Air Cargo Price Fix Flap Widens

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     As news of industry-shaking mega fines of more than USD$800 million levied in USA and Europe against Korean and British Air Cargo for price fixing continued to sink in and reverberate around the world, Qantas in one of the strangest revelations to date said it might be guilty of price fixing itself.
     Not since a guy did a whole lot of nasty things to other people and then claim he ate too many Twinkies (an American sponge cake filled with whipped cream) saying Twinkies made him crazy, has a defense or in Qantas’ case a preventive defense seemed stranger.
     "In the first place there is absolutely no need for anybody in the airline cargo business to conspire about rates," a highly placed source told FlyingTypers.
     "Just like the passenger business, rates and surcharges are published and made public, and within minutes known to everybody.
     "Sometimes fare increases or fuel surcharges are trial balloons that other companies can either match or ignore.
     "It's all according to your business model and whether you will impact traffic by going up or down with charges.
     "Air cargo executives would have to be nuts to conspire in an atmosphere where everybody knows what everybody else is doing.
     "Think about it.
     "What have we got to conspire about?
     “The customers tell each airline immediately what the other airlines are charging and this is a very narrow industry.
     “The airlines had anti trust immunity for years with IATA and that never worked because they left the meetings and just undercut each other, so I cannot believe that now without this immunity they all started to trust each other knowing that they were breaking the law. It just does not make any sense.
     "The truth is that the freight forwarders who operate in much more secrecy than the airlines have wanted a piece of the airline surcharge and most probably sparked the U.S./UK investigations.
     "It should be pointed out that the forwarders could add a surcharge.
     "They have their own tariff where they can include a surcharge.”
     "But they don't, because their business is even more competitive than the airlines and they would have a hard time justifying a fuel surcharge to their customers as their operation is not as fuel intensive as flying an aircraft.”
     “All they want is the airline to cover them to make more profit from their customers.”
     "The airlines in fact are paying the fines to get this case behind them, and from a business perspective that would make sense, as it will most likely cost more in legal fees and executive time than the fines.
     "You can rightfully say that the announcements and settlements are a whitewash.
     "I doubt that this case will go much further, but the DOJ has invested a lot of money and needs to show that they were right.”
     "Most have a defensible position by claiming simply that they were unaware there was a problem until the investigation.
     "Biggest impact will be earnings if and when more fines are levied."
     But a top forwarder has another view.
     “Look, the airlines might have avoided this whole episode by just playing fair.
     “There are billions floating around in the CASS System.
     “In some cases the surcharges are greater than the rates. Airlines get their payments from CASS every 15 days, while in many cases we get our payment long after that.
     “For us the current situation of paying surcharges to airlines via CASS before we get paid is like Customs getting duties before shipments are even rendered.
     “When there is a collect shipment airlines charge a 4% fee to the forwarder.
     “But in the case of the surcharge, agents are not given a percentage although it is our job to collect that fee for the airlines. When you think about it, nowhere in the world is there a collection agency that charges nothing for their service. We would consider 2% fair.
     “Those EU/USA fines measured against the money in question appear to be a slap on the wrist.
     “Lufthansa Cargo was smart to make a deal early, pay USD$85 million and be granted immunity, probably saving hundreds of millions of dollars.
     “But everybody lost here including the executive at DLH that probably took a fall for all of this.
     “The airlines need to play fair and not make forwarders their collection agents for nothing.
     “Play Fair” should be the title of any meetings that attempt to set this thing right.”
     Meantime just as the air cargo industry is rocked with headlines of price fixing, elsewhere in the Philippines, of all places customs and international airport officials have given the Office of the Ombudsman permission to study their air cargo handling operation with an eye toward eliminating graft and corruption plaguing the system.
     Ordinarily that move would be met with polite applause and the world would get on with the big picture.
     But it turns out the money to fund the Ombudsman's study to open up Manila International Airport Authority and the Bureau of Customs to total scrutiny of their system, processes, personnel and records was a European Commission grant of 1.1 million Euros.
     EU says it is keen at identifying and assessing the internal and external factors that render the air cargo system vulnerable to corruption.
     Duh what?
     Maybe the European Commission or some commission in America should get on with the business of studying the air cargo industry and in fact invite industry executives in to participate, instead of relying on headline-grabbing law enforcement agencies in both places that seem intent upon slapping fines.
     Your move.
Geoffrey