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Airlines served with class-action lawsuit on cartel allegations

Qantas and six other international airlines were served with a A$200 million (US$155 million) class-action lawsuit yesterday alleging price-fixing in the global air freight industry, a lawyer said.

The lawsuit was lodged in the Federal Court of Australia in Melbourne on Jan. 11 and was served yesterday to Australian flagship carrier Qantas Airways Ltd, said Kim Parker, principal of the law firm Maurice Blackburn Cashman, which brought the case to court.

Qantas, the alleged major beneficiary from the price-fixing, declined to comment.

Other airlines named in the action -- Lufthansa AG, Singapore Airlines, Cathay Pacific Airways Ltd, Air New Zealand, Japan Airlines and British Airways PLC -- were also served yesterday, she said.

The seven airlines allegedly have been part of a price-fixing cartel in the international freight industry since 2000, according to court papers.

The case focuses on surcharges the airlines imposed, including fuel surcharges attributed to higher fuel costs, security charges attributed to extra measures taken after the Sept. 11, 2001, terrorist attacks on the US and war-risk surcharges attributed to higher insurance costs linked to the Iraq war.

The action alleges that the surcharges were not representative of operational costs and were imposed in agreement between the airlines to artificially raise prices.

"Air freight surcharges have been unlawfully inflated over the last seven years," Parker said.

Parker said price-fixing and market-rigging by powerful organizations were the worst kinds of anticompetitive abuse and breached Australia's federal competition laws.

The seven airlines were named because they accounted for about 60 percent of the Australian air cargo market.

Qantas has a 22 percent share, Singapore 16 percent, Cathay 8 percent, New Zealand 6.5 percent, British and JAL both under 3 percent and Lufthansa almost 2 percent.

The suit is a first in Australia, although similar class-action lawsuits accusing airlines of colluding on cargo charges have been launched in the US and Canada.

The Australian law firm is working in conjunction with US class-action suit specialist firm Cohen, Milstein, Hausfeld & Toll, which reached a settlement with Lufthansa on the same issue in November. The Cologne-based airline agreed to pay US$85 million to settle pending class-action lawsuits in the US.

Parker said plaintiffs in the Australian suit could number in the thousands. Every business that spent more than A$20,000 on air freight charges since 2000 was part of the class-action, she said.
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