U.S. News

Airlines Served With Cargo Price-Fixing Class Action Suit in Australia

Associated Press

Qantas and six other international airlines were served with a 200 million Australian dollar (US$155 million) class action Thursday alleging price-fixing in the global air freight industry.

The lawsuit was lodged in the Federal Court of Australia in the southern city of Melbourne on Jan. 11 and was served Thursday on Australian flagship carrier Qantas Airways, said Kim Parker, principal of the law firm Maurice Blackburn Cashman, which brought the case to court. Other airlines named in the action -- Lufthansa, Singapore Airlines, Cathay Pacific, Air New Zealand, JAL and British Airways -- were also served Thursday, she said.

Qantas, the alleged major beneficiary from price fixing, declined to comment.

The seven airlines allegedly have been part of a price-fixing cartel in the international freight industry since 2000, according to court papers.

The case focuses on surcharges the airlines imposed, including fuel surcharges attributed to higher fuel costs, security charges attributed to extra measures taken after the Sept. 11, 2001, terrorist attacks on the U.S. and war-risk surcharges attributed to higher insurance costs linked to the Iraq war.

The action alleges that the surcharges were not representative of operational costs and were imposed in agreement between the airlines to artificially raise prices. "Air freight surcharges have been unlawfully inflated over the last seven years," Parker said.

Parker said price fixing and market rigging by powerful organizations were the worst kinds of anticompetitive abuse and breached Australia's federal competition laws.

The seven airlines were named because they account for about 60% of the Australian air cargo market. Qantas has a 22% share, Singapore 16%, Cathay 8%, New Zealand 6.5%, British and JAL, both under 3% and Lufthansa almost 2%.

If the case is successful, the airlines' financial liability is expected to reflect the size of their market share.

The suit is a first in Australia, although similar class actions have been launched in the United States and Canada.

The Australian law firm is working in conjunction with U.S. class action specialist firm Cohen, Milstein, Hausfeld & Toll which reached a settlement with Lufthansa on the same issue in November last year.

The Cologne-based airline agreed to pay US$85 million to settle pending class-action lawsuits in the U.S. that claimed it colluded with other airlines on cargo charges. Also in November, UAL, the parent of United Airlines, agreed to settle lawsuits alleging the same violations of U.S. antitrust laws.

More than a dozen airlines were drawn into an investigation by U.S. and European Union officials in February last year of suspected collusion in the air cargo industry.

Parker said plaintiffs in the Australian suit could number in the thousands. Every business that spent more than A$20,000 (US$15,000) on air freight charges since 2000 were part of the class action, she said.

The suit will come before the Federal Court for a directions hearing on March 16, a court official said.