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BA Directors plead to be prosecuted

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BA Directors plead to be prosecuted

Old 20th May 2007, 07:55
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BA Directors plead to be prosecuted

I see in the paper this morning that Commercial Director, Martin George and Ian Burns, Communications Cheif, hereinafter to be known as George Burns, that well know and long lived comedian, are pleading with the OFT to prosecute them to the full extent of the law here in the uk.
This arises from the fuel surcharge price fixing deal, which, if not followed through by the OFT will leave the US Dept of Justice the opportunity to prosecute them in the US with a possible life sentence.
Hoist with your own petard springs to mind. You will reap what you sow, how the mighty are fallen, all good things come to those who wait.....any more spring to mind?
What a great comedy the whole episode has turned into, not for George Burns of course, but BA as a whole. The money they made from their fuel surcharge will dissappear in fines, legal fees and compensation, lovely stuff.
Do BA management think they are above the law? This is after all, not the first time they have been caught cheating.
Just why do they do it I wonder?
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Old 20th May 2007, 08:00
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Just call it the Icarus Syndrome.
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Old 20th May 2007, 08:53
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Here at BA it is pantomine season all year, even after you leave.
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Old 20th May 2007, 09:55
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Marvellous...about time senior Ba management took responsibilty for their actions. I wonder if they are back in the Uk though? Last time I saw one of them, he was hiding in Bermuda with his family. Might be worth dropping the US DOJ a note to make sure they have an extradition treaty with Bermuda. Perhaps they could also take the fine out of the Directors pensions?
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Old 20th May 2007, 10:06
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And after costing BA (perhaps) £350 million pounds in fines for their fraudulent activity, why have they been allowed to leave with their pensions intact?

I hope they get the kind of justice that means they never get to spend their undeserved pension!
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Old 20th May 2007, 12:04
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Are we assuming that no-one else in BA management new this was going on. Surely everyone new it was going on.
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Old 20th May 2007, 18:06
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If I can recycle a good joke.......

BA now wish they had take out the Collusion Damage Waver policy.
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Old 20th May 2007, 18:27
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BA wern't the only company caught up in this affair...
http://www.moneyweek.com/file/14419/...iscontent.html
BA's fuel surcharge was just £2.50 when it was first introduced in May 2004, and it has been hiked 7 times since then. But BA's not the only one to charge its passengers petrol (or rather jet fuel) money - Virgin introduced a £2.50 charge on its transatlantic flights, also in May 2004.
The Times points out that Virgin and BA have hiked their fuel surcharges almost in tandem since then. The two airlines raised their charges at the same time and by almost exactly the same amount, five times between May 2004 and September 2005. The only difference was the hike in June 2005, where Virgin raised the surcharge from £16 to £25, while BA hiked it from £16 to £24. The OFT has of course stressed that “no assumption should be made that there has been an infringement of competition law.”
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Old 20th May 2007, 18:44
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It's one thing having a well-established Dirty Tricks department within a sleazy management but why do they always seem to get caught out? They obviously haven't been trained properly!

That £350 million would have helped plug a few holes in their pension deficit and that would have been a lot more effective use of the money rather than just p*ssing it against a wall.
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Old 20th May 2007, 18:54
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Pantomime, Joke, FARCE... The list is endless.

However, having seen Willie Wonka on the news 'admitting' BA knowingly conspired to 'fix' fuel surcharge fees, shouldnt HE be considered involved as are the other 2 'scapegoats', and that being the case bring charges against him too.

He is the main man, he knew what was happening. If he didnt then he was out of touch with the operation and not doing his job. You simply cant HIDE these charges anywhere in the accounts.

'Smithers' always fallls on his sword for Mr Burns. Cant wait to see BA appear in the Simpsons! What a hoot...

Willie, own up and take your share of the blame, and of course the other airlines involved too. It might make you a better and BIGGER man for it all.

PS - All that money saved from sacking the Regions might mean that the decor in T5 will be a tad bare on opening day...
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Old 20th May 2007, 19:05
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Tristar 500: Quote Willie, own up and take your share of the blame, and of course the other airlines involved too. It might make you a better and BIGGER man for it all.
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Think you might just want to reword the above.

The reason why WW wont own up and take the blame is rather simple - he was running Aer Lingus at the time. This all occurred under Edingtons watch.

The £350 mill is not a fine or anything else, its been held back just in case. Reaility is the fine will be far far less. Its the inevitable US class actions that have BA running scared.
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Old 20th May 2007, 19:36
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OK MANINTHEBACK that may be so, so why didnt WW take immediate action and put a stop to it when he took control! Why isnt Eddigton being re-called to explain?

There is NO excuse. Being the Cheif Exec means that you are responsible for the operation inside-out.

Ignorance is certainly not bliss... GUILTY to a certain degree

I can see it now... The 'BA 3' shuffling around Guantanamo bay in bright orange jump-suits, just the colour eh! Stelios would be so proud...

Last edited by tristar500; 20th May 2007 at 20:02.
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Old 20th May 2007, 20:32
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Eddington is in Australia looking for another airline to gut. Word is that since APA (Airline Partners Australia) failed in their bid to take over Qantas, that they are now looking at bidding for BA.
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Old 21st May 2007, 07:44
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Smile

Tristar - WW couldnt put a stop to it for the simple reason it had already stopped under Eddingtons reign. Personally I think thats a reasonable excuse
Eddington no longer works for BA so how exactly could he be recalled?.
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Old 21st May 2007, 08:15
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How about a refund to passengers for the all of the additional charges that were imposed as a result of collusion.

