BA fined - Maybe US Airlines will be next?

[Juliadlf]

I saw this news article today regarding BA being fined for price fixing fuel surcharges with Virgin.

http://www.thisismoney.co.uk/news/article.html?in_article_id=422920&in_page_id=2&ct=5

 

Can the US airlines be next?

 

Julia

[DonLou]

I find it odd. During those "price fixing" years we flew BA because they had the lowest airfare from LAX to London. What does that suggest about the other airlines?

[billybob123]

I think the point isn't that the airlines were "price-fixing" fares; it's that they colluded on the mandatory (and fradulent in my eyes) fuel surcharge. It's hard to think of a similar situation to compare to, though I'm sure companies jump at the chance to charge "surcharges".

 

Just put it in the darn fare. It's patently dishonest to sell a fare at $199 then tell you you have to pay the additional $20 or $60 (or, I suppose in this case, £199 with £10-20 surcharges) and lump it in with the taxes, so people accept it as "taxes". It's not "taxes"!

 

Anyway, sorry for the digression there.....

[FlyerTalker]

Just put it in the darn fare. It's patently dishonest to sell a fare at $199 then tell you you have to pay the additional $20 or $60 (or, I suppose in this case, £199 with £10-20 surcharges) and lump it in with the taxes, so people accept it as "taxes". It's not "taxes"!

Can anyone here say "Port Charges"???

[jeffw47]

Man, did FlyerTalker ever hit the nail on the head with that!!!! :D

[Globaliser]

During those "price fixing" years we flew BA because they had the lowest airfare from LAX to London. What does that suggest about the other airlines?

It's important to remember that, as it turns out, neither BA nor Virgin made a single penny out of the collusion. What has happened since then shows that even if they hadn't been colluding, fuel surcharges would have been at that sort of level anyway - and they have gone up even further since then. It wasn't that they made any money out of talking; it's only that they shouldn't have been talking at all.

I think the point isn't that the airlines were "price-fixing" fares; it's that they colluded on the mandatory (and fradulent in my eyes) fuel surcharge. It's hard to think of a similar situation to compare to, though I'm sure companies jump at the chance to charge "surcharges".

 

Just put it in the darn fare. It's patently dishonest to sell a fare at $199 then tell you you have to pay the additional $20 or $60 (or, I suppose in this case, £199 with £10-20 surcharges) and lump it in with the taxes, so people accept it as "taxes". It's not "taxes"!

There is actually a good commercial reason to keep it in the form of a surcharge, which is that many customers get a discount on the base fare. In the UK, fares are now advertised inclusive of all taxes, fees and charges, so you don't get the situation where you are told of a "£199" fare and it turns out to be £229 instead. Similarly, I think that in the US the fuel surcharge must be included in the fare, rather than added later (although I'll be corrected if I'm wrong on that.) So consumers are not misled, it isn't fraudulent, and most price comparison sites are clever enough also to display the total payable.

[sho]

I belong to both BA and Virgin executive clubs, and I think it is unfair to fine only BA but not Virgin, as they are both in it with this collusion deal. Somehow just because Virgin reported BA (to me, it is self-confession), it got off the hook and did not get fined at all!

[Juliadlf]

I personally do not know if any airline is or not making a profit off the so called "fuel surcharges". But I would have to ask, why did they(BA) need to discuss this with Virgin or any other airline?

 

I would think - just my opinion now - that when they are pricing their fares they are already figuring out what the fuel charges would be so they should be pricing the fare at what they can make a profit on ( yes, I do believe they need to make a profit) and not start adding "fuel surcharges" to the fare.

 

Julia

[billybob123]

Can anyone here say "Port Charges"???

 

Good point! Are port charges the fees that are charged to the cruiseline by local port authorities/governments? Perhaps a better corollary (rather than a fuel surcharge) would be the "airport improvement fees" and "segment taxes" the government/airport authorities here charge on airline tickets?

 

So consumers are not misled, it isn't fraudulent, and most price comparison sites are clever enough also to display the total payable.

 

Points taken. However, the "fradulent" comment referred to the airlines' practice, PRIOR to having their fingers collectively rapped by governments and now including the surcharge in their price, of bundling the surcharge in the "taxes and fees" sections of their tickets, which implied it was a government agency that was charging it. Consumers were certainly misled - perhaps it was not the same in the UK, but there were stories after stories where people complained here in Canada about the "advertised price vs. real price".

 

Perhaps the knowledgeable among us knew there was a difference; however the average traveler (for e.g. my coworkers and friends who booked airline tickets) could not distinguish and usually griped at the government.

[Globaliser]

I belong to both BA and Virgin executive clubs, and I think it is unfair to fine only BA but not Virgin, as they are both in it with this collusion deal. Somehow just because Virgin reported BA (to me, it is self-confession), it got off the hook and did not get fined at all!

The policy exists because it's recognised that if one party to these arrangements doesn't blow the whistle, they rarely ever come to light. So long as you don't blow the whistle, you'll always be at risk of being hit very hard by the regulators (as we have just seen). You're gambling. The policy means that you have an incentive to promote the general public interest in bringing something to light that might otherwise have remained hidden.

I personally do not know if any airline is or not making a profit off the so called "fuel surcharges". But I would have to ask, why did they(BA) need to discuss this with Virgin or any other airline?

The short answer is, they didn't need to - quite apart from the fact that it was illegal to do so. The subsequent history of fuel surcharges shows that the levels that the airlines were thinking of would have stuck, even if there had been no collusion.

However, the "fradulent" comment referred to the airlines' practice, PRIOR to having their fingers collectively rapped by governments and now including the surcharge in their price, of bundling the surcharge in the "taxes and fees" sections of their tickets, which implied it was a government agency that was charging it.

Yes, things are certainly better now that you don't need to have specialised knowledge to understand what the real price is.

[DonLou]

...Somehow just because Virgin reported BA (to me, it is self-confession), it got off the hook and did not get fined at all!

 

The policy exists because it's recognised that if one party to these arrangements doesn't blow the whistle, they rarely ever come to light. So long as you don't blow the whistle, you'll always be at risk of being hit very hard by the regulators (as we have just seen). You're gambling. The policy means that you have an incentive to promote the general public interest in bringing something to light that might otherwise have remained hidden...

 

I agree with sho. The bottom line is that Virgin also "ripped off" their passengers by using an anti-competitive surcharge. But they don't have to reimburse their victims and they don't have to pay a fine. Did BA twist Virgin's arm to go along with the increase in the surcharge? Oh well. There's probably not a good answer - I'm just venting. :rolleyes: