British Airways Must Face Fuel Surcharge Class Action Lawsuit

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A New York federal judge has denied a request by British Airways PLC to dismiss a class action lawsuit over claims that it violated its Executive Club frequent flier program contract by imposing bogus fuel surcharges on rewards flights.

Executive Club members accumulate points, called “Avios,” by flying on British Airways or its partner airlines or by using a specific credit card. Executive Club members frequently redeem Avios for airplane tickets, though they do not cover the entire cost of airfare. Executive Club members must pay some fees and charges, including fuel surcharges. Fuel surcharges are imposed on all British Airways ticket purchasers, whether or not they redeem Avios. According to the British Airways website, the fuel surcharges “reflect the fluctuating price of worldwide oil.”

Four members of British Airways’ Executive Club initially filed the class action lawsuit on Nov. 9, 2012, arguing that the fuel surcharges were not based on fuel costs. Instead, the plaintiffs argued, British airways used the surcharge to charge Executive Club members hundreds of dollars for each ticket purchased with Avios. In some cases, the plaintiffs argued that they were charged more for fuel surcharges on the rewards flights than they would have been charged for economy flights on the same route.

In its motion to dismiss the class action lawsuit, British Airways argued that the action was preempted by federal law and that the plaintiffs failed to sufficiently argue that the surcharges were not based on fuel prices.

U.S. District Judge Raymond Dearie disagreed with British Airways, finding that the breach of contract claims were not preempted by federal law and that the plaintiffs had provided sufficient support for their allegation that the surcharges were not related to fuel costs.

British Airways argued that the class action lawsuit was preempted by the federal Airline Deregulation Act (ADA), which prevents states from enforcing any laws related to the price, service or route of an air carrier. However, Judge Dearie rejected this argument, finding that the U.S. Supreme Court had already decided the issue in a 1995 decision, American Airlines Inc. v. Wolens.

“First, British Airways argues that the plaintiffs’ claim is preempted because it relates to the price of airfare and because it resembles a state-law consumer protection claim that would otherwise be preempted. The Wolens Court, however, explicitly rejected both arguments,” Judge Dearie wrote. “As Wolens makes clear, the ADA does not preempt contract claims, whether or not they relate to pricing or would otherwise be precluded if articulated under state consumer protection laws.”

Judge Dearie also found that the plaintiffs had provided adequate support for their claims, including descriptions of the fuel surcharges they paid when redeeming Avios for flights, reference to an omission in British Airways’ annual report that suggests the fuel surcharges do not reflect the price of fuel, and pointing to a statistical analysis indicating that fuel surcharges imposed by the airline from 2007 to 2012 “bore little relationship to — and were not based upon — changes in the price of fuel.” He found that these claims were sufficient to indicate a plausible breach of contract and thus, the class action lawsuit should not be dismissed.

The plaintiffs are represented by David S. Stellings, Nicholas Diamand, Jason L. Lichtman and Douglas I. Cuthbertson of Lieff Cabraser Heimann & Bernstein LLP.

The British Airways Fuel Surcharge Class Action Lawsuit is Russell Dover, et al. v. British Airways PLC, Case No. 1:12-cv-05567, in the U.S. District Court for the Eastern District of New York.

UPDATE: On April 7, 2017, British Airways said it planned to appeal a judge’s order granting certification to a Class of consumers who allege the airline charged improper fuel surcharges. The airline asked the judge not to set a trial date.

UPDATE 2: On April 13, 2018, British Airways and a group of passengers are seeking preliminary approval of a $42 million settlement to end a long-running class action lawsuit.

UPDATE 3: June 2018, the British Airways fuel surcharge class action settlement is now open. Click here to file a claim.