BRITISH AIRWAYS and Virgin have been hit with a potentially damaging and expensive class-action lawsuit in America over an alleged price-fixing conspiracy.

The suit was filed in New York on Friday by the leading class-action firm Cohen, Milstein, Hausfeld & Toll.

It follows an admission by BA last week that it was under investigation by the Office of Fair Trading and the American Department of Justice. The probe centres on allegations of price-fixing related to fuel surcharges on long-haul flights.

The airline has sent two senior executives — commercial director Martin George and head of communications Iain Burns — on leave during the course of the investigation.

The lawsuit claims that BA, Virgin, and other unnamed airlines operated a “global conspiracy to fix, raise, maintain and/or stabilise prices for long-haul passenger flights to and from the United Kingdom”.

It says Virgin and BA’s introduction of fuel surcharges was “concerted” and lists surcharge rises over the past two years, claiming the pair worked in a “cartel”, with increases progressing in a “lockstep pattern”.

“(BA and Virgin) implemented their agreement by exchanging information in secret ... communications between defendants included telephone conversations between British Airways head of communications Iain Burns and his counterparts at Virgin,” the claim said.

BA and Virgin yesterday declined to comment on the action. Virgin has said it is not a target of the OFT probe, but said it was helping the authorities with their investigation.

But it emerged yesterday that Virgin, which is owned and chaired by Sir Richard Branson, tipped off the OFT.

Airline-industry sources said the revelation — which was not denied by Virgin — would harm relations between the companies, which have become more friendly since the “dirty tricks” affair a decade ago. Senior City lawyers said last night that Virgin’s decision to blow the whistle could give it immunity from prosecution by the OFT, but would not give it any protection from claims by third parties — such as the class- action suit in America.

Airlines have been hit by a rash of similar suits in America after an earlier investigation by the European Commission and the Department of Justice into airline surcharges to their cargo customers. Lawyers at Cohen, Milstein, Hausfeld & Toll, based in Washington, have been investigating the airline industry since filing a suit in the cargo charges case several months ago.

• Virgin Atlantic is expected to report increased profits and record passenger numbers when it releases its 2005 financial results tomorrow.

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