Airlines Drawn into Cargo Price-Fixing Probe

By Harry R. Weber Associated Press

More than a dozen airlines have now been drawn into a widening investigation by United States and European Union officials of whether there has been collusion in the air cargo industry to fix prices on surcharges for fuel, security and insurance.

Spokespersons for the European Commission, the U.S. Department of Justice and the Federal Bureau of Investigation refused Wednesday to provide details about the probe.

But one of the foreign airlines targeted, SAS AB’s SAS Cargo in Copenhagen, Denmark, said the EU has alleged that cooperation among airlines began in 2000 and involved agreements about surcharges imposed by airlines to offset certain external costs.

Among the costs, according to a statement from SAS, are surcharges on fuel, added security after the Sept. 11, 2001, attacks in the United States and premiums for war-risk insurance after the start of the war in Iraq. SAS said in a statement it does not suspect any violations at its operations.

Raids were conducted at the offices of several airlines Tuesday, and on Wednesday several more cargo carriers said they had been contacted or issued subpoenas from authorities.

In Washington, FBI spokesman Bill Carter said records in the case have been sealed and he referred further questions to Justice Department spokeswoman Gina Talamona, who would say only that the investigation was ongoing. She declined further comment.

EU antitrust spokesman Jonathan Todd in Brussels, Belgium, when asked if there was also an investigation into collusion in setting fuel surcharges for passenger flights, said: “I cannot make any comment on any other investigation that may or may not be going on. At any one time, the commission has several hundreds of antitrust investigations going on, of which only a small proportion are in the public domain.”

The commission said Tuesday that the raids were a preliminary step in investigations into suspected cartels, and it does not mean the companies raided are guilty of anti-competitive behavior.

Under EU law, the commission can fine companies accused of operating a cartel as much as 10 percent of their annual sales. Price-fixing, if proven, could also bring fines and other penalties in the U.S.

Atlanta-based shipping giant UPS Inc. has been “informally contacted” by the Justice Department regarding the probe, company spokesman Norm Black said Wednesday.

“UPS understands it is not part of the probe,” Black said, adding that the company was not searched or subpoenaed. “As is its practice, UPS will cooperate with requests from government agencies.”

The largest U.S. airline, AMR Corp.’s American Airlines, said it has received a subpoena from the Justice Department but has not been told it was a target of the investigation, spokesman Tim Wagner said. “And unlike some other airlines,” he said, American didn’t receive a search warrant. He said the Fort Worth, Texas-based airline would cooperate fully with investigators.

UAL Corp., based in Elk Grove Village, Ill., had its United Airlines office in Frankfurt, Germany, searched by EU officials, according to United spokesman Jeff Green. He said other air freight carriers in Frankfurt had similar visits. He said he was unaware of any other searches or inquiries involving other United offices or airports.

Meanwhile in Chicago, FBI spokesman Ross Rice confirmed Tuesday that the FBI had searched the Air France-KLM cargo terminal at O’Hare International Airport as part of an ongoing investigation. He would not say what the investigation was about.

Among the other airlines that were searched or approached by investigators are Atlas Air Worldwide Holding Inc.’s Polar Air Cargo unit, Japan Airlines Corp., Hong Kong’s Cathay Pacific Airways Ltd., British Airways PLC, Germany’s Lufthansa AG, Luxembourg’s Cargolux Airlines and Lan Chile.

Most said they were cooperating with the probe.

Atlanta-based Delta Air Lines Inc., whose cargo business makes up only a small fraction of its revenue, has not been contacted in the probe, spokeswoman Chris Kelly said. FedEx Corp., based in Memphis, Tenn., also has not been contacted, spokesman Jess Bunn said.

In South Korea, the nation’s antitrust watchdog said Wednesday it had inspected local and foreign airlines in cooperation with similar actions by authorities in the United States and Europe. The commission did not mention what airlines were inspected.

But Korean Air Co. spokesman Cho Hyong-chol confirmed that officials visited that airline, adding that he had no details.