Asiana Airlines Executives Indicted On Price Fixing Airfares

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Asiana Airlines Executives Indicted On Price Fixing Airfares By Mike Mitchell

		August 29, 2010 - The Department of Justice has announced that a Brooklyn, New York grand jury returned an indictment against two former executives of Asiana Airlines, Inc. (Asiana) for participating in a conspiracy to fix economy class airfares paid by passengers for travel from the United States to the Republic of Korea. The one-count indictment returned in U.S. District Court in Brooklyn, charges Joo Ahn Kang and Chung Sik Kwak, each a former vice president of the Americas of Asiana, with conspiring with others to suppress and eliminate competition by fixing passenger fares for passenger transportation services from certain airports in the United States to Korea from in or about and between January 2000 and February 2006.

Kang served as President of Asiana from December 2005 to November 2008. Asiana Airlines formerly Seoul Airlines is an airline based in Seoul, South Korea and is one of South Korea's two major airlines, along with Korean Air. Asiana is one of six airlines to receive a five-star rating from Skytrax. The airline is headquartered at Asiana Town, Osoe-dong, Gangseo-gu, Seoul (near Gimpo Airport), international hub at Incheon International Airport, 70 kilometres from central Seoul, and its domestic hub at Gimpo International Airport. According to the indictment, Kang and Kwak, each a citizen and resident of Korea, along with co-conspirators carried out the conspiracy by communicating and agreeing on the price of one or more components of the fares charged to passengers who purchased economy class tickets for flights between the United States and Korea. As a part of the conspiracy, Kang, Kwak and co-conspirators monitored and enforced adherence to the agreed-upon, noncompetitive rates charged to passengers traveling between the United States and Korea. Kang and Kwak are charged with violating the Sherman Act, a violation which carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. A total of 16 airlines and four executives have pleaded guilty or have agreed to plead guilty in the Justice Department?s ongoing investigation into price fixing in the air transportation industry. To date, fines of more than $1.6 billion have been imposed in the investigation and all of the pleading executives have been sentenced to serve prison time.

The airlines that have pleaded guilty, or have agreed to plead guilty, as a result of the department?s ongoing investigation into the air transportation industry are: British Airways, Korean Air Lines, Qantas Airways, Japan Airlines International, Martinair Holland, Cathay Pacific Airways, SAS Cargo Group, Air France, Koninklijke KLM Royal Dutch Airlines, Israel Airlines, LAN Cargo, Aerolinhas Brasileiras, Cargolux Airlines International, Nippon Cargo Airlines, Northwest Airlines, and Asiana Airlines. Airline executives who have pleaded guilty as a result of the investigation are Bruce McCaffrey of Qantas, Keith Packer of British Airways, Franciscus Johannes de Jong of Martinair and Timothy Pfeil of SAS.

On Aug. 12, 2009, Jan Lillieborg, a citizen and resident of Sweden and former vice president of global sales for SAS Cargo, was indicted for participating in a conspiracy to suppress and eliminate competition by allocating customers and coordinating surcharge increases for international air shipments to and from the United States.

This case is part of a joint investigation into the air transportation industry being conducted by the Antitrust Division?s National Criminal Enforcement Section, the FBI?s Washington Field Office, the Department of Transportation?s Office of Inspector General and the U.S. Postal Service?s Office of Inspector General.

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