British Airways and Korean Air Fined for Price Fixing

Filed in archive Aviation News on August 24, 2007

With overcrowded planes, fares at all-time highs, and on-time arrivals plummeting, the last thing airlines need is more problems. However, things just got worse for British Airways and Korean Air.

On Thursday, both airlines pleaded guilty to price fixing on international flights. The punishment (if you can call it that) was a $300 million fine, which was quickly reduced because they "cooperated" with investigators. No wonder international travel remains down.

U.S. District Judge John D. Bates said the case "involved considerable commerce and reflected long-term and widespread conduct involving major airlines and players."

Both saw their potential fines reduced because they cooperated with Justice Department investigators. Korean Air's fines could have been twice as high and British Airways could have faced fines closer to $900 million, but the Justice Department and the judge credited the company with cooperating.

"Any anticompetitive behavior is to be condemned at British Airways or at other companies. It will not be tolerated and we remain vigilant in this respect," British Airways Chief Executive Willie Walsh said in a statement released after court.

Korean Air released a statement saying it was "committed to antitrust compliance" and was taking steps to make sure the conduct was never repeated. Neither company addressed the extent of its cooperation or how widespread the practice was in the industry.

Earlier this month, authorities in London announced $246 million in fines for British Airways in a parallel trans-Atlantic investigation. Both inquiries are ongoing.

Scott D. Hammond, deputy assistant attorney general for criminal antitrust issues, said the sentences proved that "those who violate the antitrust laws and seek to deny American consumers and businesses the benefits of competition will be held accountable."
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