No Air NZ reserve for airline cartel action
A report in NZ’s Independent Financial Review says that Air New Zealand has made no provision in its accounts for class legal action and other fine-generating investigations brought against it and other airlines for alleged price fixing on air-freight charges unlike Australian rival Qantas.
Last month Qantas said it was setting aside US$40 million for potential fines from US authorities for price fixing and class action.
It is one of seven airlines, including Air New Zealand, named as defendants in a class action filed in the Australian Federal court by law firm Maurice Blackburn Cashman on behalf of freight forwarders.
The law firm says the claim could net $200 million in damages, if successful.
Qantas, Lufthansa, Singapore Airlines, Cathay Pacific Airways, Air New Zealand, Japan Airlines and British Airways have been named as defendants.
Air New Zealand chairman John Palmer said the audit committee had advised the airline’s board that based on material it had the airline was not required to make a provision in the accounts.
But he said the investigation was ongoing and Air NZ would be monitoring the situation closely.
There are several investigations into cartel practice by airlines running concurrently around the world.
Fines of around US$850 million have already been handed out to British Airways and Korean Air by Britain’s Office of Fair Trading and the US Department of Justice. They have worked together since 2006 investigating price-fixing of long-haul passenger fuel surcharges between British Airways and Virgin Atlantic between 2004 and 2006.
The Department of Justice is also doing a multi-national investigation into the price fixing of air cargo fuel surcharges which embraces Air NZ. British Airways agreed to pay US$200 million for its part in the cargo side in addition to its passenger price-fixing plea bargain.
Lufthansa has settled class action claims in the US for US$85 million and in Canada for US$5 million.
Other airlines are plea-bargaining or helping authorities with inquiries in exchange for lenient fines.
Report by The Mole
John Alwyn-Jones
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