SINGAPORE AIRLINES and Cathay Pacific have copped fines totalling $23 million for their parts in a global air cartel, which included attempts by the Singaporean carrier to fix prices for transporting meat to feed American and Australian troops in the Middle East.
The latest fines take to $91 million the amount that 12 airlines, including Qantas, have been penalised in Australia for the freight cartel.
The fine imposed on Singapore's cargo unit comes after it admitted trying to fix rates with Malaysia Airlines for meat exports to troops stationed in the Middle East.
The attempt to fix those charges followed the United States decision in January 2003 to deploy about 35,000 troops to the Middle East, just before the invasion of Iraq. Australia also decided then to send military personnel to assist.
A Singapore Airlines executive emailed a colleague that he understood the "demand for meat in ME [the Middle East] has picked up due to the build-up of US troops".
"Only SQ [Singapore Airlines], MH [Malaysia Airlines] and EK [Emirates] are serious players," the executive emailed another Singapore colleague.
"[I've] told MH that we will up 20? if they are prepared to do likewise. He is confident EK will follow."
In the latest chapter in the unravelling of the cartel, the Federal Court in Sydney ordered Singapore and Cathay to pay fines of $11.75 million and $11.25 million respectively.
After Qantas was fined $20 million in 2008, the penalties imposed on the two Asian airlines are the second- and third-highest in Australia for illegally ramping up freight charges in concert with other airlines.
In October Emirates was fined $10 million for fixing fuel prices, a security surcharge and a customs fee on freight carried from Indonesia to Australia and other countries between October 2001 and May 2006.
The Australian Competition and Consumer Commission chairman, Rod Sims, said that the "sheer scale of the penalties will act as a strong deterrent" to any business considering cartel activity.
"We are really trying to send a signal that if you go and engage in cartel behaviour, you will get caught eventually," Mr Sims said.
Part of the fine against Singapore Airline relates to its admission that it fixed surcharges for fuel, security and customs fee for freight services from Indonesia to Australia.
The penalty against Cathay comes after it admitted that it tried to fix rates with Qantas for freight services between Hong Kong and Australia.
In September 2004 Cathay was operating a weekly 747 jumbo freighter between Hong Kong and Sydney, which was threatened by a new Qantas service. Cathay proposed Qantas lift its price by 25 per cent to the level it is charging.
Frequently Asked Questions about this Article…
What happened in the Australian air freight cartel case involving Singapore Airlines and Cathay Pacific?
The Federal Court in Sydney ordered Singapore Airlines and Cathay Pacific to pay fines of $11.75 million and $11.25 million respectively after admitting roles in a global air freight cartel that included attempts to fix freight rates and surcharges.
Which airlines have been fined in Australia for the air freight cartel and how much in total?
So far 12 airlines have been penalised in Australia for the freight cartel, bringing total fines to $91 million. Named carriers in the article include Qantas (fined $20 million in 2008), Emirates (fined $10 million in October for fixing fuel and other surcharges), Singapore Airlines and Cathay Pacific.
Why was Singapore Airlines fined and what did it admit?
Singapore Airlines' cargo unit admitted attempting to fix rates with Malaysia Airlines for meat exports to troops in the Middle East and admitted fixing surcharges for fuel, security and customs fees on freight services from Indonesia to Australia — actions that contributed to its $11.75 million fine.
Why was Cathay Pacific fined and what conduct was involved?
Cathay Pacific admitted it tried to fix freight rates with Qantas for services between Hong Kong and Australia. The case included a 2004 episode where Cathay, operating a weekly 747 freighter to Sydney, proposed Qantas increase its price by 25% to match Cathay's level, resulting in an $11.25 million penalty.
What kinds of cartellike behaviour were identified in the case (price fixing, surcharges, etc.)?
The cartel behaviour involved attempts to fix freight rates, coordinate surcharges such as fuel, security and customs fees, and proposals to raise competitor prices (for example a suggested 25% price increase). The conduct affected freight services on routes including Indonesia–Australia and Hong Kong–Australia.
What did the Australian regulator say about the fines and why is that important for investors?
ACCC chairman Rod Sims said the 'sheer scale of the penalties will act as a strong deterrent' and warned that companies engaging in cartel behaviour will 'get caught eventually.' For investors, this signals active regulatory enforcement and increased legal risk for carriers involved in anti‑competitive conduct.
How might these fines matter to everyday investors in airline stocks?
The fines are direct cash penalties (for example, $11.75m and $11.25m) and represent legal and reputational risk. While the article doesn't quantify broader financial impacts, investors should note that large regulatory penalties can affect a company's profits, cash flow and public image.
Where can investors follow further developments in the freight cartel case?
Investors can monitor Federal Court rulings and public admissions by the airlines, along with announcements from the Australian Competition and Consumer Commission (ACCC), which led the enforcement action described in the article.
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