The Air Freight Cartel

Today, I was fortunate enough to attend a lecture given by lawyers from the law firm Slaughter and May, who are currently acting on behalf of British Airways, concerning their alledged involvement in the Air Freight Cartel.

I knew little about this cartel, or BA’s alleged involvement, and so I thought I’d share the story with you.

Everything laid out below is all based on publicly available information, and I’ve tried not to bore you with the legal technicalities!

What is the Air Freight Cartel?

This cartel is much different from the traditional, drugs-style cartels (sorry - I know).
Essentially, this is a group of 14 airlines, who all allegedly colluded together to fix the prices of cargo freight across the world.

Who was involved?

Those inculpated in the cartel included:

  • Air France
  • KLM
  • British Airways
  • Cargolux
  • Singapore Airlines
  • SAS
  • Cathay Pacific Airlines
  • Japan Airlines
  • Martinair
  • Air Canada
  • Qantas
  • Latam Airlines
  • Lufthansa
  • Swiss International Airlines

What’s the story?

In 2005, the European Commission recieved two applications by two airlines for ‘immunity’. This essentially allows whistle-blowers to come forward without fear of facing repurcussions, but this is in exchange for information. The two airlines in this case were Lufthansa and Swiss International Airlines.

They informed the Commission of the activities that had been taking place within this cartel. These activities included:

  • Fuel surcharges;
  • Security charges;
  • Non-payment of commission to freight forwarders

With this information, the Commission proceeded wth dawn raids on offices around the EU. With the information gathered, and after conducting oral hearings, the Commission then concluded there had been:

"a single and continuous infringement of Article 101 of the Treaty on the Functioning of the European Union … covering the EEA territory … by which the addressees coordinated their pricing behaviour in the provision of airfreight services with respect to various surcharges and the payment of commission payable on surcharges” (Recital 1, Case AT.39258)

With this decision, they proceeded to impose fines on the airlines. In total, the fines stood at €799,000,000.

After three appeals (of which BA won one), the Commision’s decision still stands (as of November 2017). However, BA is currently appealing. In total, this process is now 13 years long.

What’s the issue?

What’s the issue in airlines fixing prices if they all agree on it together? Well, under European Union competition law, this is illegal, as are cartels, as they stifle competition.

This is by virtue of Article 101 of the Treaty on the Functioning of the European Union (TFEU):

"The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market”

The application of the various surcharges, as the Commission contends, violated this. It points to particularly-shady conversations in support of this:

“We will leave nothing written. And no other traces. So bring your camouflage cape” (Documentary evidence cited at para 962)

What now?

British Airways has faced numerous civil claims from private parties and is currently facing them in the UK courts. As some will remember, one such case was that involving The Honourable Mr Justice Smith’s lost luggage, in which he demanded BA tell him where his luggage was, all the time whilst sitting on their court hearing.

The cartel is also under investigation around the world. The US DoJ has levied fines of $1.7 billion, whilst the Australian Competition and Consumer Commission fined carriers over A$75 million. Other jurisdictions are also investigating.

Here’s a link to the EU case:

And here is a link to the transcript of the hearing in which Mr Justice Smith wished to find out about his luggage:

Futher information can also be found here:

Moral of the story - don’t price fix ladies and gents!


For once, it wasn’t a US carrier playing dirty. I never thought I would live to see the day…


Look at all of those oneworld/Star alliance Members!
BA, SAS, CPA, JAL, AC, Qantas, Lufty, ect.!


That’s a heafty price codos to the people who brought this up


Wow I like how a majority of them are oneworld members


Yep it’s pretty incredible. This fine is actually a reduced fine as well - the airlines submitted “leniency” applications, in which they essentially ask for a reduction due to a number of reasons (particularly exchange of information). Here’s a list of the fines by airline including the percentage reduction:

  • Air France - €182,920,000 - 20%
  • KLM - €127,160,000 - 20%
  • British Airways - €104,040,000 - 10%
  • Cargolux - €79,900,000 - 15%
  • Singapore Airlines - €74,800,000
  • SAS - €70,167,000 - 15%
  • Cathay Pacific Airlines - €57,120,000 - 20%
  • Japan Airlines - €35,700,000 - 25%
  • Martinair - €29,500,000 - 50%
  • Air Canada - €21,037,500 - 15%
  • Qantas - €8,880,000 - 20%
  • Latam Airlines - €8,220,000 - 20%
  • Lufthansa - €0
  • Swiss International Airlines - €0

Being the whistle-blowers, Lufthasa and Swiss recieved no fine, however, they are not immune from proceedings in other jurisdictions (such as the US and Aus), or even national jurisdictions.


I honestly thought a U.S. carrier would do this, like @Reedgreat, but never a European airline, let alone nearly all of them. It’s despicable, really. If you can’t handle the competition, attract more customers to your airline. I for one, now have a lesser opinion of these carriers, especially BA. Do I really want to hand over my money and support the shenanigans these airlines are causing? Perhaps I’ll start flying U.S. carriers internationally, being that these guys are trying to monopolize the industry.

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Interesting how Virgin Atlantic isn’t on that list, but then it’s for Cargo, Virgin were the whistle blower for their own Fuel Surcharges collusion thus gaining immunity.

I agree that such business practices are shameful. These decisions aren’t made on the ‘shop floor’ or ‘in the cockpit’ so to speak, these come from high up the food chain and, by now, those senior managers involved would have pocketed their bonuses and moved on. Once again the ‘but everyones doing it’ excuses have been trotted out.

Personally I don’t believe for one minute that the major US carriers haven’t been colluding over prices both for passengers and cargo. The trick is proving it. With the extremely unjust Chapter 11 protection that the US airlines enjoy trying to track down inter airline co-ordination after ‘re-organisation and re-structuring’ is rendered next to impossible.

I find the US DoJ fining airlines whilst protecting their own home carriers from trading equitably and fairly in a global market just reeks of hypocrisy.

Level playing field? Never in aviation history.

All IMHO of course ;)

All this being surprised that European airlines did it, that’s the problem with stereotypes. We expect some American or non-western company to be responsible for many unethical business practices (mostly because Europe colonised the world and is considered to be more “civilised and ethical”) but then it turns out to be an European company (just like Volkswagen in 2015)

Shame on all the culprits. I wouldn’t say Lufthansa and Swiss International Airlines deserve complete immunity as they also were involved here, maybe they deserve a 50% fine reduction.

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Proud of ma European g’s #toplads #diditforthevine

S a r c a s m


Lufthansa and Swiss will still be liable for national claims and claims in other jurisdictions don’t forget. It’s only in this EU case they have immunity. In addition, it’s also possible for Lufthansa and Swiss to be included in any damages payouts in private claims against any of the airlines individually (I believe BA have done this).

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Kim and airfrance are sky team

Companies do this quite often, it benefits them all and eventually when it’s close to being found out you have the whistle blowers. In the end they probably made more money off the illegal activities than the fines they have been handed. There are so many cases of this in pretty much every single industry mainly banking.

Not surprised at all. My guess is it’s very difficult so differetiatie your company in a industry that’s so “standardized”. With that challenge along with all the competitors I’m not surprised to hear that this is going on. Interesting story!

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Every airline does dirty things. And they were the unlucky ones. I’m sure they hate Lufthansa and Swiss lol

Don’t necropost!
Anyways, moving on…

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What does necropost mean?

It means posting on a topic that has not seen activity in a long time.

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Oh. Didn’t know that was the rule.

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Because US competitors are way too competitive and greedy to fix prices

Edit - just realized age

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