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Saudia fined SR52.5m for cargo price-fixing

JEDDAH: Saudi Arabian Airlines confirmed on Friday that a US court has fined the national carrier $14 million (SR52.5 million) for allegedly colluding with other airlines to inflate air cargo prices.

Abdullah Al-Ajhar, vice president for public relations, said Saudia is following the case at US District Court for the Eastern District of New York and that it would inform the media details of the case shortly.

"The New York court has actually issued its verdict against Saudi Arabian Airlines and the airline's legal agencies in the US are following up the case," Al-Ajhar told Shams Arabic daily.

The Reuters news agency said Saudia agreed to pay $14 million on Tuesday to settle the case, adding that more than two dozen airlines around the globe were involved in the price-fixing issue.

"If the proposed settlement is approved by US District Judge John Gleeson in Brooklyn federal court, it would mean that 14 airline groups named in the class-action price fixing litigation have settled or agreed to settle, bringing the total amount of proposed settlements to $454.4 million," Reuters quoted attorneys for the plaintiffs as saying. Of that amount, $278.4 million already has been approved by the court.

The agreement with Saudia stems from claims filed by direct purchasers of air-cargo shipping services who accused the airline of conspiring to raise air-cargo freight rates between 2000 and 2006.

Michael Hausfeld, one of several attorneys representing the plaintiffs, called Tuesday's settlement "a further step toward total global resolution of one of the largest cartels ever uncovered."

The settlement with Saudi Arabian Airlines -- as well as two other airlines who have recently settled the claims, Malaysia Airlines and South African Airways -- is also significant because they have not pleaded guilty to violations of antitrust laws in the US, unlike the majority of the other settling airline groups, said Robert Kaplan, from Kaplan Fox & Kilsheimer, who also serves as counsel for the plaintiffs.

The class-action originated from a US Department of Justice investigation into a number of airlines suspected of violating antitrust rules with the air transportation industry. To date, 22 airlines and 21 company executives have been charged in the criminal investigation, which has resulted in more than $1.8 billion in fines.

Saudi Arabian Airlines sold 30 percent of its cargo division to a specialized company in 2008 as part of its privatization program. According to a report issued by the airline, cargo revenues in 2007 reached more than SR1.7 billion.

© Arab News 2011