April 21, 2009
European Commission Investigates Star, oneworld
The European Commission announced yesterday that it has opened formal proceedings against members of the Star and oneworld airline alliances. According to its public statement, "the Commission is assessing whether [the members'] joint activities" related to "managing schedules, capacity, pricing, and revenue management on transatlantic routes, as well as share revenues and sell tickets on these routes without preference between the carriers" could restrict competition. The Commission noted that it would take the consumer benefits conferred by these alliances into account during its investigation and that the investigation itself does not imply that the Commission has any conclusive proof that these cooperative arrangements have infringed EC competition law.
According to various news reports, the airlines appear to be taking the investigatory notice in stride. In a statement to Air Transport World, oneworld Vice President for Communications Michael Blunt said the investigation "is no surprise" and that "[i]t is the normal European process for addressing any agreement of this kind." Another story in the Wall Street Journal contained a similar sentiment from British Airways, which remarked that the investigation "is a normal part of the EU process of examining [its] immunity application with American Airlines and Iberia." American Airlines was also reported as calling the investigation "routine." Continental Airlines, which recently won tenative approval from the U.S. Department of Transportation to join the Star Alliance (discussed on the blog here), expressed "confiden[ce] that the European Commission will reach a similar conclusion" regarding its cooperative arrangement with Star members United, Air Canada, and Lufthansa.
The Commission's attitude toward international airline alliances has softened over the years. Since its 1996 announcement that it would open procedures to investigate six of the then-extant transatlantic cooperative agreements, the Commission has taken a "broadly positive approach to airline alliances to allow [EU] carriers to compete effectively on a global level." There is no immediate reason to believe this is no longer the case. Given the EU's concern over the recent U.S. legislative proposal which could end antitrust immunity for airline alliances, it seems unlikely that the Commission would try and undermine its position by needlessly tightening the strictures on these alliances.