WRITTEN QUESTION P-0062/00

by Evelyne Gebhardt (PSE) to the Commission

(18 January 2000)

Subject: Increase in air fares

1. Is the European Commission aware that the major European airlines, acting in unison, have terminated their current agency contracts with travel agencies and offered them new contracts involving lower agency fees, those fees being in every case identical?

2. Is it also aware that the travel agencies have offset the consequent reduction in their revenue by levying a new transaction fee on travellers who, being final consumers, are therefore unable to avoid a hidden and mutually agreed increase in air fares?

3. Does the Commission share my view that, although travellers may circumvent this increase in air fares by booking with the airlines directly, they must, if they do so, put up with poorer service and accept that a large number of jobs in travel agencies may be lost?

4. Does the European Commission consider that such price agreements, the cost of which is ultimately paid by the final consumer and which jeopardise the job security of people working in travel agencies, are compatible with current European law? When, and how, will the Commission intervene if there has been a breach of Community law or if even the slightest whiff of suspicion exists that Community law has been breached?

Answer given by Mr Monti on behalf of the Commission

(17 February 2000)

The Commission informs the Honourable Member that it has been actively studying the relationship between airlines and travel agents. In a recent competition law decision(1) the Commission set out its policy on the commissions paid by airlines to travel agents. One of the facts

established in this decision was that British Airways had reduced the basic commission paid to travel agents in the United Kingdom, and introduced a new scheme by which travel agents could earn extra commission by meeting certain targets. The decision found that these supplementary commission schemes were abuses of British Airways' dominant position on the United Kingdom market for travel agents services. These commission schemes secured the loyalty of travel agents rather than being given in return for extra services from the travel agents or cost savings realised by British Airways. Several complaints have been received of similar behaviour by other Community 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 the Commission does not currently have evidence that airlines have colluded to lower their basic commissions simultaneously. Also it does not have any indication that the majority of travel agents are introducing the transaction levy described in a concerted fashion. As a result it is not clear that the increase in air fares described is taking place. The Commission's efforts have been focussed on the new supplementary commission schemes introduced by some airlines which allow travel agents to compensate for the reduction in basic commission. The Commission has no view on the relative merits of direct purchases of air tickets by consumers and purchase through travel agents.

The Commission shares the Honourable Member's concern that the relationship between some airlines and travel agents could have serious negative effects on other airlines, travel agents and ultimately on consumers. Current actions are designed to ensure that the relevant principles of European law are respected, protecting against these negative effects.

(1) Commission Decision 1999/1973/EC British Airways, not yet published.