Today, British Airways was fined £270 million for colluding in a price fixing arrangement with rival airline Virgin Atlantic.
This is the culmination of a sorry tale of greed and illegal practice that led to the departure of BA’s communications and commercial directors when this all came to light in mid 2006.
British Airways CEO Willie Walsh was interviewed on the TV news a short while ago. From watching him speak, I gained the favourable impression that he was sincere in his regrets at what had gone on within his company. His words literally mirrored his quotes in BA’s press release:
I want to reassure our passengers that they were not overcharged. Fuel surcharges are a legitimate way of recovering costs. However this does not in any way excuse the anti competitive conduct by a very limited number of individuals within British Airways. Anti-competitive behaviour is entirely unacceptable and we condemn it unreservedly. We have a long standing competition compliance policy which requires all staff to comply with the law at all times. I am satisfied that we have the right controls in place. However, it is deeply regrettable that some individuals ignored our policy.
In contrast, Virgin wheeled out a PR spokesman for their separate interview who, in my view, gave his company little credibility compared to BA’s approach. Virgin hasn’t issued a press release; at least, there’s nothing showing in their online press centre.
So BA is hit with a whopping fine in the US and the UK – it was the largest ever imposed in the UK for anti-competitive business practice – and are publicly very apologetic. The company’s reputation is dented, although it’s probably doubtful that will make much difference to anyone who flies with the airline, perhaps because of their humility (it doesn’t affect my intention to continue flying BA).
And what of Virgin? They were the other party in this sordid tale. No financial pain for them as they blew the whistle on British Airways, resulting in immunity from any penalty.
According to The Times, here’s how that started:
[…] So, [in June 2006], why would [BA’s communications director Iain] Burns think anything would be different on one of his regular calls to Virgin? Because on that June day, his Virgin counterpart had been ordered to embark on a course of entrapment by spooked Virgin management, taping Burns and handing evidence over to the Office of Fair Trading in order to escape prosecution themselves.
Whatever you think about BA’s behaviour (or, rather, individuals within BA, where the key protagonists have already departed), I end up with a bad taste in my mouth as far as Virgin Atlantic is concerned.
I think they potentially have the most to lose from reputation and brand perception points of view. BA is taking some punishment for doing wrong. Virgin did wrong and gets away with it scot free. That is very wrong. Plus there’s no humility there.
Would I fly Virgin again? Right now, the answer is no.
[Photo credit: Don Boyd]