Florida West International Airways Executives Indicted

 

 
 
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Florida West International Airways Executives Indicted

By Daniel Baxter
 

December 6, 2010 - A one-count indictment was returned U.S. District Court in Miami charging Miami-based Florida West International Airways Inc., one of its former executives, and two executives of a competing air cargo carrier with participating in a conspiracy to fix and coordinate certain components of air cargo shipments from Colombia to Miami. 

Among the components fixed were peak season surcharges imposed before Valentine’s Day and Mother’s Day, when imports of fresh flowers increase, as well as security and fuel surcharges. 

Florida West International Airways (often abbreviated FWIA) is an American cargo airline based on the grounds of Miami International Airport in unincorporated Miami-Dade County, Florida, USA. It operates scheduled and charter services worldwide, with its main markets in Latin America, the Caribbean and the USA. Its main base is Miami International Airport.

The airline was established in 1981 and was originally known as Florida West Airlines. Following entry into Chapter 11 bankruptcy in October 1994, its assets and subsidiaries, were sold to Florida West International Airways in August 1995. Operations restarted on 12 March 1996. In December 2000, LAN Airlines acquired a 25% stake in the airline, which has 66 employees. Mansour Rasnavad is the president and CEO. (at March 2007). 

The one-count indictment charges Luis Augusto Afanador, Rodrigo Hernan Hidalgo, and Jaime Lara Rueda Sr. with conspiring to suppress and eliminate competition by fixing and coordinating certain components of cargo rates, including peak season, security, and fuel surcharges, for international air shipments from Colombia to Miami.

The department said the conspiracy began at least as early as January 2002 and continued until at least Feb. 14, 2006. Florida West is charged with joining and participating in the conspiracy from at least as early as August 2002 and continuing until at least Feb. 14, 2006. 

Air cargo carriers transport a variety of cargo, including fresh flowers, consumer goods, and electronics, on scheduled international flights. According to the indictment, Florida West, Afanador, Hidalgo, Lara, and co-conspirators participated in meetings, conversations, and communications to discuss and agree on certain components of cargo rates and the elimination of discounts from Bogota to Miami.

 

To facilitate the agreements reached, Florida West, Afanador, Hidalgo, Lara, and co-conspirators discussed encouraging air cargo providers to maintain and increase certain components of air cargo rates for shipments from Miami to Bogota. In order to expand the agreements reached, Florida West, Afanador, Hidalgo, Lara, and co-conspirators agreed not to compete for certain customers from Medellin, Colombia to Miami beginning in the summer of 2005.

As part of the conspiracy, Florida West, Afanador, Hidalgo, Lara, and co-conspirators implemented and monitored the agreements reached, and accepted payments for shipments at collusive and noncompetitive rates. Afanador and Lara are senior executives of a Colombian air cargo carrier based in Bogota. Hidalgo is a former vice president of sales and marketing for Florida West. Hidalgo was indicted on Oct. 28, 2010, by a Miami grand jury for participating in a separate conspiracy to fix surcharges on air cargo shipments from the United States to South and Central America following Hurricanes Katrina and Rita in 2005. That charge is pending. 

Florida West, Afanador, Hidalgo, and Lara are charged with price fixing in violation of the Sherman Act, which carries a maximum $100 million criminal fine for a corporation and a maximum penalty for each individual of 10 years in prison and a $1 million criminal 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.

 
   

Including Florida West, Afanador, Hidalgo, and Lara, as a result of this investigation, a total of 21 airlines and 19 executives have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.7 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against the remaining 15 executives. 

The joint investigation into the air transportation industry is being conducted by the Antitrust Division’s National Criminal Enforcement Section and Chicago Field Office, the FBI’s field offices in Miami and Washington, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General.

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