Singapore Air, Cathay fined over cartel

SINGAPORE Airlines and Cathay Pacific have copped fines totalling $23 million for their part in a global air cartel that included attempts by the Singaporean carrier to fix prices for taking meat to feed American and Australian troops in the Middle East.

SINGAPORE Airlines and Cathay Pacific have copped fines totalling $23 million for their part in a global air cartel that included attempts by the Singaporean carrier to fix prices for taking 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 illegal freight cartel.

The fine imposed on Singapore Airlines' cargo unit comes after it admitted attempting to fix rates with Malaysia Airlines for meat exports to troops stationed in the Middle East.

The attempt to illegally fix those charges followed the US's decision in January 2003 to deploy about 35,000 troops to the Middle East, just before the invasion of Iraq. The Australian government also decided at the time to send additional military personnel to assist.

A Singapore Airlines executive wrote in an email to 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. [I've] told MH that we will up 20? if they are prepared to do likewise. He is confident EK will follow," the executive wrote in the email.

In the latest chapter in the unravelling of the cartel, the Federal Court in Sydney fined Singapore Airlines and Cathay $11.75 million and $11.25 million respectively.

After Qantas' fine of $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.

Last month 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 2001 and 2006.

Australian Competition and Consumer Commission chairman Rod Sims said the "sheer scale of the penalties will act as a strong deterrent" to any business considering cartel activity. "We are trying to send a signal that, if you go and engage in cartel behaviour, you will get caught eventually," he 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 attempted to fix rates with Qantas for freight services between Hong Kong and Australia.

In September 2004 Cathay was operating a weekly 747 freighter between Hong Kong and Sydney, whose competitive position was threatened by a new Qantas service.

Cathay proposed that Qantas increase its price by 25 per cent to the level it was charging.

The ACCC also has legal action under way against Air New Zealand, Garuda Indonesia and Thai Airways.

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