Fight over flight in billion-dollar lawsuit

By Daisy Melwani

Air New Zealand and Air India are the only carriers left defending a multi-billion dollar civil lawsuit in New York, where 26 airlines have cut settlement deals totalling $US1.19 billion ($A1.63 billion).

The class action’s hearing was to have started in January, but several more settlements were reached, leaving just the New Zealand and Indian 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 $US26.5 million, while Korean Air made the biggest settlement at $US115 million.

The plaintiffs estimate damages at about $US2.66 billion, which would triple to as much as $US7.98 billion under US antitrust laws.

Asiana Airlines, Nippon Cargo Airlines and EVA Airways Corp were the latest to settle.

The freight forwarders say 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, according to a report and recommendations by US Magistrate Judge Viktor Pohorelsky in the US District Court in October 2014.

In New Zealand, the Commerce Commission reached settlements with 11 carriers, including Air New Zealand, securing penalties totalling $NZ45 million ($A41.11 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 avoided prosecution in other jurisdictions, with European and US regulators dropping their claim against the national carrier, while the Australian Federal Court tossed out legal action against the airline in 2014.

“Air New Zealand has been cleared by regulators or courts of involvement in cartel conduct in the USA, Europe and Australia,” a spokeswoman said in an emailed statement. “We will continue to defend the civil claim.”

Image credit: The Big Short

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