BA Investigated by Britain, U.S. for Alleged Cartel Activity

British and U.S. agencies are investigating alleged price-fixing by British Airways and other airlines on passenger fares and fuel surcharges, BA said Thursday.

In a brief statement, BA said it was assisting the Office of Fair Trading and the U.S. Department of Justice with their investigations, but it provided no other details.

Two other airlines - Virgin Atlantic and American Airlines - said they were cooperating with the investigation.

BA said Martin George, its commercial director, and Iain Burns, its head of communications, have been given leaves of absence during the probe.

The Office of Fair Trading confirmed that an investigation was under way but gave no details.

Paul Charles, director of communications at Virgin Atlantic, said: "We're aware of the investigations and we're assisting with inquiries" from the two agencies.

In a telephone interview, Charles declined to say whether Virgin Atlantic was being investigated but said none of its staff had been placed on leave.

American Airlines said in a brief statement that it "has received a United States federal grand jury subpoena in connection with a government investigation into alleged price fixing in the air passenger industry. The airline has been informed that the company is not a target of the investigation."

A United Airlines official in England said questions regarding the probe had to be referred to the airline's home office in the United States.

Eight other airlines - Ryanair, bmi, Continental, Lufthansa, Finnair, KLM, Icelandair and SAS - said they were not being investigated.

BA shares tumbled following the announcement, and were down 4.9 percent at $6.45 in midmorning trading on the London Stock Exchange.

In February, more than a dozen airlines were drawn into a widening investigation by U.S. and European Union officials of suspected collusion in the air cargo industry to fix prices on surcharges for fuel, security and insurance.

European and U.S. officials refused to provide details about the probe.

But one of the foreign airline's targeted, SAS AB's SAS Cargo in Copenhagen, Denmark, said the EU has alleged that cooperation among airlines began in 2000 and involved agreements about surcharges imposed by airlines to offset certain external costs.

SAS said the costs included surcharges on fuel, added security after the Sept. 11, 2001, attacks in the U.S., and premiums for war-risk insurance after the start of the war in Iraq.

Raids were conducted at the offices of several airlines, including BA, and several cargo carriers said they had been contacted or issued subpoenas from authorities.

BA confirmed at the time that it had received a request for information from the EC and the U.S. Department of Justice "relating to alleged cartel activity involving BA and a number of other airlines and cargo operators."


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