Malaysia Airlines latest to be fined in Australia for conspiring to rob its air freight customers
The ACCC has issued a brief statement over the latest airline to be penalised over an air freight surcharge price fixing cartel in the aftermath of the 9/11 attacks.
The Federal Court in Sydney has penalised Malaysia Airlines Cargo Sdn Bhd $6 million for price fixing as part of a cartel following action by the Australian Competition and Consumer Commission.
“This penalty sees the total penalties ordered against this international cartel increase to a record $58 million. These penalties are the highest generated by a single ACCC Investigation,” ACCC Chairman Rod Sims said.
Let’s call this behaviour for what it was. It was a conspiracy between airlines, including Qantas, to rob their customers.
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This so called conspiracy invoved about 18 airlines. Also included Cathay Pacific, British Airways, Air New Zealand, Korean, Malaysian, American, Singapore, Emirates, Thai, Garuda, Air France, KLM, Lufthansa, Japan airlines, All Nippon, Scandinavian, Cargolux. About 1.5 billion in fines so far plus pending class actions.
It related to agreeing the fuel surcharge component in freight pricing.
It was dumb in the extreme and related to freight guys taking a walk in the park.
It was allegedly not sanctioned by senior executives in the airline; and I actually believe that.
Why do I believe that?
First, with few exceptions, the freight divisions are the poor cousins within most airlines and they are left to do their own thing. They basically rent hold space from the airline and nobody within the airlines are too interested in what they do, as long as they do not lose money .
Second, because you could simply fly a kite on your fuel surcharge in the public domain and either other airlines quickly matched it or they didn’t. You really did not need to go to the trouble of talking to competitors to get them to do the same. When flying the kite, those that would, did, and those that wouldn’t, didn’t.
The thing is, in relative material terms, it represented a drop in the ocean of airline revenues.
However, the fines, legal action and negative publicity for all involved would be about 1,000 times more than whatever the ‘initial advantage’ may have been.
That being said, they did it, and they have paid the penalty.
PS. A much more, shall we say, more “integrated” freight price fixing cartel exposed related to DHL, UPS, Panalpina and Kehne and Nagel. These are the biggies in the express freight busines and it related to their European operations.