Cartel of BA and Virgin executives fixed fuel surcharges, court told
Published 27/04/2010 | 04:04
Every long-haul passenger who flew British Airways or Virgin Atlantic in 2005 paid more than they would have done if the airlines had not been operating an illegal cartel, a court has heard.
Senior British Airways executives “sidestepped the proper process” and colluded with Virgin Atlantic executives to secretly fix the price of fuel charges in a bid to recover hundreds of millions of pounds, Southwark Crown Court in London heard.
BA's one-time commercial director Martin George, sales and marketing director Andrew Crawley, former head of communications Iain Burns, and Alan Burnett, who led sales in the UK and Ireland, all deny a cartel offence under the Enterprise Act 2002.
In 2004/5, passenger fuel surcharges were worth £64m a year to British Airways, but both BA and Virgin found they were “difficult to sell to customers”.
In one internal email, Mr Burns noted that “whatever the timing we will get a media pasting” over any increases and added that their “corporate reputation will take a very big and negative hit” at a time when BA was already facing considerable industrial action.
Richard Latham QC, prosecuting for the Office of Fair Trading, told the jury: “These defendants, and those at Virgin, sidestepped the proper process and simply agreed what would be done by both airlines.”
With oil prices rising and airlines struggling to cope in 2004, the court heard the criminal cartel began when Mr Burns called Virgin's director of corporate affairs Paul Moore on August 6, telling him: “This is a conversation we aren't going to have.”
Mr Latham said Mr Burns told Mr Moore BA would announce an increase in its fuel charge on August 9 of “£6 to £8 a sector”.
Asked if that meant £7 each way, Burns said: “No, £6.”
Mr Moore replied: “Don't be surprised if we follow.”
Mr Moore's response demonstrated to BA that Virgin were “receptive to ongoing price-fixing arrangements”, Mr Latham said.
The trial was adjourned until today.