Competitive Airlines: Towards a more vigorous competition policy in relation to the air travel market

Preface During their joint meeting in Skagen (Denmark) on 6-7 September 2001, the competition authorities of the Nordic countries established a task force to examine the degree of competition in Nordic aviation and to suggest measures to enhance it. Their report is hereby submitted. The analyses, conclusions and recommendations contained herein are unanimous. 1. The Nordic Task Force on Airline Competition has examined the aviation markets in Denmark, Finland, Norway, and Sweden, with a view to suggesting measures to enhance competition. 2. The Task Force has focused on numerous barriers to airline competition in the Northern European region, as well as in a wider pan-European or global perspective. 3. The Task Force believes that the European aviation industry may be facing a period of strong consolidation over the next few years. Such consolidation may in some circumstances have positive effects on economic efficiency. But in combination with the anti-competitive effects of the hub-and-spoke mode of operation, of the frequent flyer programmes , and of other restrictions on competition , the horizontal and vertical concentration in the aviation industry represents a formidable challenge to European competition authorities at the national and Community level. A vigorous competition policy will be required in order to enhance – or even preserve – the present degree of competition in the air travel markets. 4. First of all, the competition authorities should strengthen their efforts to enhance competition through • Adequate control of airline mergers and alliances • Efficient interventions against predatory pricing and other abusive behaviour • Efficient restrictions on frequent flyer programmes • Prohibition on airline price cooperation through tariff consultations • Open and non-discriminatory business conditions in travel agent agreements • Interventions against anti-competitive effects of corporate discount schemes • Control of the configuration and use of ticketing and computer reservation systems 5. Second, public regulations in all relevant areas should be developed in order to limit their anti-competitive effects: • More efficient and non-discriminatory slot allocation procedures • Enhanced competition between airports • Enhanced access to ground handling and other infrastructure services • Competition neutral tax rules in aviation and related activities 6. Third, governments should promote competition through initiatives such as: • Reduced state aid and subsidies to airlines • Public procurement tendering that facilitates competition 7. Since many of these measures fall outside the scope of competence of national or Community competition authorities, concerted action will be needed between various …