BA Fined for Surcharge Fixing Plot

[Bazz]

Just announced on the BEEB

BA Fined £121.5M for fuel surcharge fixing plan by British Competition Watchdog (OFT) after being shopped by VAA. American fine still to be announced, expected later today, could be a further £300M.

Link here

BA colluded with Virgin Atlantic over the surcharges, which were added in response to rising oil prices, the Office of Fair Trading (OFT) said.

[V]

It's a bit odd isn't it. BA and VS collude to fix their prices. VS then grass up BA so they won't get fined themselves. They seem as bad as BA here, but get away with it.

Anyone noticed though, how passengers never get any recompense? BA may well say they're not overcharging, but just who pockets the fine they'll pay??????

Pax have paid for the fuel surcharge, and will pay the fine too in increased prices, so while it's right that they are fined, we all suffer in the long run.

Did BA attempt to collude with VS or did VS collude then blow the whistle? The BBC seem to alter the way they word this on their reports.

Originally posted by catsilversword
Anyone noticed though, how passengers never get any recompense? BA may well say they're not overcharging, but just who pockets the fine they'll pay??????

Err, that'll be the next surcharge increase [:X]

The most unsavoury part of this sad buisness is that whilst we would expect this of BA from their years of dirty tricks, Virgin have always played on their "we are better than BA, we are whiter than white" reputation, which is now in tatters. The view from normal passengers will be that Virgin and BA are no different to each other and both rip off their passengers.

Virgin colluded with BA to overcharge you and me to make more money out of us.[V]

Virgin have finally hit rock bottom. [n]

No longer can they describe themselves as ethically better than BA, that they are the passengers friend when, for the past three years they have been shafting them.
Poor food, poor cabin service, worse than charter economy, awful ground service, now added to that colluding with the so called rival to fleece their passengers.
It now looks like the attitude we have read on other forums about the way the Cabin crew feel about the passengers has permeated from the top downwards.[V]

How far the airline has come from Bransons original idea.

Unless he sacks the senior managerment and gets the airline back onto its original principals, this airline will rapidly become no different to the countless other airlines out there.[:(!]

Where has its soul gone???? [:#]

[Bazz]

Originally posted by locutus
Did BA attempt to collude with VS or did VS collude then blow the whistle? The BBC seem to alter the way they word this on their reports.

According to the piece on Sky News the increases in the surcharge were sometimes initiated by VAA and sometimes by BA. There is evidence that both sides were fully complicit and, no doubt, equally guilty. I am not sure who made the initial approach but that is a trifle irrelevant given that both parties then willingly colluded to defraud their pax.

VAA has done well to negotiate avoiding a financial penalty but the harm done to their reputation is significant.

How long before someone tries a 'Test Case' to reclaim part of their 'Fuel Surcharges' ?

[preiffer]

Indeed, it's an interesting case. When I watched the news, they said it could go to a TOTAL of £300m though, not a FURTHER £300... [?]


I HOPE VS don't even DARE to comment on it. People in glass houses and all that... [:w]

Absolutely, VS owe their passengers an apology for price fixing but in agreement with P should probably stay stumm!

Interesting blog on the BBC thinking the same here

[Scrooge]

Originally posted by andrew.m.wright
How long before someone tries a 'Test Case' to reclaim part of their 'Fuel Surcharges' ?

Oh now that would be interesting...However it would be better if the case was heard over here.

Originally posted by Scrooge

Originally posted by andrew.m.wright
How long before someone tries a 'Test Case' to reclaim part of their 'Fuel Surcharges' ?

Oh now that would be interesting...However it would be better if the case was heard over here.

tell me more ?

[mitchja]

My understanding on this is that the fuel surcharge set by VS was correct for their operating costs with BA charging the same as VS.

BA have lower operating costs, therefore, BA where in fact over-charging it's PAX as they didn't need to charge as much as VS but did so anyway [:?]

Regards

[Bazz]

I thought the charge was one of collusion and price fixing not one of overcharging per se?