You may say that it was the collusion that was illegal rather than the charge but had there been no collusion and market forces allowed to rule, there may have been a much smaller levy if any at all.

Big opportunity for a lawyer here Perhaps.
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Old 21st May 2007, 08:49
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Originally Posted by rubik101
The money they made from their fuel surcharge will dissappear in fines, legal fees and compensation, lovely stuff.
Ah yes. So the monies paid by BA pax will now be diverted to government funds as "fines" which they will proceed to p1ss down the drain on whatever their fellow travellers in the eco-nazi lobby tell them they want to have provided.

I think I'd rather BA kept the money; they might spend it on something more worthwhile, like investing in the fleet.

Incidentally, it is no show of conspiracy if two competing organisations change their pricing (up or down) at the same time, it is actually standard business pricing as any first year economist will tell you; one hears the other is going to do it, they then do the same. The prices being charged bear little relation to the costs of an operation and everything to what the competition is doing. The consumer, purchaser of your services, couldn't care less about your costs and in fact does not even know them. But they know everything about what is being charged elsewhere for what they perceive as a comparable service (even if we all maintain it is not actually so) and are very much in the habit of going for the cheapest. So if your competition knock £100 off the fare, you can either see your bookings drop right off, or you can match it. And that is what happened here. What the competition is doing is even incorporated in the Yield Management calculations, real market forces at play. There we go, Economics 1.01 on PPRuNe for a Monday morning !
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Old 21st May 2007, 10:03
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I was not suggesting that the money taken from the paying customer of BA, and Virgin come to that, should end up in the Brown Bag, never to be seen again. I am suggesting that they not have been robbed in the first place.
If ALL competing airlines decided to impose a fuel surcharge, all well and good. So how is it that airlines like Ryanair and easyjet have managed to survive, and record profits, without feeling the need to impose a so called 'fuel surcharge'?
The joke is that an ill conceived attempt to raise prices using the spurious excuse of fuel price rises has since backfired on those that dreamed up the idea. Fuel price rises are always a reason to adjust ticket prices. This was simply a ploy to shift blame for the rise in ticket prices onto the oil industry/market. Why were they not just honest and raised the prices in the normal way? It was all about marketing and public perceptions, it's called spin and it's infectous and the public see it for what it is, a scam.
The two ex members of the board who were responsible, so we are led to believe, have taken the blame. I am sure Rod Eddington should also avoid Disneyland Florida for the forseeable future. He is equally culpable.
I only mentioned the news article because it seems so ironic that they should be so keen to be fully prosecuted in this country to avoid prosecution in the US. I have a feeling that the US DoJ will simply bide their time and then lodge a prosecution anyway. Look at Enron.
Whichever way you look at it, it is a shambles, economics 101 or not.
£350 might only be the start of it if the US get their teeth into it.
If you work for BA, don't expect the company to fill your pension deficit any time soon.
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Old 21st May 2007, 10:25
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Originally Posted by rubik101
So how is it that airlines like Ryanair and easyjet have managed to survive, and record profits, without feeling the need to impose a so called 'fuel surcharge'?
Well one is that for short-haul carriers (eg EZY/FR) the proportion of overall costs that fuel accounts for is much smaller than for long-haul carriers (eg BA/VS).

Another is that different carriers take different approaches to whether they just adjust their base fares or stick on an additional entry elsewhere. Now I know that most (myself included) are just fed up of all the "extras" being added after you have seen the base price, but that is a different question altogether. And if the US DoJ want to go into this, the whole pervidious area of adding extras just before the final price is presented is one that has spread across to Europe (and indeed worldwide) from ...... yes, from the USA. The only country I know where you go into a shop, see something priced at $10, say "I will have it", and they say "Thank you, that will be $10.85". Oh, and you should try car rentals .......
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Old 21st May 2007, 11:38
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I fail to see how one company can be accused of running a price fixing scam on it's own, others would surely need to be complicit for it to work. The way I'm seeing this is that two directors tried to be a bit crafty but weren't very clever about it. By sacking the two involved the company has attempted to distance itself from their actions and refers to it's own written rules as evidence these two acted without company authority.

The investigation will surely be looking at how far through the board and senior management of the company this was being perpetrated and act accordingly.
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Old 21st May 2007, 11:42
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BA's fuel surcharge was just £2.50 when it was first introduced in May 2004, and it has been hiked 7 times since then. But BA's not the only one to charge its passengers petrol (or rather jet fuel) money - Virgin introduced a £2.50 charge on its transatlantic flights, also in May 2004.
The Times points out that Virgin and BA have hiked their fuel surcharges almost in tandem since then. The two airlines raised their charges at the same time and by almost exactly the same amount, five times between May 2004 and September 2005. The only difference was the hike in June 2005, where Virgin raised the surcharge from £16 to £25, while BA hiked it from £16 to £24. The OFT has of course stressed that “no assumption should be made that there has been an infringement of competition law.”
So basically they are going after BA because they raised their "price" by £24 during a time when the fuel price more thant doubled.

What a load of
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