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WASHINGTON – When the line business took a look dive a decennium ago, executives at global carriers scrambled to find a hurried mend to refrain playing ruin.

What they came up with, according to federal prosecutors, was a massive price-fixing scheme among airlines that artificially inflated traveller and load render surcharges between 2000 and 2006 to attain up for lost profits.

The airlines' crimes outlay U.S. consumers and businesses — mostly planetary passengers and load shippers — hundreds of millions of dollars, prosecutors say.

But the airlines caught by the Justice Department hit paid a powerful price in the fivesome eld since the government's widespread enquiry became public.

To date, 19 executives hit been live with evilness — quaternary hit absent to situation — and 21 airlines hit coughed up more than $1.7 1000000000 in fines in digit of the maximal malefactor just investigations in U.S. history.

The suite cases reveal a Byzantine scheme of schemes between mostly planetary carriers willing to mend fees in lockstep with competitors for flights to and from the United States.

Convicted airlines include nation Airways, Asiatic Air, and Air France-KLM. No major U.S. carriers hit been charged.

The price-fixing unraveled mostly because two airlines definite to become decent and invoke in their co-conspirators.

In New 2005, officials with German-based Lufthansa notified the Justice Department that the line had been conspiring to ordered load surcharges. By Valentine's Day 2006, FBI agents and their counterparts in Europe made the enquiry unstoppered by raiding line offices. After those raids, British-based Virgin ocean came nervy about its persona in a similar scheme to ordered render surcharges for passengers.

Investigators yet found a certain essay dawdle birthing discover agreements, exercising back to 2000, to ordered traveller and load render surcharges The probe swollen to airlines doing playing between the U.S. and Europe, Asia, South America, and Australia.

The Lufthansa and Virgin ocean mea culpas allowed them to verify advantage of a Justice Department mercifulness program because they helped fissure the conspiracies.

Former Associate Attorney General Kevin J. O'Connor, who oversaw Justice's just division in the New 2000s, said he doesn't know ground they confessed, but the termination "demonstrates the power of that mercifulness program."

Now in private practice, O'Connor said companies that admit for mercifulness haw be sagely disagreeable to bounds liabilities from illegal conduct.

"Generally speaking, if they hit an inkling they strength get caught, they become in," O'Connor said. "The theory strength be that yet these things module be exposed and ground venture continuing."

Federal prosecutors and investigators declined to handle details of the cases because they are ease investigating.

"Lufthansa Cargo fully cooperated with the enquiry launched by DOJ," histrion Riecken, Lufthansa's administrator of joint person for the Americas said. Virgin ocean referred every questions to the Justice Department.

Airlines and executives who didn't become nervy were live with violating the general Antitrust Act.

Two past line executives were sentenced to sextet months in prison; two others were ordered to situation for octad months. Charges are pending against 15 executives, figure of whom are thoughtful fugitives.

Bruce McCaffrey, one-time evilness chair of transport for the Americas at the inhabitant traveler Qantas, pleaded blameable to band to disable trade. He was sentenced to sextet months in situation in 2008. He admitted working with added airlines to mend load render surcharges between 2000 and 2006.

Keith H. Packer, a past grownup manager of sales and marketing for nation Airways, pleaded to band to disable change and was sentenced to octad months in situation in 2008. He admitted connexion the load band in 2002 and participating until February 2006.

British Airways and Asiatic Air pleaded blameable to violating the general act; apiece was punished $300 meg in August 2007.

British Airways admitted sterilisation load surcharges from 2002 to 2006 and traveller render surcharges from 2004 to 2006. Asiatic Air admitted sterilisation load and traveller surcharges from 2000 to 2006.

Announcing quaternary blameable pleas in June 2008, O'Connor said the housing "conservatively, has strained zillions of dollars of shipments. Estimates declare that the harm to dweller consumers and businesses from this band is in the hundreds of millions of dollars.

"As an example of the effect of the conspiracy, render surcharges imposed by some of the conspirators chromatic by as such as 1,000 proportionality during the conspiracy, farther outpacing some percentage increases in render costs that existed during the aforementioned time period," O'Connor said.

In digit of individual lawsuits by passengers and load shippers today existence heard in a Calif. federal court, San Francisco-based lawyer Christopher Lebsock and others assert line officials routinely concentrated at business meetings to handle render costs and how to attain up losses.

Lebsock said they united to add or increase the render surcharges that are tacked onto traveller fares and load fees.

"We hit seen in unstoppered documents that they were concerned and wanted to raise revenue to offset the crescendo price in fuel," Lebsock said.

According to published notes of an October 2005 gathering of line representatives in Jeddah, Arabian Arabia, a patron of executives openly crosspiece about surcharges already in place. One official, identified in gathering transactions exclusive by the initials" GF," advisable the assemble create "a subcommittee to study this person and become up with a joint proposal."

According to published notes of added gathering of line representatives in Arabian peninsula in September 2004, "the participants united to attain homogenous contract for such (insurance and fuel) surcharges to be applied."

Not every line officials at these meetings united to tie the conspiracies.

During a 2004 business gathering in Thailand, executives from U.S. based-United Airlines and Northwest Airlines mitt the gathering when others started discussing environment fares and render surcharges, according to a suite filing by lawyers in digit class state suit.

Warren Gerig, an planetary manager for United when he walked discover of that meeting, declined to handle the case. The Northwest chief was identified exclusive as Sarathool M. and could not be reached.

While gathering notes attain it appear the discussions were unstoppered to anyone who accidently walked into the wrong ballroom, Lebsock and Justice officials believe executives were more certain to conceal their activities.

"My significance is they weren't rattling unstoppered to the public," Lebsock said. "They weren't that stupid."

Lebsock said documents obtained in pretrial discovery attain country that some surcharge discussions carried over from super assemble meetings around the concern to more private office settings and e-mail discussions

According to digit traveller lawsuit, individual Asian airlines — including PRC Pacific Airways, Nihon Airlines, and All Nippon Airways — confined some discussions to phone calls and e-mails. Lebsock said evidence shows some line executives proven to conceal or destroy incriminating documents and e-mails.

Lebsock believes the conspiracies were so substantially unseeable that it's doable they would hit continuing unobserved had Lufthansa not become forward.

"In the epilepsy of someone reaching forward, and revelation it out, it is very, rattling arduous to establish that there was a (conspiracy)," Lebsock said.

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Online:

Justice Department's just division: http://www.justice.gov/atr/index.html

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