British Airway’s Fuel Surcharge Penalty Halved by OFT to £58 million
British Airway’s Fuel Surcharge Penalty Halved by OFT to £58 million REUTERS

British Airways' fuel surcharges penalty amount imposed by the Office of Fair Trading (OFT) has been slashed by 63 million pounds from an earlier 121.5 million pounds to 58.5 million pounds , the OFT said on 19 April, 2012.

The reduction in fine was reportedly due to the co-operation of British Airways in the OFT investigation that reassessed the pricing of passenger fuel surcharges by both BA and Virgin Atlantic Airways (VAA) for long-haul passenger flights to and from the UK between August 2004 and January 2006.

In the statement, the OFT mentioned that both BA and the VAA were engaged in anti-competitive practices in relation to the pricing of passenger fuel surcharges and thereby imposed a fine of 58.5 million pounds on BA.

Virgin Atlantic was released from the penalty on the grounds that the airlines brought the matter to the OFT's attention. Hence, under the OFT's leniency policy, the airlines was exempted from the fine charges.

Under this policy, a company which has been involved in cartel conduct and which is the first to give full details about it to the OFT will qualify for immunity from penalties in relation to that conduct.

"This decision brings an end to this investigation and sends out a strong message that co-ordinating pricing through the exchange of confidential information between competitors is unlawful," Ali Nikpay, OFT Senior Director of Cartels and Criminal Enforcement, said in a statement on the OFT website.

"The size of the fine underlines that it is important for companies to take steps to ensure that they have an effective compliance culture. The fine would have been higher still but for the co-operation provided by BA throughout the OFT's investigation," he added. "Without this, together with BA's admission of the infringement, the case would have taken considerably longer to resolve."

In Aug 2007, the OFT had announced that BA admitted collusion over the price of "long-haul passenger fuel surcharges" and would be paying a penalty of 121.5 million pounds imposed by the OFT.

The airlines admitted that August 2004 and January 2006, it colluded with Virgin Atlantic over the surcharges which were added to ticket prices in response to rising oil prices.

During that period, the surcharges rose from 5-60 pounds per ticket for a typical BA or Virgin Atlantic long-haul return flight.