British Airways must face flyers' U.S. lawsuit over fuel surcharges


By Jonathan Stempel

NEW YORK, Nov 8 (Reuters) - A U.S. judge has rejectedBritish Airways Plc's bid to dismiss a lawsuit by frequentflyers who accused the carrier of imposing bogus fuel surchargeson rewards flights.

The carrier, a unit of International Airlines Group, had argued that federal regulations pre-empted thelawsuit, and that the flyers failed to plausibly allege that thesurcharges were not based on fuel costs.

In a decision made public on Friday, U.S. District JudgeRaymond Dearie in Brooklyn, New York, said the plaintiffsoffered sufficient support for their claims that the surchargeswere not "reasonably related to or based upon" fuel costs. Hedid not rule on the merits of the case.

The case was brought last Nov. 9 by four members of BritishAirways' frequent flyer program, Executive Club.

Members accumulate points known as Avios that can beredeemed for plane tickets.

The plaintiffs said British Airways saw the fuel surchargesas a means to boost revenue, and charge frequent flyers hundredsof dollars on each "free" reward ticket.

In letting the case proceed, Dearie cited a statisticalanalysis from the flyers that suggested that British Airways'fuel surcharges from 2007 to 2012 "bore little relationship to -and were not based upon - changes in the price of fuel."

British Airways had countered with its own analysis showinga correlation between fuel surcharges and oil prices.

Dearie also cited a suggestion that the carrier does notview surcharges as a hedge against variable fuel costs, and anallegation that one plaintiff paid a surcharge on a first classticket to London's Heathrow Airport that exceeded the cost of aneconomy class ticket on the same flight.

A spokeswoman for British Airways said the carrier does notdiscuss litigation matters.

David Stellings, a partner at Lieff Cabraser Heimann &Bernstein representing the frequent flyers, in an e-mail calledthe decision "an important step forward" for customers, and saidthe case will move into discovery.

Earlier on Friday, International Airlines Group said itsthird-quarter profit more than doubled, helped by improvedresults at Spanish carrier Iberia.

The case is Dover et al v. British Airways Plc (UK), U.S.District Court, Eastern District of New York, No. 12-05567.

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