Commission closes airline inquiries

The European Commission said yesterday that it had closed its antitrust investigation into two major airline alliances on the basis that their benefits to consumers outweighed any competition concerns.

The Commission had examined, but never actually suspended, the Wings alliance between KLM and Northwest Airlines, and the Star Alliance between Lufthansa, SAS and United Airlines.

"I am happy that we were able to bring these investigations to a successful end," Competition Commissioner Mr Mario Monti said.

"Airline alliances generally present benefits for the consumer but regulators must ensure that they do not result in the elimination of competition on specific routes," Mr Monti added in a statement.

On the Star Alliance, the Commission said its fears were allayed when the three partners offered to surrender slots at Frankfurt airport.

In 1998, the EU body said it had serious concerns about the alliance's domination of routes between Frankfurt and Washington, Chicago, Los Angeles and San Francisco where it had between 56 and 95 per cent of the market.

The Commission noted yesterday that competition was growing due to slots becoming available to other airlines and because of pledges by Germany not to impose regulatory barriers to new entrants.

On the Wings Alliance, the Commission had been concerned about market domination on routes between Amsterdam and Detroit and Minneapolis/St Paul.

Mr Monti is satisfied that there is sufficient competition from airlines on indirect routes.

"Like the Star Alliance, the KLM-Northwest agreement also brings benefits for consumers in terms of increased frequencies and reduced fares," the Commission said.

US regulators had previously cleared the transatlantic code-sharing agreements among the European and US airlines in Wings and the Star Alliance.

Airline alliances have grown in popularity in recent years, as carriers seek to leverage off competitors' service networks and achieve operational efficiencies.

For the past two years, Aer Lingus has formed part of Oneworld, the largest such alliance in existence.

The alliance involves seven other airlines, including British Airways, American Airlines and Cathay Pacific.