Airlines must pay refunds over price-fixing

British Airways and Virgin Atlantic are to pay around £100 million to passengers following a US lawsuit bought on behalf of UK and American travellers affected by fuel surcharge price-fixing.

But while lawyers involved could end up many millions of pounds richer, passengers in the UK might get as little as £1 per ticket in compensation.

BA said today that BA and Virgin had agreed in principle to resolve the class action litigation pending in a California court.

It is thought that the settlement, which still has to be finally approved, will cost BA about £70 million and Virgin about £34 million. The BA total includes about £45.5 million for UK passengers affected

BA said that about 11 million passengers - including seven million in the UK - were affected by the settlement.

It added that the settlement was worth between £1 and £11.50 per ticket purchased for the affected long-haul flights by UK passengers and between 1.50 dollars (about 75p) and 20.50 dollars (about £11.25) for US passengers.

One aviation source said today: "The real winners here are the lawyers. The firm involved could be getting many millions from this."

BA has already been fined £121.5 million by the Office of Fair Trading (OFT) last year and a further 300 million US dollars (about £150 million) by the US Department of Justice after it was found guilty of conspiring to fix fuel surcharges.

Virgin escaped financial punishment last year after the group came forward to expose the collusion.

BA chief executive Willie Walsh, said: "As we have previously said, we absolutely condemn any anti-competitive activity by anybody.

"This settlement, which BA and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable. BA can now move on and do what we do best - delivering excellent customer service."

A spokesman for Virgin Atlantic said today: "We deeply regret our involvement in this matter and believe that the provisional settlement reached draws a line under this episode."

BA could be forced to set aside more cash on top of the £350 million provision made last year as the group also faces possible further regulatory fines and class action suits across Europe.

BA and Virgin admitted colluding over fuel surcharges on long-haul flights between August 2004 and January 2006.

The charges, which came in response to rising oil prices, increased from £5 to £60 per ticket for a typical BA or Virgin long-haul return flight over that period.

The lawsuit was brought by US law firm Cohen, Milstein, Hausfeld & Toll (Cohen Milstein) which said today that £73.5 million would be going to affected UK passengers.

It added that this total was made up from the £45.53 million that BA had agreed to pay to UK passengers plus the £27.99 million Virgin had agreed to pay.

Cohen Milstein said that in the US, BA had agreed to pay 46.37 million dollars (about £23 million) and Virgin 12.63 million dollars (about £6 million).

Details of how UK passengers and businesses will be able to register to claim the refund will be available from 7pm today on www.airpassengerrefund.co.uk, or by telephoning 0800 043 0343.

Cohen Milstein would not give details of its fees for the action.

The company said legal fees had been negotiated with BA and Virgin separately, and would not be taken out of the settlement amount. They would have to be approved by the US courts.

Michael Hausfeld, a senior partner at Cohen Milstein, said: "We are delighted to have achieved such a terrific settlement for UK consumers. BA and Virgin overcharged their customers over a period of almost two years. Customers in the UK should claim back what was unlawfully taken from them in order to demonstrate that such behaviour is unacceptable.

"This is the first time non-US citizens have been rewarded on an equal footing to US citizens in a case before the US courts, making this a legal precedent and a significant milestone in both US and UK legal history."