Brussels, 13/10/2000 (Agence Europe) - The European Commission has informed the Austrian airline company Austrian Airlines (AuA) and its partners in the STAR Alliance, Germany's Lufthansa and SAS, that is has serious concerned about their recently concluded cooperation agreements. These agreements seem to it to be of a nature to eliminate competition on a large number of routes between Austria and Germany and raise similar concerns on the Austrian-Nordic aviation market.
In 1999, AuA and Lufthansa, on the one hand, and AuA and SAS, on the other, notified two cooperation agreements with the Commission requesting an exemption under EC competition rules on concerted agreements; AuA pointed out that these agreements were aimed at enabling it to join the STAR Alliance. The aim of the partners was to build a lasting alliance by creating an integrated air traffic system based on close cooperation of their commercial, marketing and operational activities. The agreement between AuA and Lufthansa, more specifically, gave rise to the creation of a 50/50 joint-venture between the two parties which would further strengthen the integration of bilateral traffic between Austria and Germany. Likewise, cooperation between AuA and SAS will set up a bilateral joint traffic management system. A summary of these two agreements was published in the Official Journal of 11 July 2000, raising many comments on the part of competitors, customers and travel agencies.
The Commission informed the companies by letter of its "serious doubts" regarding these agreements that, at this stage, have not enabled it to grant the requested exemption, and that for the following reasons: i) AuA and Lufthansa have a joint market share in air passenger traffic of 100% on almost all the 33 direct routes between Austria and Germany. Competition from other modes of transport (road and train), moreover, only exists to a limited extent; ii) despite the liberalisation of the Community's air transport, there remain high entry barriers, preventing other carriers from penetrating the market in the Germany-Austria zone; a similar argument also applies to the air transport market between Austria and the Nordic countries.
Under such conditions, the Commission considers that passengers will no longer have the choice of airline companies regarding bilateral traffic. Such a position of monopoly on direct flights also risks leading to higher prices for flights between Austria and Germany and Austria an the Scandinavian countries.