Air NZ defends price-fix suit

Air NZ shares closed up 7c yesterday at $2.93. Photo / Mark Mitchell

Air New Zealand and Air India are the only carriers left defending a multi-billion dollar civil law suit in New York, where 26 airlines have cut settlement deals totalling US$1.19 billion ($1.78 billion).

The class action's hearing was to have started in January but several more settlements were reached, leaving just the two airlines defending the suit, hearings for which will begin on September 19. Judge Brian Cogan set a new pretrial conference in August and the new trial date in a February 19 judgment.

The claim was filed in 2006 on behalf of six freight forwarders and has been led by global litigation firm Hausfeld. Qantas Airways is among airlines to have settled, paying US$26.5 million, while Korean Air made the biggest settlement at US$115 million. The plaintiffs estimate damages at about US$2.66 billion, which would triple to as much as US$7.98 billion under US antitrust laws.

"Following additional settlements, at this time only Air New Zealand and Air India remain and face joint and several liability for the billions of dollars in damages (trebled) caused by the airlines' price-fixing cartel," said Hausfeld attorney Brent Landau.

Asiana Airlines, Nippon Cargo Airlines and EVA Airways were the latest to settle for US$55 million, US$36.4 million, and US$99 million respectively.

The freight forwarders allege the airlines "conspired to develop and implement an industry-wide index for calculating fuel and security surcharges that were applied to thousands of routes flown worldwide by the defendants, including flights to and from the United States", and were able to adjust those rates 28 times between January 1, 2000 and September 30, 2006.

The alleged price-fixing has been the subject of antitrust actions around the globe, with big settlements from multinational airlines in Europe and the US.

Here the Commerce Commission reached settlements with 11 carriers, including Air New Zealand, securing penalties totalling $45 million, or about 10 per cent of the revenue generated from air freight forwarding services in and out of New Zealand in 2006.

Air New Zealand has not been prosecuted in other jurisdictions; European and US regulators dropped their claim against the airline. The Australian Federal Court tossed out legal action against the airline in 2014, a decision which is under appeal.

The airline was also excluded from a class-action settlement in Australia and clawed back $3.2 million in legal fees. It has been noting the US litigation as a contingent liability in its annual report since 2007.

Air NZ shares closed up 7c yesterday at $2.93.