WRITTEN QUESTION E-4019/00

by Doris Pack (PPE-DE) to the Commission

(21 December 2000)

Subject: Discount systems operated by tour operators and air carriers

1. The Commission announced an investigation into the discount systems operated by the various European air carriers for discriminationatory elements. What was the result of the investigation? Were systems such as Miles & More operated by Lufthansa in compliance with EU competition rules?

2. Do such fidelity discount systems serve as a tie to market dominant undertakings which constitutes a barrier to competition?

3. Did the Commission examine the reduction in the commission paid by European air carriers to travel agents in the light of the dominant position of those carriers and as discrimination against and exploitation of travel agents? What was the outcome of these investigations?

4. Does the Commission not consider the reduction in basic commission from 9 to 5 %, i.e. a reduction in travel agencies' ticket sales commission income by some 45 % for internal and European flights to be discrimination or exploitation, especially where the carriers are market- dominant undertakings?

5. The various incentive programmes run by the air carriers induce effects which are harmful to competition. Have these programmes been investigated by the Commission? What were the findings? What will the Commission do, if appropriate, to remedy the damage caused by incentive programmes?

6. What was the outcome of the Commission's examination of the increased participation of (national) air carriers in international or global alliances? Do these alliances lead to agreements on fares, conditions, timetables and services?

7. What does the Commission intend to do on the basis of its findings to prohibit alliances which restrict competition, especially where these activities by airlines massively effect competition?

8. Has the EU directive been adequately transposed into national law in all Member States? If not, in which Member States has transposition been inadequate or not happened at all?

9. Is the Commission aware of any abuse in relation to the mandatory insolvency insurance for tour operators? Is there any information in this connection to indicate that in insolvency cases service providers (hotels, air carriers, coach companies, service brokers, etc.) have submitted inflated bills? What will the Commission do to abolish such abuses especially as in the final analysis the cost is passed on to the consumer via higher insurance premiums?

Answer given by Mr Monti on behalf of the Commission

(5 March 2001)

1. The Honourable Member refers to a Commission investigation into discount systems operated by European air carriers. This presumably is the series of competition investigations announced at the time of the adoption of the Decision on British Airways' incentive scheme for British travel agents(1). Following this Decision British Airways has radically changed its incentive scheme for travel agents. As a result of the ongoing Commission investigations of other Community carriers' schemes for travel agents, revised schemes are currently being presented to the Commission by other airlines. The Commission is taking all measures necessary to ensure that the principles in the British Airways Decision are applied to other Community airlines in equivalent situations.

However these investigations do not cover the Frequent Flyer Programme incentives offered by airlines to individuals who travel with them. The Commission has not investigated the Miles and More scheme to which the Honourable Member refers and has not made any statement as to the compliance or otherwise of this or any other Frequent Flyer Programme with Community competition law.

2. To the extent that the phrase fidelity discount schemes refers to incentives offered by airlines to travel agencies the Commission's attitude to these and its current actions are described in its answer to the Honourable Member's first question.

If, on the other hand, the phrase fidelity discount schemes refers to incentives such as Frequent Flyer Miles granted to passengers, then it should be noted that the Commission has not yet taken a position as to whether such schemes in themselves are in breach of Community competition law. However in its examination of alliances between airlines, the Commission has identified the combining of the Frequent Flyer Programmes operated by the parties to the alliance as a factor making it more difficult for third parties to compete with the parties to the alliance and has proposed remedies to alleviate this effect(2).

3. and 4. With respect to the third and fourth question of whether reductions in the basic commission paid by air carriers are in breach of Community competition law, the Commission would refer the Honourable Member to its answer to Written Question P-0062/00 by Mrs Gebhardt(3).

5. If what is meant by incentive programmes are incentive programmes operated by airlines for travel agents, the Commission would refer the Honourable Member to its answer to her first question. If, on the other hand, this phrase refers to incentive schemes such as Frequent Flyer Miles offered to passengers, the Commission would refer the Honourable Member to its answer to her second question.

6. and 7. The Commission is actively investigating a number of alliances between air carriers. These alliances typically involve agreements between the parties covering one or more of fares, scheduling, route selection and other aspects of providing an air service. Such agreement restricts competition between the parties to the alliance. However alliances can also have benefits, for example, increasing the number and quality of air services available to the public and increasing the efficiency with which these are provided. Because of this, alliances can qualify for an exemption from the EC Treaty's prohibition of restrictive agreement. To qualify for such an exemption, it has to be the case that competition is not eliminated on any individual market, that the benefits of the restrictive agreement are passed on to consumers and that the alliance is not any more restrictive than necessary to achieve the identified benefits. In all of these cases, the Commission is taking the necessary steps to either impose remedies or obtain voluntary undertakings so as to ensure that the condition for an exemption are met.

8. The Commission understands that the Directive referred to is Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours(4). National provisions implementing this Directive have been communicated by all Member States.

9. The Commission is not aware of any evidence concerning the type of abuse of mandatory insolvency insurance described. Should evidence of such abuse come to light this would be a matter of concern to the Commission and to the relevant Member State or Member States responsible for the implementation of the relevant Directive.

(1) Commission Decision 1999/1973/EC British Airways, [2000], (OJ L 30, 4.2.2000).

(2) See for example Commission notice concerning the alliance between Lufthansa, SAS and United Airlines, [1998] (OJ C 239, 30.7.1998).

(3) OJ C 280 E, 3.10.2000.

(4) OJ L 158, 23.6.1990.