http://edition.cnn.com/2007/BUSINESS....ap/index.html
Qantas admits price-fixing in U.S.
WASHINGTON (AP) -- Qantas Airways Ltd. on Tuesday became the third international airline this year to admit to price-fixing and agree to pay a multimillion-dollar fine to the U.S. government.
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Qantas acknowledged imposing fuel surcharges in the airline's freight division.
The Australian carrier's CEO said U.S. and foreign antitrust regulators are investigating up to 30 airlines for similar conduct.
Qantas sought to eliminate competition by fixing the rates for shipments of cargo to and from the U.S and elsewhere from at least January 2000 through February 2006, according to the charges filed in the U.S. District Court for the District of Columbia.
During the time covered by the felony charge, Qantas was the largest carrier of cargo between the U.S. and Australia, earning more than $600 million from its cargo flights between the two nations, according to the Justice Department.
Under the plea agreement, which is subject to court approval, Qantas has agreed to cooperate with the Justice Department's ongoing investigation and pay a $61 million fine.
Qantas Chief Executive Geoff Dixon apologized for the illegal conduct, which he said involved fuel surcharges in the airline's freight division. The company's financial statements include a $40 million provision for the U.S. case, and "we do not believe this or any further financial penalties will materially affect future operating results," he said.
Qantas has cooperated fully with antitrust investigations in the U.S. and elsewhere since May 2006 and expects them to take up to two years to complete. "We understand more than 30 other airlines are included," Dixon said in a release.
Earlier this year, British Airways PLC and Korean Air Lines Co. Ltd. each pleaded guilty and agreed to pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights.
Qantas was charged with carrying out the price-fixing by participating in meetings to discuss the cargo rates to be charged on certain trans-Pacific routes to and from the U.S., and then levying rates according to the agreements reached.
Four former and two current Qantas employees have been excluded from the plea agreement and the Justice Department has reserved the right to investigate further. The two current Qantas employees "deny involvement in any illegal conduct," Dixon said.
"It was so unnecessary, they didn't really have to collude," said airline consultant Michael Boyd, adding that cargo rate increases and fuel surcharges were justified based on rising oil prices in recent years.
Fuel costs accounted for the largest piece of U.S. airlines' operating expenses in the second quarter of 2007 at 25.4 percent, and are expected to represent more than 26 percent of airlines' expenses globally in 2007, according to domestic and international trade groups.
It's unclear if any U.S. carriers eventually will be incriminated in the Justice Department probe. If a domestic airline simply saw its foreign competitors raise rates and did the same "that's not illegal," Boyd said. "But picking up the phone and talking about it is."