Korean Air and Asiana Airlines Sued in the U.S.

Eleven international airlines, including Korean Air, Asiana Airlines and Japan Airlines, are facing a class action suit in the U.S. for fixing international cargo carriage prices.

The lawsuit has been filed while the U.S. Justice Department is investigating airlines’ cargo carriage price-fixing charge.

U.S. law firms say that if the airlines are found guilty, they would have to pay an astronomical amount for damages, in addition to the fine imposed by the Justice Department.

It was confirmed yesterday that a company in New York filed a class action suit against 13 international airlines including Korean Air for air-cargo price-fixing in New Jersey District Court on March 2.

A class action suit is a legal device that allows a group of individuals with a claim against a company or an individual to join together as plaintiffs in a single suit. The verdict has effects over everyone in the group. The company in New York said that hundreds of companies and individuals that use air-cargo services will join in the suit.

However, it did not divulge the exact amount of damage it is seeking, and asked for a trial by jury. One lawyer in New York said that if the airlines lose the suit, they may face punitive damages plus an astronomical amount in fines.

Korean Air ranked first in cargo operations in 2004 with 2.3 trillion won sales.

“Since airfares are decided upon approvals from the Ministry of Transportation and Construction and the Korean government, it is virtually impossible to fix prices,” said an official of Korean Air.

Korea’s Samsung Electronics and Hynix Semiconductor also faced class action suits in the U.S. last year, and were levied fines of $300 million and $185 million, respectively, by the U.S. Justice Department. Four senior executives of Hynix Semiconductor recently agreed with the Justice Department to serve five to eight month prison terms.

Soo-Hyung Lee sooh@donga.com