Budget airline accuses world's second largest oil company of overcharging it for aviation fuel
Budget airline Ryanair is suing ExxonMobil, the world's second largest company, as part of a multimillion pound lawsuit alleging the oil group overcharged it for aviation fuel.
The London-listed carrier is claiming at least €9m (£7.6m) in compensation – plus an unspecified amount for lost profit – after the oil major allegedly ramped prices over a seven-year period, documents filed with London's high court reveal.
The claim, which equates to at least 2% of the airline's 2011 pre-tax profit, follows an Italian competition authority decision in 2006 ruling that Exxon and other aviation fuel suppliers in Italy had breached European competition rules.
The court documents add that the oil companies entered into "a unique and complex agreement, the purpose and effect of which was to share the market for the supply of jet fuel and to prevent the entry of new operators".
Ryanair alleges that the competition ruling means that airlines buying fuel from Exxon in Italy – via its subsidiary Esso Italiana – had "paid higher prices than at comparable airports located outside Italy".
The claim adds: "[Ryanair] has further suffered loss of profit and interest". Industry experts said that airlines could have used lower fuel prices to cut ticket prices, meaning that the likes of Ryanair might have sold more seats and related services to extra passengers.
An Exxon spokeswoman said: "Esso Italiana can confirm that Ryanair initiated proceedings against it in 2011 regarding historic jet fuel sales in Italy. We do not wish to comment further." Ryanair, which is claiming damages for fuel supplies made between 1999 and 2006, declined to comment.
In 2006 Italian regulators fined six oil companies – including subsidiaries of Exxon and Shell – a total of €315.4m for constructing an arrangement to supply jet fuel to airports. The Italian competition authority found that the companies engaged in an "intense and continuous exchange of information" and co-ordinated strategies for setting up refuelling contracts and keeping the status quo in place in the jet fuel market.
Ryanair itself has had a mixed relationship with competition regulators, with the European commission coming out against its proposed acquisition of Aer Lingus because it would lead to the budget airline dominating Dublin airport and the Irish airline market. However, earlier this month the airline welcomed news that airports operator BAA had lost its appeal against a Competition Commission ruling that it must sell Stansted airport.