THE resignation of two senior figures at British Airways suggests the airline may have a case to answer over allegations of price fixing, as the Office of Fair Trading continues an investigation.
Commercial director and board member Martin George and head of communications Iain Burns left the company on Monday after being placed on leave following an OFT raid on BA’s headquarters in June.
Their departures brought an admission that BA employees had discussed fuel surcharges with a rival, the charge that is being investigated.
In a letter of resignation, George said: “I recognise that within my department there may have been inappropriate conversations in violation of company policy in relation to long-haul fuel surcharges.”
BA said it had discovered “contacts took place with a competitor”.
The OFT is conducting both civil and criminal investigations into alleged price co-ordination with other airlines, looking specifically at fuel surcharges on flights between Heathrow and the US, and any advance warning of price changes would breach the law.
The inquiry began following a tip-off believed to have come from Virgin Atlantic. The OFT has the power to fine BA up to 10% of its turnover, which amounts to £850 million, although it is likely any fine would be limited to turnover on the routes in question.
However, under new criminal investigation powers that it is using for the first time, the OFT could also seek penalties of up to five years in prison and unlimited fines on individuals found guilty of acting “dishonestly” in establishing a cartel.
BA will hope to avoid criminal charges, but a long series of legal battles on top of the OFT probe could prove debilitating. The US Department of Justice is also investigating and the airline faces a string of class-action lawsuits in the US.
In addition it is one of 15 airlines under investigation by the European Commission and authorities in the US and Asia for alleged fixing of fuel surcharges on cargo flights. This has prompted an even larger number of lawsuits in the US.
Lawyers have put the combined legal bill for the cargo cases alone at £555 million. A 16th airline, Lufthansa, recently agreed to pay £47 million to settle the lawsuits in which it is involved.
- Director of planning Robert Boyle has replaced George as commercial director.