Thursday, November 17, 2011

Nigeria fines Virgin Atlantic and British Airways

Nigeria's government has fined air carriers British Airways $135 million and Virgin Atlantic Airways $100 million over what it describes as unfair trade practices that hiked up airfare prices in the oil-rich nation, an official told The Associated Press on Thursday.

The official said the fines came after a six-month investigation into fuel charges added to fares from Lagos' Murtala Muhammed International Airport to London's Heathrow Airport. The official said the two airlines acted together to inflate prices as far back as 2004.

The official spoke to the AP on condition of anonymity as the Nigerian government did not want to publicly acknowledge fines as negotiations with the two carriers continue. Nigerian newspaper ThisDay published a story Thursday saying the government had levied the heavy fines.

British Airways, which is run by International Consolidated Airlines Group PLC, rejected the allegations in a Thursday statement. British Airways has been flying to Nigeria, a British colony until 1960, for more than 75 years.

"We are vigorously defending our position," the statement read.

Virgin Atlantic Airways Ltd. issued a statement Thursday saying it had been contacted by the Nigerian Civil Aviation Authority over the fuel-charge investigation.

"We have fully assisted the NCAA with its inquiry and we do not believe we have breached Nigerian law," the statement read. "We will be robustly defending any suggestion to the contrary."

The airlines also will be required to provide compensation for affected passengers, which could mean millions of dollars more in losses, the official said.

The fuel charges appear to have spiked in just over a year, from 2.50 pounds ($4) in 2004 to 30 pounds ($47) in 2005, according to an analysis done by the Nigerian government and obtained Thursday by the AP.

The fee "was nothing but an additional fare," the analysis read.

In trading Thursday, IAG stock dropped 2.10 pounds ($3.30) to 141.40 pounds ($222).

The Nigerian government's push to accuse the two airlines of price fixing has precedent abroad. In the U.S., 21 airlines have paid more than $1.7 billion in fines over artificially inflating passenger and cargo fuel charges, one of the largest criminal antitrust investigations in U.S. history. Both British Airways and Virgin Atlantic found themselves ensnared in that probe, with British Airways fined $300 million in August 2007.

However, the fines come as Nigeria is engaging in talks with the United Kingdom over Nigerian carrier Arik Air's loss of spots at Heathrow. The Nigerian airline said a government agreement entitles it to 21 slots at U.K. airports, but the airline refused to pay increased rates for some Heathrow slots, which are administered by a private company.

The Nigerian official denied the fines came as a response to the conflict, which has seen the Nigerian government threaten to cut British Airways flights in Lagos in retaliation.

Other foreign carriers also fly in and out of Lagos' international airport, a major hub for West Africa. That airport alone saw 2.3 million passengers pass through it in 2009, according to the most recent statistics provided by the Federal Airports Authority of Nigeria.

The official said authorities will continue their investigation to examine the high prices charged by other foreign airlines as well.


Related stories: Nigerian government moves to restrict British airways flights to Lagos

Nigeria rejects British Airways 20% fare reductions

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