit of the airline is another matter entirely. I wouldn’t be at all surprised if no fuel surcharges were actually fixed in a way that damaged customers.
But it’s almost a matter of life-and-death to honour competition regulations to the letter in a world where competition watchdogs from Washington to London to Brussels are straining at the leash to bite. International companies like BA are governed by strict prohibitions against anti-competitive behaviour and potential fines are huge.
Just imagine being the employee or employees who chatted to those competitors. BA has said this morning that they’ve almost certainly cost the company and its shareholders £350m. Yikes!
BA’s humiliation is also another astonishing chapter in the epic battle between Sir Richard Branson and the flag-carrying airline. As , it was Branson’s that originally blew the whistle on BA to the competition authorities for allegedly wanting to discuss fuel surcharges. But even Branson may not have expected the financial cost to BA to become quite so stupendous.
UPDATE 19:30: Passengers and shippers may indeed have been damaged by price fixing. But to be clear what BA has admitted, it is that its staff had inappropriate conversations with competitors about fuel surcharges.
Whether these conversations actually resulted in prices being manipulated – and if so by how much – has not been disclosed.
Even so, the mere fact that BA staff had these conversations is appalling for a business that has always claimed to put the interests of the customer first.
And if it were to turn out that any detriment has been more acute to cargo customers, rather than to passengers, well BA should still hang its head in shame.
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BA has been delivering average to under-average customer service in recent years, at over average prices. Air France and Lufthansa may be formaly less polite, but they get you there on time, including your luggage.
BA has been in a sad mariage with BAA for to long and has been protected from international competition togehter with Virgin at their cosy Heathrow HQ.
This is hopefully going to be over next year, thank god the customers are gaining at last!
BA cornered $350m, Microsoft reserves many hundred of million each years to settle IP rights. Recently, IBM and Amazon settled online patent issue for undisclosed sum - is everything OK? I mean biggies seems to not bothered about fair competition and preservation of innovation for money at all - what sort of role model they are??
As a BA Gold card holder, will we be entitled to sue BA if they are found guilty?
I don't take being fiddled out of money lightly.
BA will have a lot of angry customers to deal with.
For quite a while travelers have had to deal with rising ticket prices and shrinking quality of service. BA may be setting aside millions of dollars for those lawsuits, but the customers will be the ones who truly pay. BA will probably just hike it's prices to compensate. Customer Service no longer means what it used to.
So Virgin Atlantic, The British Airline 51% owned by blind tax minimising Carribean trusts and 49% by Singapore Airlines, manages to score a big hit against British Airways. It is a British tradition to knock success. It about time we in Britain stood up for British Airways, which is rightly regarded as one of the world's best airlines.
I am a furious and disgusted British Airways employee with over 20 years service - not only by the behaviour of a tiny minority of our staff with regards to this matter, but also due to the fact that this £350 million would have made a significant impact on our ailing pension fund.
As a result of our so-called pensions 'settlement', in order to maintain my status-quo with regards to retirement and benefits, I find myself having to pay and EXTRA £250 per month into my pension scheme with many loyal staff having to pay even more! I am sick to the stomach and have absolutely no faith in our management. More heads need to roll over this issue, not just the two scapegoats!
BA almosr certainly deserves this fine. what is concerning though is that no-one looks at other airlines with anywhere near the same scrutiny - do we hoinestly think that the so called separately managed KLM Air France combo have not done even more price fixing than BA? Or why was the BA AA tie up frustrated by the EU but air France and KLM or Lufthansa BMI tie ups were waved throuhg. i can only assume it is corporate racism in the EU that subjects British companies to an unfair level of review versus their competitors - perhaps there are Investigation-fixing charges to be levelled at the EU?
As a BA Gold card holder (just three times over this year), I couldn't care less about fuel surcharges. When I pay £5k to fly to Peru every other week, the trivial amount I pay in fuel surcharges is like a mosquito biting an elephant.
Anyone who thinks this sort of thing doesn't go on as a matter of routine throughout business is living in cloud cuckoo land. BA were unlucky to get caught - simple as.
Edward - you are deluded on many levels. And to the BA employee - the holes in the pension schemes have been filled (or agreements have been reached) so untwist your knickers.
Can I just echo Ivans' comments above....as a long serving BA employee, I'm also very angry at yet another incompetent management that quite frankly is not up to the job of running British Airways.A 2 Billion pensions deficit that the company refused to pay. 350 million would have helped plug the gap. Perhaps even improve our product to keep our passengers happy? Or even lower prices? Sadly not. Instead 2 executives flee the jurisdiction and leave the rest of us to pick up the tab. WW should stand in front of all the staff and apologise to all the staff .
I agree with Ivan. Customers will have much to complain about if this if BA is found guilty and many will be able to sue. Staff on the other hand have see their pension contributions soar but were never told that the near £400 million the company saved would be spent on paying for the actions of directors. As it it this action as seen all BA staff robbede of their ERP Employee rewrd programme for this year. This could have been 2 to 3 weeks pay and when you are on £12000 a year that makes a huge difference. The current leadership team, (the same people who on the very eve of a very danaging cabin crew strike were actually discussing Free first class travel for them selves and their partners) must take collective responsibility and depart....with no further bonuses. I know that is a forelorn hope and it will interesting to see what level of bonud they get this year.
I'm a BA shareholder and have family members who are or have worked for BA.
I can't believe what has happened!! To think that a number of years ago BA was the number 1 airline now who knows what people rate them.
Why can't BA have a board like Lord King who helped BA and saved them!!
Finally I just what to say BA get your act togather!!!
Anyone who thinks that all the Airlines are not envolved in this is not thinking with their heads. This nothing more then Virign trying to cause trouble again.
Why are they still called BRITISH Airways anyway?
All their long haul flights are out of London apart from one a day from Manchester to NY.
If you try to fly anywhere in Europe from the 'regions' they try to make you go via Heathrow to make the 'Fortress Heathrow ' statistics look better even though direct flights are availble from the regional airports and they've just sold their regional operation to FlyBe!
British? I don't think so. London Airways more like - they should be prosecuted under the Trades Descriptions Act!
I've got my CIMA final case study on thursday and it's on .. you guessed it.. the airline industry.
The issues of staff morale, threat of strike action, private equity backed take-overs, OFT fuel surcharging investigations and "open skies" policies are all gold.
I'm just worried about losing marks for repeating those two letters all the time.
Price-fixing requires more than one airline to be involved - you can't price-fix on your own! Who are the others? Are they being prosecuted too?
How can we check or obtain proof that the £40 per person fuel surcharge levied on our forthcoming holiday to Turkey in September 2007 is correct and legitimate? We will be travelling with jmc, part of the Thomas Cook group. Thank you