Confidential emails from Flight Centre executives, including the managing director, Graham Turner, reveal the level of pressure they were putting on major airlines to shelve bargain fares available over their websites because they were undercutting its own prices.
In an email in May 2009, Mr Turner personally wrote to Singapore Airlines’s Australian boss seeking ”an agreement that we will not be undercut on the web”.
The emails from Mr Turner and another Flight Centre manager are contained in a statement of claim lodged by the competition regulator in the Federal Court in Brisbane.
The Australian Competition and Consumer Commission has used the emails to support its case that Flight Centre sought to illegally fix prices by attempting to collude with Singapore Airlines, Malaysia Airlines and Emirates between 2005 and 2009. The emails from Mr Turner were sent in 2009 when Flight Centre was at loggerheads with Singapore Airlines over a new preferred-carrier agreement.
On May 12 that year, Mr Turner sent an email to the airline’s country manager, Subhas Menon, in which he talked of a ”lunch to either stitch up a mutally [sic] agreed arrangement or to go our separate ways”.
In that email, Mr Turner said Flight Centre was seeking a ”total guaranteed margin on SQ [Singapore Airlines] … [and] an agreement that we will not be undercut on the web”.
Two days later Mr Turner emailed Mr Menon again to tell him ”the web is an issue and may be the clincher why [it] may be best to go our separate ways”.
But Flight Centre again rejected the claims yesterday and insisted the regulator had misinterpreted its legitimate attempts to seek access to the airlines’ fares available over the internet for its own customers.
”We have never once said, ‘increase the price’,” spokesman Haydn Long said yesterday.
The statement of claim also details emails from a Flight Centre manager, Darren Burgess, to airlines. In August 2005, he sent an email to Singapore Airlines stating: ”I would like to formally express our opposition & [sic] concern at the recent Singapore Airlines internet initiative.”
”At a time when we are going out of our way to sell SQ [Singapore Airlines], we are faced with being uncompetitive to the effect of some AUD150-200 per person to a wide range of destinations,” he wrote.
”The losses we are incurring matching this offer are significant.”
Mr Burgess said Flight Centre’s concern was Singapore Airlines’ offers would result in other airlines following suit. ”We have already seen MH [Malaysia Airlines] come out with something similar using SQ [Singapore Airlines] as their justification,” he wrote.
The ACCC claims the emails were designed to imply Flight Centre would ditch its commercial relationship with the airline if it did not agree to stop offering fares at a lower price.
In another email to Singapore Airlines in March 2006, Mr Burgess wrote: ”Last year there were many instances where SQ [Singapore Airlines] either undercut or allowed us an insignificant margin.” The regulator claims part of the reason for the email was to stop the airline putting ”competitive pressure” on Flight Centre for what it charged.
Mr Burgess wrote to Emirates in May 2008 warning that bonus points available via the airline’s website were ”becoming a major issue with our guys in the frontline as they are not able to match the offer”.
In another email to Emirates in December that year, Mr Burgess asks: ”Why would a consumer book through us if you can earn more points online AND receive a 4% discount if booked online?
”I know I have said it before, but the above does nothing to help us to achieve our collective goals.”