London Briefing/Fiona Walsh:It may go down as the most expensive phone call in British business history.

Three years ago, a senior executive at British Airways telephoned his opposite number at arch-rival Virgin Atlantic to discuss increasing the levy applied to ticket prices to cover the airlines' rising fuel costs.

Thus began a clandestine - and illegal - alliance between the two carriers that continued until early 2006, during which time the fuel price surcharge on long-haul return tickets rocketed from £5 to £60.

So far, the cost of that call to BA is £270 million (€397 million) in the form of the record-breaking fines for price fixing imposed on the airline last week by the UK and US competition authorities.

But the total cost could eventually climb far, far higher, with lawyers on both sides of the Atlantic preparing class action suits against the group.

In terms of reputation, the impact of the price-fixing scandal is even harder to assess, but could ultimately prove more costly than the financial penalties.

The UK's Office of Fair Trading (OFT) and the US Department of Justice are continuing with criminal investigations into individuals involved in the case and a number of as yet unnamed current and former BA executives could face criminal charges.

Meanwhile, Sir Richard Branson's Virgin, although a willing and active partner in the collusion - records show that it initiated three of the six discussions on price hikes - escapes any penalty from the authorities.

As whistleblower, it has been granted immunity by the authorities in the US and UK under their leniency policy, aimed to encourage those involved in anti-competitive behaviour to come forward.

Price fixing is notoriously hard to prove unless an insider gives evidence and leniency is offered to those who blow the whistle - unless they are shown to have forced rivals into the illegal action.

BA has also benefited to some extent from the OFT's leniency policy. In return for its full co-operation, the airline escaped a fine that could have been as high as £850 million (10 per cent of its turnover).

That probably wasn't much comfort to BA chief executive Willie Walsh, the former Aer Lingus chief who endured a truly dreadful week last week.

But then August is never a good month for BA. Last year, it was the discovery of an alleged plot to blow up planes with liquid bombs that sparked a security clampdown at Heathrow, BA's main base. The airport almost came to a standstill as staff were overwhelmed by the new security measures.

This August, apart from the price-fixing scandal, Heathrow faces unprecedented chaos next week as climate change campaigners press ahead with a day of direct action against the airport, despite having failed to get a controversial BAA court injunction lifted.

Meanwhile, BA has been named and shamed by the Association of European Airlines (AEA) as the European airline most likely to lose luggage. One in every 35 passengers on BA flights lost luggage between April and June and the airline is forecast to misplace a record 1.3 million bags this year.

Even bags which do not go missing might as well be lost - yesterday there were reports that some passengers had to wait nine hours to pick up bags on a flight from Lagos, Nigeria. Arriving at Heathrow at 6am, they apparently had to wait until 3pm before their bags materialised. The AEA figures also showed that BA passengers were the most likely to be delayed - in the three months to June, 44 per cent of its long-haul flights and 36 per cent of its short-haul flights arrived more than 15 minutes late.

Unions have blamed staff reductions for the baggage problems and warned that things could get worse in the run-up to the opening of the new Terminal 5 at Heathrow next March.

BA's chief executive warned investors last week that overcrowding and baggage problems at the airport are starting to hit the airline's revenues and urged the airport's owner, BAA, to take on more staff. As the peak holiday season got into full swing last week, the chorus of criticism of Heathrow reached a crescendo.

Pictures of lengthy queues of angry passengers appeared in every newspaper and, in a lead story, the Financial Times reported comments from the new City minister, Kitty Ussher, that London's status as one of the world's leading financial centres risks being undermined by the excessive delays at the airport.

She told the paper that the government shares business concerns that the so-called "Heathrow hassle" will discourage multinationals from holding annual or other important meetings in London. "I don't want . . . New York or Dubai executives saying, 'oh God, I don't want to go through Heathrow,'" she said.

A number of leading businesses and City figures also weighed into the debate. Ken Livingstone, London's outspoken mayor, described the airport as "a ghastly shopping mall", accusing it of casting "shame" on the capital.

Little wonder then that BA is now being dubbed "the world's favourite headline".

As the legal and reputational fallout from the price collusion continues, it will take more than a phone call from Willie Walsh to fix that.

• Fiona Walshwrites for the Guardiannewspaper in London