EU joins fray on airline alliances

The European Commission yesterday launched an investigation into six main transatlantic airline alliances as it sought an equal role with Washington in policing competition along blue riband routes.

The inquiry will include British Airways' planned link with American Airlines, which will form the world's most powerful airline alliance - the catalyst for yesterday's move.

British Airways' proposed tie-up is already being investigated by the Office of Fair Trading in Britain, the United States Justice Department and an influential all-party committee of MPs.

The EU will look into co-operation deals between Germany's Lufthansa and United Airlines of the US; Scandinavian Airlines (SAS) and United; British Airways and USAir; Swissair and Belgium's Sabena; Austrian Airlines and Delta; and between KLM of the Netherlands and Northwest.

"It is important to ensure that such alliances do not damage competition or erode consumers' interests," European Transport Commissioner Neil Kinnock told a joint news conference with his competition counterpart, Karel van Miert.

An accompanying paper said the Commission's preliminary view was that such deals would "substantially restrict competition on the routes between the United States and Europe as well as on some intra-Community (EU) routes".

Mr van Miert justified the inquiry, which will last several months, on the grounds of the transatlantic imbalance in authority which he said allowed US anti-trust authorities a free rein to set conditions on deals.

"For some time now we have been confronted with all sorts of alliances between American and European airlines," he said.

"Up until now we have only been able to examine the part of those alliances which affect flights within Europe. On the American side, they are entitled to look at the transatlantic dimension outside of the US," Mr van Miert added.

In the past airline alliances have been inspected by the national competition authorities of the EU country involved, leaving the deal's overall impact on European aviation markets unexamined.

However, the Commission may face a fight over the legal grounds it has used to extend its jurisdiction.

Comment, page 23