Monday Aug 18 2008
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Second cargo chief receives jail sentence
Published: Aug 18, 2008 

US authorities are sending a second cargo manager to prison for his role in the price-fixing scandal that has been rocking the global air cargo industry.

Timothy Pfeil, who was director of sales and marketing of SAS Cargo for North America in 2005 and 2006, pleaded guilty to price-fixing charges for the period of his tenure and agreed to a six-month spell behind bars.

Pfeil, a former manager for Lufthansa Cargo, took up his position with SAS Cargo at the beginning of 2005 and was still in charge when the investigation into allegations of price-fixing kicked off in 2006 with a number of raids on airline offices in North America and Europe. He is the second senior cargo manager who has been hit with a prison term by the US Department of Justice. In May, the authorities revealed that Bruce McCaffrey, a former vice-president of cargo for the Americas of Qantas, had pleaded guilty to similar charges and was facing eight months in prison as well as a fine of US$20,000.

SAS pleaded guilty to price-fixing charges in June and was fined $52 million by the US authorities. Cathay Pacific, Martinair and Air France-KLM were also fined after they pleaded guilty to the charges. Air France-KLM has to pay $350 million, Cathay $60 million and Martinair $42 million.

British Airways, Korean Air, Qantas and Japan Airlines also pleaded guilty to price-fixing charges and were hit with fines.

According to the US Department of Justice, the illegal activities commenced in 2001 and went on into 2006.

Other airlines are bracing themselves for a financial hit from the ongoing investigation. Cargolux revealed in May that it was setting aside $154.9 million for the issue, which plunged the carrier into a net loss of $47.1 million for 2007.

Air Canada took a $124 million provision for the price-fixing probe in its results for the first quarter, which drove its deficit for the period down to $286 million.

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