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. Last Updated: 07/27/2016

British Airways Penalized by $6.8M




BRUSSELS, Belgium -- The European Union's executive branch fined British Airways $6.8 million Wednesday for allegedly paying British travel agents to direct ticket-buying travelers onto its flights.


In a statement, the European Commission said that it is investigating a series of complaints it has received in relation to commissions paid by airlines to travel agents.


The ruling is the result of a two-year inquiry triggered by two formal complaints from British Airways' archrival, Virgin Atlantic.


Virgin accused British Airways of offering travel agents extra commissions if they could demonstrate that its ticket sales were going up compared to rival carriers, particularly when selling to corporate clients.


Richard Branson's airline alleged that the program was designed to put maximum pressure on travel agents to give preference to the largest carrier in the market, regardless of price, quality of service or scheduling.


Last year, the commission warned British Airways the program was illegal, as European Union law prohibits the use of restrictive contracts to reinforce a dominant market position.


British Airways then introduced a new "performance rewards scheme," which triggered a second complaint from Virgin.


British Airways is expected to appeal on the basis that it is being singled out for prosecution, as other leading European airlines operate similar incentive programs.


The European Commission runs the day-to-day affairs of the 15-nation EU, proposes EU law, enforces its implementation across Europe and represents EU governments in international trade talks.