Ex-chief of Qantas freight operations in US gets jail, fine for price fixing

16 May, 2008: Bruce McCaffrey, former head of freight operations of Qantas Airlines in the United States, will serve 8 months in prison and pay a fine of US $20,000 (Australian $21,000) for his involvement in the illegal price-fixing of cargo shipments.

McCaffrey, who pleaded guilty, has thus become the first person to be charged for involvement in the global air freight cartel by over 30 airlines between 2000 and 2006, the website smh.com.au has reported.

In charges filed before the United States District Court in the District of Columbia, McCaffrey was accused of engaging in “meetings, conversations and communications in the United States and elsewhere to discuss the cargo rates to be charged on certain routes to and from the United States.”

The $200-million class-action suit over the alleged fixing of freight rates was filed against 7 airlines – Qantas, Air New Zealand, Singapore Airlines, Japan Airlines, Lufthansa, Cathay Pacific and British Airways.

Qantas Airlines, the Australian flag carrier, admitted its guilt to the United States Justice Department, but the airline refused to comment on whether 5 other former and existing employees in the freight division excluded from its plea bargain could face the same fate as Bruce McCaffrey did.

The website smh.com.au quoted a spokesman of Qantas as saying: “We can’t comment on this case which involves a former staff member because it’s before the courts. Qantas is cooperating fully with the United States Department of Justice and continues to work with authorities and regulators to resolve all outstanding issues.”

Senior members of the management team of Qantas, including Geoff Dixon, chief executive, are immune from prosecution in the United States.

Since price fixing is not a criminal offence in Australia, Peter Frampton, former head of freight, and three other staff members of Qantas in Australia will not be extradited to face charges.

The Australian Competition and Consumer Commission is seeking admittances of guilt from airlines whose operations fall under its jurisdiction in exchange for lighter penalties.

The cartel, which kept prices on airfreight shipments artificially high, reportedly involves about 30 airlines.

The German airline Lufthansa was granted immunity from prosecution in exchange for exposing the operation. In August 2007, British Airways and Korean Air pleaded guilty to their involvement. In April 2008, Japan Airlines admitted to its role and paid a fine of US $110 million.

Hundreds of businesses in Australia are involved in the class-action suit against the 7 airlines for Australian $200 million, which they believe was “unfairly” charged to them as a result of “criminal activity.”