Airline alliances under investigation for anti-competition practices

20 April 2009

The European Commission launched Monday a probe into pacts between some airlines in two major alliances on suspicion the deals might constitute restrictive business practices on transatlantic routes.

One inquiry concerns existing and planned cooperation between four current or prospective members of the Star Alliance - Air Canada, Continental, Lufthansa and United, the EU's top competition regulator said in a statement. The second involves proposed cooperation between three members of the Oneworld alliance - American Airlines, British Airways and Iberia of Spain.

The level of cooperation between the two groupings of airlines "appears far more extensive than the general cooperation between these airlines and other airlines which are part of the Star and Oneworld alliances," the commission said.

The agreements under scrutiny allow the airlines to coordinate their commercial, marketing and operational activities on routes between the European Union and North America. The commission said it is concerned the airlines' plans to jointly manage schedules, capacity, pricing and revenue on transatlantic routes may lead to reduced competition on the routes.

"When you have cooperation between airlines in such areas as pricing, schedules and capacity, we have to make sure that the consumer actually benefits," Jonathan Todd, a spokesman for the European Union's executive Commission, told a news briefing. If it found the airlines had broken EU rules, the Commission could order them to stop any illegal practices and fine them up to 10 per cent of global turnover, he said.

The Star Alliance probe covers existing transatlantic cooperation between Lufthansa and United, and between Lufthansa and Air Canada, as well as a proposed four-party agreement between them and Continental.