[RichardMannion]

There is certainly a healthy amount of comments kicking round about the whole matter. I don't think we will ever know the true facts inside out about who did what and when. I personally don't really know where to sit in regards to this issue; what I have seen is an outing of senior people at BA, yet no one has been offered up so far from VS:

This comment from a BBC article:
Virgin Atlantic said that it had informed the OFT as soon as its lawyers were made aware of the nature of contacts that had occurred between individuals from the two airlines.

Now if it takes 17 months to notice... [:?]

If it had been the other way round, and BA had blown the whistle I think VS would be really up the creek without a paddle, ~£300m is a large fine, but you have to remember BA profits last year were ~£650m. VS profits were ~10% of that (if I recall).

The VS brand will have taken a severe battering today, and it will be interesting on how they try to recover from this as it will take a long time to gain confidence back from some people. If I were SRB and some of the other CxO level people at VS, I'd want heads to roll.

At least VS doesn't rip-off it's customers when it comes to claiming back taxes/fees for unused fligths like BA and certain other carriers, and that buys them some positive credits in my book. That alone runs into £m's on BA's part (and wouldn't be surprised if it helped pay for a sizeable chunk of their fines).

Thanks,
Richard

I was watching a news piece on it which described multiple "phone calls" over a period of time, each time calling for a raise of the price starting from 5 pounds going all the way up to 26 pounds per ticket. The segment didn't state who instigated the calls in each case though. It seems like VS benefits twice in this. First, they got to make extra profit by screwing customers, and then they got avoid the fines by screwing BA before VS itself got in deep trouble. Doesn't look too good for either company.

Several pieces in Thursday's Guardian including this one about a class action law suit being brought in the US. That should be interesting and hopefully a test of the principles around the approach of passing on costs through surcharges.

Paul

As you might expect, this has knocked BA's share price, leaving it hovering around a 52 week low.

It's a good time to buy 200 BA shares for the 10% shareholder's discount on tickets.

http://www.bashareholders.com/

It states that you must have held 200 shares on 3 November 2006.

[Decker]

From the FAQs

Shareholder Discount Coupon
Shareholders who hold a minimum of 200 shares or more on a record date in early November each year are entitled to a Shareholder Discount Coupon. This coupon entitles the shareholder and up to five travel companions to a 10% discount on BA flights.

So I've just grabbed 200 . Thanks for the tip Onionz... I had some shares languishing in an E-Trade account so I just sold them to buy these... 10% not to be sneered at

[Bazz]

Is the discount restricted to full fare tickets? If so it is not such a great benefit.

[Decker]

From their info sheet

The flight coupon can be used to cut 10% off the price of any published British Airways fare, for a journey from or within the UK, for leisure travel only, subject to the normal terms and conditions. The fares include any British Airways class of travel worldwide - from UK domestic, World Traveller plus and Euro Traveller to Club World, Club Europe and First. 'World Offers' fares are also included.
Tickets issued through this scheme are no different from regular tickets- the rules, restrictions and conditions associated with the type of fare or holiday package involved, covering such items as advance purchase requirements, still apply.

Can't really see how they can enforce the leisure travel only bit! Otherwise, yes it's applicable to pretty much all fares.

You need to be holding the 200 shares on a certain record date in November, then you get the discount for the next year.

If you don't hold the shares in certificated form, i.e. a nominee holds it on your behalf in some form of share account, it takes a bit more work to sort out the discount but it's probably worth the hassle . See the link I gave above for more information.

Originally posted by onionz
As you might expect, this has knocked BA's share price, leaving it hovering around a 52 week low.

It's a good time to buy 200 BA shares for the 10% shareholder's discount on tickets.

http://www.bashareholders.com/

Thanks for that tip - I'm assuming this is 10% for every trip or is it once only?

I don't know for certain but I've always been inclined to believe it's for every trip. The Terms and Conditions do not appear to restrict it to once.