After Qantas All The King's Men . . .

     May not be able to put air cargo together again.
     At least that is the view of some air cargo insiders in Europe.
     The recent announcement November 28 that Australian airline Qantas Airways Limited is making a plea deal with the United States Department of Justice and paying a U.S. $61 million fine related to “illegal price fixing conduct within its freight division,” has lubricated law enforcement for even deeper thrusts amidst more widespread and further scrutiny and investigations around the world - and some more sleepless nights and admissions for other cargo executives.
     The Qantas Humpty Dumpty effect has already taken hold.
     On Thursday November 29, The Sydney Morning Herald said the global debacle had “snowballed into the world’s largest and most far reaching anti-cartel investigation,” and that “Legal firms in Australia, Europe, North America and even Tanzania are preparing (more) class actions against the illegally inflated charges airlines have allegedly been charging importers and exporters for the past seven years.”
     The Melbourne Herald Sun went on to say that “Qantas is in talks with the Australian Competition and Consumer Commission which is likely to hand down similar penalties (to the U.S.),” but went on to say that price fixing is not a criminal offense in Australia or New Zealand, as it can be in the U.S.
     That’s good news for any New Zealanders that might be involved, as also on Thursday, a story from the New Zealand Press Association reported that country’s Commerce Commission had begun its own investigations into “airlines’ conduct,” but didn’t specify which airlines.
     Neither the New Zealand Commerce Commission nor the Australian Commerce Commission could immediately be reached for comment. Qantas and Air New Zealand also did not immediately return requests for comment.
     Air New Zealand has already been named in a class action suit for freight price fixing filed in early 2007 also involving the likes of Qantas, Lufthansa, Singapore Airlines, and British Airways, while two years ago, Air New Zealand was convicted of violations to New Zealand’s Fair Trading Act for deceptive advertising, the NZPA report said.
     The implications are bad not only for the reputation of airlines and business in general, but also for passengers and cargo customers that may pay the price of the fines and legal fees in higher ticket and per kilogram cargo charges. Similarly, investors could get burned by any financial drains the airlines may incur paying the price.
     “Anybody who thinks that these airline fines are what this investigation is all about as an end all to further probes has rocks in their head,” a source told Air Cargo News/FlyingTypers this week.
     “What it is all about is information,” the source continued. “The problem is once law enforcement and various politicians get a hold of an issue, all hell breaks loose.
     “Just look at the compliance havoc over politician-mandated U.S.A. cargo security going on around the world right now.
     “These plea deals have turned the mattress over along with details that will open up even more probes,” the source said.
(Earlier this year, both British Airways and Korean Airlines agreed to pay $300 million each in fines related to cargo price fixing, while other class action suits are pending).
     On the other hand, there were some observers that played down some aspects of the entire fiasco. To be sure, they still agreed it should be settled as soon as possible.
     Per-Ola Hellgren, an analyst at Landesbank Baden-Wuerttemburg in Mainz, Germany called the grievances toward the industry “systematic,” adding that airlines that still had any undiscovered discrepancies in their businesses might want to strike a deal with authorities voluntarily, as that route could probably be done more quietly and at lower costs.
     “It would be in the best interest of any other airlines that have skeletons in their closets to come forward in order for this mess to get cleaned up and so that everyone can get on with business,” Mr. Hellgren said.
     He said he thought any damage to the credibility of the airlines in the public’s view – if there ever was any - was probably already done, while on the other hand the entire issue could also, in some ways, be regarded as a matter of perception:
     “This could be seen as a question of the interpretation of what constitutes admissible behavior,” he said.
     “Airlines may have been surprised by the resoluteness and vigor of prosecutors – regulators may have been tighter than airlines expected. At the end of the day, to some extent, this is arbitrary. It’s essentially someone defining one thing and someone else defining it differently.
     “It would be good for airlines to get all of this behind them and relegated to the history books,” Mr. Hellgren said.
George, Geoffrey