Europe Starts Inquiry of Airline Alliances

[Rockville]

BRUSSELS — The European Commission said on Monday that it was investigating whether airlines were using their alliances to block competition and undermine liberalization in the trans-Atlantic market.
“On basis of what we have seen so far, there may be breaches of the antitrust rules because of the very extensive scope of these agreements,” said Jonathan Todd, a spokesman for Europe’s competition commissioner, Neelie Kroes.
Airlines that form alliances usually share certain operations like routes and bookings. But regulators said accords involving seven airlines that are members of two groupings — Star Alliance and OneWorld — may be going too far.
Mr. Todd declined to comment specifically on whether the case was aimed at ensuring enforcement of the “open skies” agreement, signed between Europe and the United States two years ago. The agreement allows airlines based in the United States and Europe to fly across the Atlantic between any two airports in each region.
The Star Alliance includes Air Canada, Continental Airlines, Lufthansa and United Airlines. OneWorld includes American Airlines, British Airways and Iberia.
The commission said cooperation between members of the alliances that were serving trans-Atlantic routes “was far more extensive” than cooperation between alliance members in other parts of the world.
Mr. Todd said the investigation could lead to fines of up to 10 percent of each carrier’s global annual sales, or even orders to break up the alliances.
But he said the commission had not issued formal charges so far — perhaps a sign that the European authorities wanted the airlines to take steps themselves to change their business practices without the need for penalties at a time of sharp cutbacks in air travel and ticket sales because of the global economic slowdown.

NY Times, April 21, 2009