Travellers from New York to London are encouraged to fly British Airways by the advertising slogan, “Go with those who know”. Does BA know rather more about its competitors’ pricing policies than it should?

BA faces investigation by the Office of Fair Trading and the US Department of Justice over alleged cartel activity in relation to passenger fares including fuel surcharges. There will be both a civil and criminal investigation, although the OFT states that no assumption should be made that the law has been infringed.

Martin George, BA’s commercial director and one of last year’s leading internal candidates to replace Sir Rod Eddington as chief executive, has been given leave of absence during the investigation. This will only increase investors’ concerns over the seriousness of the allegations.

The maximum fine that could be imposed on BA is 10 per cent of worldwide revenue, or £850m based on last year’s figures. The investigation appears to focus on transatlantic routes, so any fine might be related to that geographic segment’s turnover. This would suggest a far smaller potential penalty.

BA’s ability to pass on fuel surcharges reflects better underlying demand for seats. Nonetheless, surcharges were an important element in the increase in full-year profits reported in May. “Other revenue” increased by 51 per cent, or £407m last year, primarily because of a rise in passenger and cargo fuel surcharges. The latter are already the subject of a separate global investigation involving many airlines.

Fuel surcharges have only recouped part of the rise in fuel costs, suggesting any alleged collusion was not that effective. The line between price signalling and collusion is also blurred and the distinction difficult to prove. But the uncertainty of a drawn out investigation and the risk of a heavy fine suggest that BA’s share price outperformance since May’s results is over.

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