BA men quit after 'breach'

Two British Airways officials resigned yesterday after it emerged that the airline breached its own rules in talking to a competitor about fuel surcharges.

The pair who quit were commercial director Martin George and head of communications Iain Burns.

Both had been on leave of absence since June when the UK's Office of Fair Trading (OFT) and the US Department of Justice began an investigation into alleged price coordination by airlines in relation to long-haul flight fuel surcharges.

BA said: "It has emerged from work done by BA in response to request for information by the regulators (the OFT and the US Department of Justice) that contacts took place with a competitor in respect of long-haul passenger fuel surcharges in breach of the company's compliance policy.

"BA policy is to conduct its business in full compliance with all applicable competition laws. BA continues to assist t he regulators in their investigations."

In a letter to BA chairman Martin Broughton, Mr George said that within his department "there may have been inappropriate conversations in violation of company policy in relation to long-haul fuel surcharges".

Mr George said he had "not b een involved in such conversations".

He went on: "Although the board of BA have not found that I have behaved in a dishonest way, I fully recognise my responsibilities as head of department and as a board director."

Mr George, who has worked for BA for 19 years, said he was leaving "with deep regret, while believing that departing is, in these circumstances and for these reasons, nevertheless, the right course".

BA said its planning director, Robert Boyle, had been appointed to take over as commercial director and that Thomas Coops, former communications director at Abbey National, had been appointed interim head of corporate and media relations.

It has been reported that Sir Richard Branson's Virgin Atlantic tipped off competition chiefs about the possible fixing of fuel surcharge pricing.

It is thought that this may have arisen from alleged conversations between Virgin and BA concerning the timing and impact of raising fuel surcharges.

Virgin has said it is assisting the OFT with its inquiries but is not under investigation itself.

If found guilty of operating a price-fixing or market-sharing cartel, an airline can expect to be fined as much as ten per cent of its worldwide sales.

BA's worldwide sales last year amounted to £8.52 billion.

The OFT said that its investigation was "ongoing". It is understood it could last some months.

In June this year, at the start of the probe, the OFT said it was "conducting both a criminal and civil investigation into alleged price coordination by airlines in relation to fuel surcharges for long-haul passenger flights to and from the UK".

The OFT went on: "The OFT's civil investigation is being conducted under the Competition Act 1998 and Article 81 of the EC Treaty and the criminal investigation under the Enterprise Act 2002.

"The OFT's investigation is at an early stage. No assumption should be made that there has been an infringement of competition law. The OFT will not be in a position to conclude whether the law has been infringed until it has completed its investigations."