Air France-KLM Fined $87 million in US Civil Price-fixing Claim

Europe’s largest airline company, Air France-KLM, has agreed to pay US$87 million in fines for a settlement over civil damages related to fixing prices on cargo operations. This comes after many other airlines, including Korean Air, Cathay Pacific, Qantas and British Airways, have paid large fines as well, following an investigation into price-fixing from 2000 to 2006.

Last year, Franciscus Johannes de Jong, the former vice president of KLM cargo subsidiary Martinair, agreed to pay a fine of US$20,000, as well as serve an 8-month jail sentence. After that, subsidiaries and former clients of Air France-KLM started claiming a series of civil damages.

This US$87 million fine hasn’t been officially put into effect, as it still has to be approved by United States courts. However, the money will be repaid to direct cargo customers of the French-Dutch carrier. Indirect customers, on the other hand, won’t be included in the repayment from this settlement.

Michael Hausfeld, co-lead counsel for the freight shippers, said that this settlement is an important and huge step forward. He added that they look forward to getting the right amends for the customers that purchased Air France-KLM services indirectly, as they suffered huge charges due to the cartel as well.

There has been over US$1.6 billion in fines that the US Department of Justice has imposed on carriers around the world. The investigation started in 2006 and has found that the airlines involved developed a series of worldwide cargo cartels. They conspired to fix the prices of specific cargo routes and then made sure that the rates were enforced. The European Commission is still carrying out their investigation, leaving room for even more fines to be imposed.