Regulator spotlight on fuel surcharges catches Air NZ

By Paul McBeth

Monday 15th December 2008

The Commerce Commission is pursuing 13 airlines and seven executives for allegedly price fixing on air freight services.

The Commission alleges the airlines, including Air New Zealand, colluded to impose fuel surcharges for more than nine years "under the auspices of the trade organisation International Air Transport Association". It also claims some of the carriers conspired to fix prices by imposing a security surcharge immediately following the terror attacks of 2001.

"The Commission will continue to strongly pursue cartels involved in price-fixing and other anti-competitive conduct," said chair Paula Rebstock in a statement. "Participation in cartel activity is internationally regarded as one of the most egregious forms of anti-competitive behavior."

The air freight market to and from New Zealand is estimated to be worth more than NZ$400 million annually, and total revenue over the period of the agreement is believed to be almost NZ$3 billion. Any airlines convicted face whichever penalty is the highest of NZ$10 million, three times the commercial gain or 10% of the group's annual turnover.

The Commission has limited its investigation to those carriers with the greatest impact on New Zealand, along with the "most culpable individuals."

In a statement, the watchdog said "some airlines are cooperating with the Commission and an early resolution may be possible," although these have not been named.

The investigation is part of a worldwide case that potentially involves 60 airlines, and the airlines are under similar scrutiny by other competition watchdogs including the US Department of Justice, the Australian Competition and Consumer Commission and the European Commission.

The 13 companies named are: Air NZ; British Airways Plc; Cargolux International Airlines S.A; Cathay Pacific Airways Ltd.; Emirates; PT Garuda Indonesia; Japan Airlines International Co.; Korean Airlines Co.; Malaysian Airline System Berhad Ltd.; Qantas Airways Ltd.; Singapore Airlines Cargo Pte and Singapore Airlines Ltd; Thai Airways International Public Co.; United Airlines Inc.

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