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Passengers to Get Restitution From Airline Collusion

British Airways, Korean Air Pay $300 Million Each

By Dan Schlossberg
ConsumerAffairs.com

August 2, 2007

The U.S. Justice Department even says they will receive partial refunds from two carriers that admitted colluding with competitors to hike prices.

Because Virgin Atlantic and Lufthansa tipped authorities to the scheme, they will avoid fines and potential criminal prosecution. British Airways and Korean Air, on the other hand, had to cough up $300 million each to the U.S. government after pleading guilty to price-fixing related to rising fuel costs.

Also fined by authorities in the United Kingdom, British Airways will have to pay a total of $546 million in penalties.

Government investigators found the carrier, the largest to link the U.S. and U.K., colluded with Virgin Atlantic in forging four fuel-related surcharges between 2004 and 2006, a period when the price of jet fuel jumped more than 50 per cent.

Korean Air’s collusion occurred between 2000 and 2006, the Justice Department said. Like British Airways, it is accused of overcharging passengers, shippers, and travel agents. Korean Air is the biggest airline that flies from the U.S. to Korea.

Unlike Virgin Atlantic and Lufthansa, both of whom will pay yet-to-be-determined restitution to passengers, neither British Airways nor Korean Air have agreed to pay passengers anything. But likely lawsuits, including some already filed by companies that used the carriers to move their products, could change that picture.

The amount of passenger restitution has not been determined because investigators do not know how much money the airlines received above fair-market value during the time the collusion occurred.

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