Brussels set to block Lufthansa deal
The European Commission is understood to want Lufthansa, Germany’s national air carrier, and Austrian Airlines to find a competitor for almost all of the direct routes between Austria and Germany as the price for clearing their alliance.
Brussels on Tuesday told the airlines that they had two months to reply to the Commission’s objections to their deal or it would be blocked.
The Commission is concerned that an alliance between the two airlines would eliminate competition on almost all routes between Austria and Germany.
In the past, Brussels has required airlines to give up slots and flight frequencies to a rival in return for clearing airline alliances. But the carriers are only forced to give up the slots if a rival asks for them, and in many cases, no competitor has emerged.
Business customers and other airline passengers have complained to the Commission that the lack of competition between Austria and Germany was leading to high fares. The Austrian tourist board has also complained that high air fares are affecting Vienna’s position as a holiday destination.
As a way of encouraging competition, Brussels is expected to ask the airlines to find a competitor for the routes between Austria and Germany and then enter discussions with that rival about what it requires to compete on them. This marks a new approach to deciding on airline alliances which Brussels could apply to the many deals under review.
* The Commission has told the International Air Transport Association that its agreement to set tariffs for cargo interlining – setting the price for cargo to be carried by airlines on different legs of its route – restricts competition.
It believes the interlining agreement is no longer necessary to provide customers with efficient services and has given Iata two months to respond to its finding.
Earlier this year, Brussels extended for a year a similar agreement that fixes the rates paid to different airlines when passengers use several carriers for a different part of their journey. That agreement now runs out in June next year.
