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Tuesday, February 15, 2011

EC Probes Lufthansa, TAP, Other Code-Shares

European Union antitrust regulators are taking a closer look at code-share agreements between Lufthansa and Turkish Airlines, as well as between TAP Portugal and Brussels Airlines.
The European Commission (EC) told the carriers it believes they may be “in breach of EU rules on anti-competitive agreements (Article 101 of the Treaty on the Functioning of the European Union).”
In announcing the investigation, the EC says that “while code-share agreements can provide substantial benefits to passengers, some types of such agreements may also produce anti-competitive effects.”
In particular, Brussels is reviewing deals under which the airlines are selling each other’s seats on Germany-Turkey and Belgium-Portugal routes. Each airline pair already operates its own flights on these routes and should be competing. “This form of free-flow, parallel, hub-to-hub code-share agreements may distort competition, leading to higher prices and less service quality for customers on routes between Germany and Turkey and between Belgium and Portugal, respectively,” the EC says. It is in particular scrutinizing flights on Munich-Istanbul and Frankfurt-Istanbul routes in the Lufthansa-Turkish case, as well as Brussels-Lisbon for Brussels Airlines and TAP Air Portugal. In each case, the airlines are the only operators on the route.
At this point, the EC is still reviewing the antitrust implications and is not formally objecting to the arrangements.

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