Air China, others receive subpoenas in air cargo case

30 November 2017 3:40pm
Plane against sky

22 November 2017. By Joshua Sisco.

The US subsidiaries of three Chinese air cargo carriers were subpoenaed as part of the Department of Justice’s investigation into cartel activity in the Chinese air cargo market, MLex has learned.

The US operations of Air China Cargo, China Southern Cargo and China Cargo Airlines have all received subpoenas, it is understood.

Calls and emails requesting comment from the US operations of the three airlines were not immediately returned.

The investigation is in an early stage, with prosecutors reaching out to the airlines in late October. It is being conducted out of the antitrust division’s Washington Criminal I office in DC, the same office that investigated a previous air cargo cartel, netting nearly $2 billion in criminal fines from 22 different airlines.

The subpoenas request information from the airlines dating back two to three years, it is understood. The subpoenas contain a broad array of questions and don’t focus on any specific meetings or trade associations, it is understood.

It is possible that subpoenas also were sent to other airlines. In addition to subpoenas, the DOJ sent out at least one informal letter requesting cooperation with the probe.

Air China Cargo, China Southern Cargo and China Cargo Airlines are the three largest air cargo carriers based in China that provide service to the US.

Air China Cargo is jointly owned by Air China and Hong Kong’s Cathay Pacific Airways. China Southern’s cargo operations are a fully-owned subsidiary.

China Cargo Airlines is a joint venture between China Eastern Airlines and China Ocean Shipping Company, known as Cosco. Taiwan’s EVA Air Corporation is a minority shareholder.

Other Chinese cargo carriers with routes to the US include Hainan Airlines, the cargo operation of courier SF Express; and Longhao Airlines, which also operates flights on behalf of SF Express. Hainan, SF Airlines and Longhao are small players in the market.

Hainan said again Tuesday that it hasn’t been contacted as part of the probe.

The current air cargo case marks the first criminal investigation from the antitrust division on mainland China. Air China and its cargo unit were named as defendants in a civil class action in the US seeking damages on behalf of victims harmed by the first cartel. Air China agreed to pay $50 million in 2016 to settle the case.

The Chinese government plays a major role in the industry, including providing input on routes and fares. The Civil Aviation Administration of China, part of the Ministry of Transportation, helps develop aviation pricing policies as one of its main functions, according to its website.

- Additional reporting by Leah Nylen

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