Singapore Airlines 2011 Annual Report Download - page 168

SINGAPORE AIRLINES
166
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
36 Contingent Liabilities (in $ million) (continued)
(c) Passengers: Civil Class Actions and Investigations by Competition Authorities
The Company and several airlines have been named in civil class action damages lawsuits in the US and
Canada alleging an unlawful agreement to fix surcharges and rates on transpacific flights. These cases
are currently in procedural stages and none have been tried thus far on their respective substantive
legal merits. The Company has also received notice of investigations by competition authorities in
various jurisdictions concerning whether competitive aspects of passenger air travel services have been
lawfully determined. The Company is cooperating with these criminal and regulatory investigations.
In addition, in July 2010, the Company received notice of an investigation of the Competition
Commission of India (“CCI”) concerning alleged collusion in the elimination of commissions paid to
travel agents in India. The Company has responded to the alleged complaint. In January 2011, the
Office of the Director General of the CCI issued a report exonerating the Company and the other
defendant airlines. The CCI is expected to adopt a final decision in the case in the near future.
As the civil class action suits have neither been tried nor the damages quantified and the investigations
by the competition authorities are ongoing, it is premature to make provision in the financial statements.
(d) Australian Travel Agents’ Representative Actions
A former Australian travel agent, Leonie’s Travel Pty Limited, filed a representative action in the
Federal Court of Australia (New South Wales District Registry) on 15 December 2006 naming seven
respondents [International Air Transport Association (“IATA”), Qantas Airways Limited, British Airways
plc, Air New Zealand Limited, Singapore Airlines Limited, Malaysian Airline System Berhad, and Cathay
Pacific Airways Limited] in a claim on behalf of Australian travel agents for alleged non-payment
of commissions on fuel surcharges applied to passenger tickets issued in Australia from May 2004
onwards. IATA was subsequently removed from the proceedings.
In May 2007, the applicant’s solicitors filed a fresh similar representative application on behalf of
Paxtours International Travel Pty Ltd, another Australian travel agent, against Cathay Pacific Airways
Limited and the Company. The Company denies the claims and, along with each of the named airlines,
is defending the actions.
By agreement amongst the parties, the first case was heard with one airline from the respondent group
as the lead defendant. The subsequent claims against the Company were put on hold until the first
case is resolved.
In March 2009, the Court dismissed the first travel agent’s claim. The agents appealed and on 4 May
2010 the Full Court of the Federal Court reversed the earlier decision. The other airline’s appeal to
the High Court of Australia was unsuccessful and the Federal Court recently made orders in order to
facilitate the claim against that airline being finalised. That process is still ongoing.
There have been no substantive developments in the claim against the Company during the time
the claim against the lead defendant has been progressing but the claim against the Company and
the other respondents will now progress further. It is anticipated that the Court will now require all
remaining parties to explore options for a potential commercial resolution of the claims. Based on
presently available information, the Company does not expect the damages to be material.