Air NZ hit with $16m price fixing fine

An Air New Zealand 787-9 Dreamliner. Photo: RNZ.

Air New Zealand has been fined $A15 million ($NZ16.24m) by an Australian court for price fixing between 2002 and 2007.

The Federal Court ordered Air NZ to pay the penalties after the Australian Competition and Consumer Commission (ACCC) launched legal action against a global air cargo cartel.

The Court found Air NZ agreed 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.

ACCC Commissioner Sarah Court said the illegal price fixing agreements "unfairly reduced competition for the transport cost for goods flown into Australia".

Air NZ has been ordered to pay a pecuniary penalty of $A11.5 million for price fixing over fuel surcharges imposed for cargo from Hong Kong to Australia. The other $3.5 million was for price fixing on the insurance and security surcharge from Singapore to Australia.

The ACCC launched an investigation into the air cargo cartel in 2006, and since then penalties totalling $A113.5 million have been imposed against 14 airlines.

The Air NZ fine was the second biggest, after Qantas was fined $A20 million in 2008.

The Federal Court initially dismissed the ACCC's case against Air NZ in 2014, but this was appealed in the Full Court of the Federal Court.

Air NZ will also pay $A2 million in legal costs.

Two years ago Air NZ settled for $US35 million in a civil compensation claim in the US over allegations of air cargo price fixing between 2000 and 2006.

Air New Zealand's shareholding minister Grant Robertson has expressed his disappointment in the airline.

He said if Air New Zealand broke the law it should face the consequences.

"Obviously it's some time ago, so in terms of the current management of the company, they no doubt were no involved with that. But Air New Zealand operates in a global environment where they have to obey the rules, and I'd expect them to do so."

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