Virgin sparked BA price-fixing inquiry with tip-off to OFT

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The Independent Online

A British Airways executive is understood to have tipped off a Virgin counterpart last year about plans to lift its fuel surcharge on flights to and from the UK to gauge likely market reaction. Virgin then informed the Office of Fair Trading. Any advance warning of price changes is illegal under competition law.

On Thursday, British Airways declared that its "policy is to conduct its business in full compliance with all applicable competition laws".

But at the same time, the airline put its commercial director, Martin George, and Iain Burns, its head of communications, on a leave of absence for the duration of the investigation by the OFT and the US Department of Justice.

The transatlantic inquiry is expected to examine whether BA tipped off any other rivals about upcoming price rises.

In the United States, American Airlines, a partner of BA's in the Oneworld alliance, and United Airlines have been subpoenaed to appear before a federal grand jury to give evidence to investigators. Both airlines said that they are not targets of the inquiry.

In Britain, Virgin Atlantic is also helping the OFT with inquiries but has declined to say whether its involvement in the investigation runs deeper.

BA introduced a surcharge on tickets to cover soaring fuel costs in May 2004. Since then, the country's flag carrier has lifted the levy six times from £5 to £70 on return long-haul flights, a 14-fold increase over a period in which oil prices have roughly doubled.

Industry experts noted that changes to Virgin Atlantic's own fuel surcharge have consistently mirrored those made by BA in both timing and size during that period.

The disclosure that Virgin Atlantic was the whistleblower has rekindled memories of the "dirty tricks" libel case brought by Sir Richard against BA in 1992. Sir Richard won the case and was awarded hefty damages.

Should BA be found guilty this time, it faces a fine of up to £850m and the directors a maximum of five years in prison and an unlimited fine.

The latest inquiry is the second time in six months that BA, the self-styled "world's favourite airline", has been investigated for alleged price-rigging. In February, a similar probe was launched into fuel surcharges on its cargo business and those of several other airlines. BA shares rallied 1.5 to 347.5p yesterday, after tumbling 21.75 on the news of the investigation the previous day.