Wednesday, April 6, 2011

Air Freight News - More Penalties For Cargo Carriers Who Broke Anti Trust Legislation

BA and Cargolux Fined whilst American Airlines Cargo Open New Route
Shipping News Feature

NEW ZEALAND – US – HUNGARY – The fines levied on British Airways Cargo and Cargolux for their part in the New Zealand air freight cartel scandal mentioned in our article last month have now been determined and published. BA have been fined NZ$1.6 million and Cargolux fined NZ$4.6 million for their part in the affair after Qantas accepted a NZ$6.5 million penalty in March. Both airlines will also have to pay costs.

The Commission’s proceedings were filed in December 2008 against 13 international airlines, alleging that the airlines colluded to raise the price of freighting cargo by imposing fuel surcharges on cargo shipments into and out of New Zealand. Cargolux and BA have admitted fixing the price of fuel surcharges, and Cargolux has also admitted agreeing security surcharges in respect of freighted cargo.

Justice Potter noted, in her Cargolux judgment, that the arrangements “were at the serious end of the spectrum” and that “the conduct would have adversely affected both price competition and the competitive dynamics in the air cargo services industry, with a corresponding reduction in efficiency incentives for members of the cartel.”

“The penalties reflect discounts for both airlines, to take account of their early admissions and their cooperation with the Commission’s proceeding. BA has received a greater discount, because of its commitment to further cooperation as the case progresses, but in each case the Court has acknowledged the value to this agency of receiving assistance from the parties involved,” said Commission General Counsel of Enforcement, Mary-Anne Borrowdale.

In each judgment Justice Potter noted that she was making no findings in respect of the airlines that continue to defend the proceedings. The airlines defending this action are Air New Zealand Limited, Cathay Pacific Airways Limited, Emirates, Japan Airlines International Co Limited, Korean Air Lines Co Limited, Malaysian Airlines System Berhad Limited, PT Garuda Indonesia, Singapore Airlines Cargo Pte Limited and Singapore Airlines Limited, and Thai Airways International Public Company Limited.

The Commission is currently preparing for the first stage of the price-fixing case, commencing in May, at which the key issue is the meaning of a ‘market in New Zealand’ and whether air cargo services inbound to New Zealand are part of such a market. The remainder of the case is scheduled to commence in July 2012 and will deal with the Commission’s price-fixing allegations.

In better airfreight news American Airlines Cargo has launched direct services to the Hungarian capital of Budapest from New York. The daily, non-stop B767-300 service will allow AA Cargo's customers to use a range of the carrier's services into and out of Budapest's Ferihegy Airport and the company expects traffic to be split evenly between inbound and outbound flights, with the movement of electronics and car parts expected to be key commodities ex-Hungary.

The carrier has appointed Kales Budapest as its GSA for the country under General Manager Monika Nagy and Tristan Koch, Managing Director of European Cargo Sales at American said:

“This service opens up a new part of Europe for our customers, with connections via New York throughout the United States and Latin America. In addition, our network alliances in the region will open a vast new array of destinations to shippers in Hungary.”