Air New Zealand fined $16.3m in price-fixing cartel case

An Air New Zealand Boeing 747 in Hong Kong in 2007. Photo / Ross Setford

Co-ordinated raids of airline offices in Europe and the Untied States on Valentine's Day in 2006 led to price-fixing fines, settlements and costs against Air New Zealand of close to $90m, with the latest penalty against the airline imposed in Australia today.

The airline has been ordered to pay A$15 million ($16.3m) in penalties and $2m in costs by an Australian court for its part in a global airfreight price-fixing cartel between 2002 and 2007.

The Federal Court ordered the penalty after action by the Australian Competition and Consumer Commission.

The court found Air NZ made and gave effect to agreements with other airlines to fix the price of fuel and insurance surcharges on air freight services from Hong Kong, and insurance and security charges from Singapore to various locations, including Australian airports, between 2002 and 2007.

Today's fine brings to an end years of legal action against Air New Zealand around the world.

It was one of dozens of airlines which were alleged to have colluded to impose freight surcharges after the 2001 terror attacks in the United States.

Since then airlines around the world have paid billions of dollars in fines and costs in this country and around the world as regulators took action against them.

Air New Zealand settled in the United States for US$35m, ($51m), and with the Commerce Commission in New Zealand for $8m, and as of 2009, had spent $10m fighting the case.

It said today the Australian court fine would not have an impact on guidance for 2018 earnings. It said in its last annual report that an allowance for the estimated level of the penalty and costs had been made.

ACCC commissioner Sarah Court said that the "illegal price-fixing agreements" reduced competition for transport costs for goods flown into Australia..

"This decision sends a strong warning to overseas and domestic operators that the ACCC can and will continue to defend competition and the rights of Australian customers and businesses by taking action against anti-competitive conduct," Court said.

The ACCC said that 14 airlines have now been fined $A113.5m since it launched its probe in 2006.

A judgment on penalty for a fifteenth airline, PT Garuda Indonesia, is still being decided.

In this county the Commerce Commission reached settlements with 11 carriers, securing penalties totalling $45 million, or about 10 percent of the revenue generated from air freight forwarding services in and out of New Zealand in 2006.