German BGH: Airline bonus points

Germany Highest Court (BGH) ruled yesterday about the forfeiture of Airline bonus points (BGH 28.01.2010, Xa ZR 37/09):

Plaintiff was a participant of the flight awards program of the defendant airline. Under this program, travelers were able to collect a number of bonus points dependent on the route booked that could be redeemed within five years after the flight for bonus tickets. In the conditions of the program (CoP), the defendant retained the right to terminate the program at any time. In September 2007 defendant announced the ending of the rewards program by 31 October 2007 and admitted to the participants the option to transfer the points collected to another airline’s program. At the same time defendant terminated plaintiff’s participation contract and informed the plaintiff that he may book flights on the bases of the current CoP until 30 April 2008 only and which shall take place until 31 October 2008.

Plaintiff considered that defendant’s CoP shall be null and void in this regard and he claimed that he could still redeem the bonus points within five years after the flight date.

Both, the district court and the court of appeal dismissed the action and considered the CoP of the defendant still to be in force and binding.

The BGH did not follow this point of view. Defendant may terminate the flight rewards program at any time, however, in the case at hand the CoP providing a right to decrease the period of the initial validity of the bonus points of up to one tenth can not be justified.

This may cause difficulties for the defendant when booking appropriate bonus flights only six months in advance. Bonus points are a not a voluntary service provided by the defendant, since the bonus points are a kind of discount agreed which is applicable for future flights. The defendant is obliged to grant bonus points for flights that have taken place after termination the program, unless they have been booked prior to its termination on the basis of the CoP.

The offered transfer to another airline’s awards program is not an alternative, because it is not equivalent in every respect.

European Union: Commissioner Kuneva welcomes new report on airline charges

The report, which will be presented by the Norwegian Ombudsman Bjørn Erik Thon, is the result of a year long investigation by 11 national enforcement authorities (led by Norway). The in-depth study found that airlines are frequently including parts of their basic operational costs (handling charges, fuel charges, booking fees) into what appears to be obligatory "taxes and charges" – this can mislead consumers and falsely attract consumers to buying seemingly cheaper tickets.

The study covered 281 flights, 24 leading European airlines, as well as 34 major European airports.
The results of the investigation will feed into the industry agreement currently being elaborated following the EU enforcement sweep on airline ticket selling websites (see IP/09/783).

Source: Press release by Commissioner Kuneva; report on airline charges available here>>.

USA: Southwest Airlines to settle dispute over refund of fees

Southwest is notifying passengers that it has agreed to settle a class action seeking the return of security fees and airport passenger facility charges that passengers paid for when they bought nonrefundable tickets that were not used.

The proposal is to pay $4 to each eligible passenger for unused tickets purchased between Jan. 21, 2000, and June 30, 2006.

Source: Travel Weekly; find article here>>.

USA: American Airline goes to court against displaying its fares in the net

As reported by The Dallas Morning News, American Airlines is suing the parent of meta-search Websites Kayak.com and Sidestep .com, for violating an agreement on the use of the airline's airfare content by displaying the airline's fares available through third parties. Kayak issued a statement saying that it terminated its agreement with American.

Find article here>>.

USA: $210M settlement in airline price fixing is approved

An agreement by two British-based airlines to pay roughly $210 million to settle a massive price-fixing lawsuit met with tentative approval from a federal judge on Friday.
The class action lawsuit, which accused the carriers of colluding to gouge trans-Atlantic passengers with fuel surcharges, was brought on behalf of 5.1 million passengers who bought airplane tickets in the United Kingdom and another 2.1 million passengers who purchased tickets in the United States.
U.S. District Court Judge Charles Breyer in San Francisco granted tentative approval for British Airways PLC and Virgin Atlantic to refund one-third of the surcharge paid by each of the airlines' passengers between Aug. 11, 2004 and March 23, 2006. Breyer has scheduled a hearing to make his decision permanent on Sept. 12.
Similar price fixing class action lawsuits against other carriers are pending.

Source: Associated Press/Google; full article available here>>.

