British Airways and Virgin Atlantic have agreed to pay up to £100 million in compensation to passengers affected by price-fixing on fuel surcharges for transatlantic flights.

Confirming a report in The Times, both airlines said this morning that they had agreed in principle to settle a US class-action lawsuit pending in a Californian court.

The settlement, which requires final approval, will cost BA about £46 million and Virgin about £28 million.

BA said that about 11 million passengers, including seven million in the UK, were affected by the deal.

It added that the settlement was worth between £1 and £11.50 per ticket purchased for the long-haul flights by UK passengers, although Cohen Milstein Hausfeld & Toll, the US law firm that brought the case, believes that this figure could be as high as £20 a ticket.

BA has already been fined £121.5 million by the Office of Fair Trading (OFT) last year and a further $300 million by the US Department of Justice after it was found guilty of conspiring to fix fuel surcharges.

Virgin escaped financial punishment last year after the group came forward to expose the collusion.

Willie Walsh, the BA chief executive, said: “As we have previously said, we absolutely condemn any anticompetitive activity by anybody.

“This settlement, which BA and Virgin Atlantic have jointly agreed with the lawyers for the plaintiffs, is fair and reasonable. BA can now move on and do what we do best — delivering excellent customer service.”

A spokesman for Virgin Atlantic said today: “We deeply regret our involvement in this matter and believe that the provisional settlement reached draws a line under this episode.”

BA could be forced to set aside more cash on top of the £350 million provision made last year as the group also faces possible further regulatory fines and class-action lawsuits across Europe.

BA and Virgin admitted colluding over fuel surcharges on long-haul flights between August 2004 and January 2006.

The charges, which came in response to rising oil prices, increased from £5 to £60 a ticket for a typical BA or Virgin long-haul return flight over that period.

Cohen Milstein Hausfeld & Toll said today that £73.5 million would be going to affected UK passengers.

Cohen Milstein would not give details of its fees for the case, although it said that they had been negotiated with BA and Virgin separately and would not be taken out of the settlement amount.

The fees would have to be approved by the US courts.

Michael Hausfeld, a senior partner at Cohen Milstein, said: “BA and Virgin overcharged their customers over a period of almost two years.

"Customers in the UK should claim back what was unlawfully taken from them in order to demonstrate that such behaviour is unacceptable.

“This is the first time non-US citizens have been rewarded on an equal footing to US citizens in a case before the US courts, making this a legal precedent and a significant milestone in both US and UK legal history.”

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