BA & Virgin Pay Out

Refunds for millions

By ABTN on 18 February 2008 in News

British Airways (BA) and Virgin Atlantic have agreed a settlement reported to be worth $204m (£104m) which will provide refunds to millions of passengers who travelled with the airlines between August 2004 and March 2006.

It follows a class action suit brought against the carriers after they were found to be colluding to price-fix fuel surcharges - costs added to ticket prices - between those dates.

Parties are expected to sign the agreement today and submit it to the US courts to be approved. BA is expected to pay £70m, and Virgin £34m.

A Virgin spokesman told ABTN: “Surcharges went up between £6 and £30 in the period, and the settlement is a third of that, so refunds will be from £2 to £10.

“Virgin Atlantic deeply regrets its involvement in this matter and believes the provisional settlement reached now draws a line under this episode. We quickly began settlement negotiations after the case involving passenger fuel surcharges came to light.

“Details of the settlement and the claims process will be published by the administrator and on our website in due course. Once the court has given its final approval, anticipated in a matter of months, the process will go live.”

BA chief executive Willie Walsh, said: “We absolutely condemn any anti-competitive activity by anybody. This settlement which we and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs is fair and reasonable.”

BA said the settlement would be worth between £1 and £11.50 for each coupon in the UK and approximately $1.50 and $20.50 in the US. In all, UK passengers who bought tickets will share £73m, while US purchasers will split $59m.

It is believed refunds will be claimed through a dedicated website, with an account managed by an independent auditor. Individuals and businesses can claim, and the US law firm which negotiated the settlement - Cohen Milstein – thinks around eight million passengers could be receive refunds. Unclaimed US settlements will go to charity.

 “This is only provisional settlement and has to be approved by a US court,” said the Virgin spokesman. “People probably won’t be able to claim until the summer when an independent claims administrator is appointed.”

After the price-fixing was discovered in 2006, BA was been fined £121.5m by the Office of Fair Trading and $300m by the US Department of Justice for its part in the scandal, while Virgin escaped a fine – despite admitting it broke the law – because it blew the whistle on what was happening.

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