Airline passenger news and views

I was reminded yesterday of a conversation that I had with a BA insider when the fuel surcharge story originally broke a few years back. His view was that there had been a price capping arrangement but not price fixing. Of course, he would say that wouldn’t he, but let me explain.

This all came at a time of rapidly increasing fuel prices that made it difficult for the airlines to honour ticket prices for more than about a month ahead. The fuel surcharge scheme was introduced to respond to these fluctuations which affected all the airlines in pretty much the same way.

My contact said the logical thing would have been for the FAA/CAA etc to set a figure each month, a bit like the retail price index, that would apply t o all airlines. This never happened and passengers never really knew whether the surcharge was fair or not. His point was, once you accept the need for a surcharge, you can say that tickets purchased at one fuel price, for a certain distance, are subject to a certain surcharge when the fuel reaches another price, ie the surcharge can be calculated and justified.

At that time BA and Virgin Atlantic were head-to-head in the very competitive trans-Atlantic market and there would have been temptations to use the surcharge as another price point in that competition. My contact said that the tacit agreement between the companies was actually not use the surcharge in a competitive way but simply to agree a common index and continue to compete on base price, service, schedules etc. If this is true, both airlines were acting very responsibly and doing what the authorities should have done in the first place.

Sadly, things turned nasty. The Office of Fair Trading had been building its own power base following the American model of encouraging whistle-blowers with immunity for he who tells tales first. It is rumoured that Cathy Pacific were involved with Virgin in a similar surcharge arrangement on the Hong Kong route but that Virgin acted quickly to get in first with an OFT admission of involvement with BA. Of course, all of this happened against the backdrop of a long-standing ‘Dirty tricks’ argument between Virgin and BA and the spectra of the OFT just made things worse.

Perhaps worst of all was the criminal prosecutions against individual BA managers. This seemed grossly unfair and indicative of the wholly out-of-touch mentality of the OFT.

I am glad that the trial has collapsed. I wish the individuals well and I hope that this will be the end of the matter.