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Fri, Feb 17, 2006

Authorities Investigate Cargo Carrier Collusion

Over A Dozen Airlines Under The Microscope

Are airlines collaborating to fix prices for running freight? That's what US, European and Asian regulators want to know, and they've started to probe more than a dozen airlines this week in hopes of finding the answer.

Three more Asian airlines -- South Korea's Asiana, Japan's Nippon Cargo Airlines and Singapore Airlines -- confirmed to the Associated Press Thursday they were visited by the authorities. Offices of JAL, Cathay Pacific, British Airways, and Lufthansa were also visited this week, and some where issued subpoenas.

But what, exactly, are the investigators looking into?

"We're not even sure what's prompting the regulators to get upset," said Peter Hilton, regional transport analyst at Credit Suisse in Hong Kong.

Representatives with the European Commission, the FBI and the US Department of Justice refused to provide details about what investigators are looking for... but one of the airlines under investigation says it all has to do with a surcharge agreement reached in 2000.

Denmark's SAS Cargo told the AP the European Union claims the cooperation began when the airlines reached an unofficial agreement over surcharges to impose on customers, to offset external costs to the airlines.

Public response from the affected airlines has been mixed. On Thursday, Singapore Airlines issued a statement that its cargo division had "received requests for information from the US and European authorities, and has provided the information sought. SIA Cargo will cooperate fully with the authorities."

An Asiana spokesman also confirmed its offices in Seoul were visited, and documents were inspected by South Korean antitrust authorities on Tuesday.

Nippon Cargo Airlines said officials from the US District Court of the District of Columbia left papers at the company's office at John F. Kennedy International Tuesday to appear at the court by April, according to spokesman Yuhei Yamashita.

The papers did not say why they were being asked to appear in court, he added.

Japan Airlines spokesman Yoshiteru Suzuki said the airline's offices in Frankfurt and New York were searched Tuesday by EU antitrust authorities, US Justice Department anti-monopoly officials and the FBI.

Suzuki said the questions centered on cargo operations, with apparent suspicions of a cartel.

Cargo operations represent a large source of revenue for overseas carriers. For the fourth quarter of 2005, JAL's revenue from international cargo totalled $451 million -- nearly 10 percent of the carrier's overall revenue.

FMI: www.sascargo.com, www.siacargo.com, www.baworldcargo.com, www.jalcargo.com, www.doj.gov, www.eu.int

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