Freight Transport

The Korea Fair Trade Commission (KFTC) has imposed fines totalling 11954 billion won on nineteen airlines and issued corrective orders on two airlines for violating the Monopoly Regulation & Fair Trade Act (Article 19) Sharon Gill reports

The Commission found that the 21 airlines had conspired to introduce fuel surcharges and continue to raise surcharge rates for air cargo to and from Korea between 1999 and 2007

According to the KFTC, the airlines conspired on four routes: outbound from Korea, and inbound to Korea from Hong Kong, Europe, and Japan

Conspiracies on outbound shipments from Korea:

In June 2002, Korean Airlines and Lufthansa agreed to introduce fuel surcharge Later, another fifteen airlines (Malaysian Airline, Swiss International Air Lines, Singapore Airlines Cargo, Japan Airlines International, Nippon Cargo Airlines, All Nippon Airways, Asiana Air, Air France (including Air France-KLM), British Airways, Cargolux Airlines International, Cathay Pacific Airways, KLM Airlines, Qantas Airways, Thai Airways International ) reached an agreement to impose fuel surcharge of 120 won per kg starting from April 16, 2003, and also agreed to raise surcharge rates in October 2004, July 2005 and November 2005

Conspiracies on shipments from Hong Kong to Korea:

In January 2000, seven airlines (Korean Airlines, Asiana Air, Air Hong Kong, Air India, Cathay Pacific Airways, Thai Airways International, Polar Air Cargo) agreed to start imposing fuel surcharge of 050 HK$ per kg from February 1, 2000, and consistently colluded to increase surcharge rates adjusting to oil price hikes

Conspiracies on shipments from Europe to Korea:

Between December 1999 and February 2000, eight airlines (Korean Airlines, Lufthansa, Scandinavian Airlines, Air France (including Air France-KLM), Japan Airlines International, Cargolux Airlines International, KLM Airlines) agreed to introduce a fuel surcharge of €010 per kg starting from February 1, 2000 The cartel was later expanded to involve additional air carriers (British Airways - September 18, 2000, and Singapore Airlines Cargo - December 2003) They agreed to raise the surcharge rates adjusting to oil price increases and actually implemented the agreement

Conspiracies on shipments from Japan to Korea:

Between September and October 2002, five airfreight carriers (Korean Airlines, Asiana Air, Japan Airlines International, All Nippon Airways, Nippon Cargo Airlines) agreed to impose fuel surcharge of ¥12 per kg starting from October 16, 2002, and continued to reach and implement an agreement to raise surcharges according to oil price hikes

The commission estimated that these practices had cost exporters 67 trillion won in excessive freight charges

Fines:

• Air France: 371 billion won
• Air France-KLM: 543 billion won
• Air Hong Kong: 104 million won
• Air India: warning
• All Nippon Airways: 13 billion won
• Asiana Airlines: 2066 billion won
• British Airways: 950 million won
• Cargolux: 205 billion won
• Cathay Pacific: 41 billion won
• Japan Airlines: 387 billion won
• KLM: 784 billion won
• Korean Airlines: 4874 billion won
• Lufthansa Cargo: 121 billion won
• Malaysian Airline: 112 billion won
• Nippon Cargo Airlines: 117 billion won
• Polar Air Cargo: 850 million won
• Qantas Airways: 131 million won
• Scandinavian Airlines: warning
• Singapore Airlines Cargo: 235 billion won
• Swiss International Airlines: 265 million won
• Thai Airways: 278 billion won

According to newswire reports, Korean Air said that its penalty was reduced by more than half to 222 billion won, because it cooperated in the probe and reported the unfair practices voluntarily

The Korean probe follows similar investigations in the EU, US, Canada, Australia and New Zealand into cargo-carriers and freight forwarders