Airline 'cartel' followed rather too friendly cricket match, court hears

Published on Tuesday 27 April 2010 23:10

SIR Richard Branson has been accused of telling a senior Virgin Atlantic executive to "sound out his contact" at British Airways over potential changes to fuel surcharges.

• Virgin's Sir Richard Branson told a senior Virgin executive to 'sound out' a BA colleague over surcharges, the court heard. Picture: PA

A court heard yesterday that top executives at BA and Virgin "sidestepped the proper process" and secretly fixed the cost of fuel surcharges at a cricket match between the two airlines at Sir Richard's Oxfordshire home in September 2005,

Sir Richard, Virgin's president, wanted to know if BA would follow suit if he introduced a variable fuel surcharge which would lead to higher class passengers paying a higher fuel surcharge than those in standard class.

William Boulter, Virgin's commercial director in 2005, told prosecutors at Southwark Crown Court in central London he was "reluctant" to do this at first because he felt it was a much more sophisticated conversation than those that had formed the basis of the illegal cartel between the two airlines up to this point.

Richard Latham, QC, for the prosecution, told the jury of eight men and four women: "(Sir Richard] Branson wanted Boulter to sound out his contact to see if they would follow Virgin if Virgin was to lead a variable passenger fuel surcharge."

Mr Boulter spoke to Alan Burnett, BA's head of sales in the UK and Ireland, at the cricket match, which BA won, on 4 September 2005, Mr Latham said. The conversation also involved collusion over Virgin's next rise to the fuel surcharges, from 24 to 30 each way, on 6 September 2005, with BA following suit two days later, Mr Latham said.

Virgin's director of corporate affairs Paul Moore then warned PR staff and the airline's senior executives not to release any of the publicity photos taken at the match to the press.

In response to an internal e-mail asking about the photos, he wrote: "Please don't put anything up on the intranet!!! If BA follow our surcharge it might not look too clever to show us fraternising two days before."

When the photos were released two weeks later, he added: "Can we say it happened recently, without the date?"

Mr Latham told the jury: "It's all a bit too cosy, would be the impression."

Burnett, BA's one-time commercial director Martin George, sales and marketing director Andrew Crawley, and former head of communications Iain Burns all deny a cartel offence under the Enterprise Act 2002. Mr Latham said the four defendants dishonestly agreed with Virgin Atlantic executives Moore, Boulter and Steven Ridgway to fix the price of fuel surcharges between 1 July, 2004, and 20 April, 2006.

The court was told they arranged the cartel in telephone calls before each price rise, telling each other: "This is a conversation we aren't going to have."

Mr Latham said: "Every single purchaser is a victim."

But the three Virgin executives were "controversially" granted immunity from prosecution in return for giving evidence against the BA staff after blowing the whistle four years ago, the court was told.

George, 47, of Hampton, Middlesex, was BA's commercial director and the three other defendants all reported directly to him. George; Crawley, 43, of Beaconsfield, Buckinghamshire; Burns, 51, of Farnham, Surrey; and Burnett, 63, of Egham, Surrey, are all on bail.

John Rishton, BA's chief financial officer, told the airline's then chief executive Rod Eddington that Burnett mentioned he had "spoken to someone at Virgin".

Mr Eddington said George should look into this, the court was told.

George, who was aware of the contact already, simply commented in the office: "Looks like that idiot Burnett has been speaking to someone at Virgin."

Mr Latham said: "What George said in passing was designed to downplay it and it was a front."

Earlier, Mr Latham said Burnett reprimanded Ian Heywood, another manager at BA, after one of Mr Heywood's staff made an "innocent mistake" and discussed an imminent rise in the fuel surcharge with some travel agents.

The jury was also told that BA's commercial director of air cargo was "startled" on 22 August 2005 to hear Burnett tell senior managers discussing increases to the fuel surcharge: "Don't write this down. I've spoken to Virgin and they have agreed to go first this time."