USA: Airlines to charge extra fees for baggage

Forcing customers to pay for service previously included with ticket purchases, UAL Corp.'s United Airlines and US Airways Group Inc. will begin charging $50 round-trip for checking a second piece of luggage on May 5, and Southwest Airlines Co. has already implemented a similar fee for checking a third bag. Other airlines may follow, eager to collect hundreds of millions of dollars without raising ticket prices.
Airlines are under severe financial pressure from high fuel prices, and their finances may worsen if recession curbs some travel. Carriers have been scrambling for ways to "up-sell" fliers, including selling first-class upgrades, fancy alcoholic drinks and day passes to airport clubs.
But they've also been stripping out previously free services and charging customers for anything more than basic transportation - everything from use of skycaps and telephone reservationists to on-board meals and, at a few carriers, assigned seats and exit-row or bulkhead legroom.
Baggage fees may be different, however. The stiff penalties can add hundreds of dollars to a family vacation, especially if travelers show up at the airport with bags heavier than 50 pounds or larger than the size limit airlines use -- 62 linear inches, the combined measurements of height, length and width.

Source: online.wsj.com; find full article here>>.

EU: criticism on plans for extensive airline pricing

Airlines may be required to publish a detailed breakdown of their prices, in addition to a fully inclusive price, if a new law being considered by Europe’s legislators gets the green light, risking further confusion for passengers. The 60-strong airline members of the European Regions Airline Association (ERA) have been at the forefront of publishing fully inclusive fares to the public as part of the “Plain Fares” campaign launched by the Association in 2006. As part of the European Commission’s review of the Third Package legislation, lawmakers are now proposing for airlines, and airlines only, to publish a detailed breakdown of their prices, splitting out for example the costs of airport security and fuel surcharges.

Source: press release 14/11/2007 by European Regions Airline Association ; read full article here.

"British Airways Plc and Korean Air Line Co. Ltd. Agree to Plead Guilty and Pay Criminal Fines Totaling $600 Million for Fixing Prices [...]"

As stated by the US Department Of Justice, "WASHINGTON — U.K.-based British Airways Plc and South Korean-based Korean Air Lines Co. Ltd. have each agreed to plead guilty and pay separate $300 million criminal fines for their roles in conspiracies to fix the prices of passenger and cargo flights, announced the Department of Justice. Today's plea agreements are the first to arise from the Antitrust Division's ongoing investigation into the air transportation industry.
The charges against the two airline companies were filed today in the U.S. District Court for the District of Columbia. Under the plea agreements, which are subject to court approval, British Airways and Korean Air have agreed to cooperate with the Department's ongoing investigation.
'The Department of Justice is committed to vigorous antitrust enforcement and will continue to bring to justice those who fix prices and thereby deprive the American public of the benefits afforded by a truly competitive market,' said Attorney General Alberto R. Gonzales. 'International law enforcement cooperation is crucial in prosecuting global cartels such as these, and today's enforcement actions represent the successful coordination between the United States and the U.K.'s Office of Fair Trading.'."

This Press Release is available in full text.

UK: British Airways fined £269m for fixing prices with Virgin

British Airways was fined a total of £269 million for conspiring to fix the price of air fares but the airline could be forced to pay out millions more to passengers seeking compensation.
The Office of Fair Trading (OFT) fined BA £121.5 million for anti-competitive behaviour, the largest penalty it has levied against a single company. The US Department of Justice (DOJ) fined the airline a further $300 million (£147 million), the second largest anti-trust penalty it has levied.
These fines could be dwarfed by compensation demands from passengers and companies who have paid higher fares because of BA’s actions. British passengers are understood to have signed up to a class-action lawsuit that has been filed in the US and a further legal demand for restitution is expected to be filed in a London court this year.
The charges against BA relate to two instances of price fixing. In the first, BA and Virgin Atlantic discussed the amount they would charge customers to cover increases in the price of fuel. These “fuel surcharges” were introduced in 2004 and, over a period of 18 months until early last year, the two airlines colluded on the level and timing of increases to their surcharges.
The second case of price-fixing relates to fuel surcharges for carrying cargo. This is a far wider investigation that covers about a dozen airlines in the US, Europe, Asia and Australia.

Source: timesonline.com; read full article here.

$1 flights too much for Hawaii based airline "go!"

In a 12-hour promotion marking its one-year anniversary, go! began offering 1,000 one-way interisland tickets for $1 from 7 a.m. to 7 p.m. today that only can be purchased online at www.iflygo.com. An influx of traffic overloaded the Web site and many prospective buyers were met with error messages. The system finally came up shortly after 3 p.m. — eight hours after it shut down. In response to the system crash, go! added 1,000 additional $1 tickets and extended the deadline until midnight.
Go!, which debuted on June 9, 2006, with promotional $19 fares, constantly has lowered the bar in a market that had seen ticket prices close to $100 each way for interisland travel. Hawaiian and Aloha have decried the money-losing low fares because they’ve been forced to match to stay competitive, but have been losing money on those flights in the process.

Source: Honolulu Star Bulletin. Read full article here.