Air cargo price fixing probe mounted

Feb. 21, 2006
U.S. Justice Department officials reportedly said they were involved in an industry wide inquiry into possibly anticompetitive practices in the air cargo

U.S. Justice Department officials reportedly said they were involved in an “industry wide” inquiry into “possibly anticompetitive practices” in the air cargo industry. Officials of the European Union and South Korea also mounted investigations into possible price fixing centered on air cargo fuel and security surcharges.

Justice Department officials had served a subpoena on American Airlines but, according to early reports, had not executed a search warrant. A spokesman for the airline told the New York Times the airline had not been notified that it was the subject of any investigation and that it intends to cooperate fully. That sentiment was repeated by other airlines in Europe and Asia as European Commission (EC) officials and the Korean fair trade commission carried out unannounced inspections.

Among the airlines reportedly contacted were United Airlines, Japan Air Lines, Cathay Pacific, Lufthansa, KLM/Air France, Cargolux, British Airways, Asiana and Korean. Officials of the various investigating agencies reportedly conducted employee interviews and examined documents.

In addition to all-cargo carrier CargoLux, Polar Air Cargo and integrator UPS have been contacted.

Though no specific charges appear to have been filed, the price fixing investigation centers on surcharges for fuel and security. Looking at fuel surcharges published at various airlines’ Web sites, some of the fees are identical; others match a pattern. Security surcharges are more of a mixed bag.

Shippers have generally complained that carriers apply surcharges when prices rise but are much slower at removing them. To their credit, many of the airlines offer their fuel surcharge methodology on their Web sites, so shippers are able to see how the charge is calculated and what are the triggers for changes. The fact there are active investigations under way has led most organizations, to offer only statements that they are cooperating with the various government agencies. The International Air Cargo Association, whose members include major global air cargo companies, said only that this was a matter for those companies and that TIACA would not be commenting on the investigations.

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