WRITTEN QUESTION P-0586/98 by Giovanni Burtone (PPE) to the Commission (23 February 1998)

Subject: Alitalia's promotional fares - infringement of the rules on competition

Following a decision by the European Commission the airline Alitalia has suspended a number of 'promotional fares' it had introduced on some routes Italy, particularly links with the islands.

In view of the fact that these fares had:

- on the one hand, brought about an increase in the number of tourists visiting the most remote regions of Italy (in particular Sicily and Sardinia), which obviously benefited operators in the sector,

- on the other hand, made it easier for Italians to travel to other parts of Italy,

can the Commission say:

1. whether it intends, in full compliance with the Treaties and all the legislative provisions on competition, to adopt the compensatory measures needed to ensure that the inhabitants of the islands and tourism are not penalized because of the islands' remote location;

2. with what instruments, in what form and to what extent does the Commission intend to take these essential measures?

Answer given by Mr Kinnock on behalf of the Commission (24 March 1998)

In its Decision of 15 July 1997 ((OJ L 322, 25.11.1997. )) authorising the payment of Lit 2 750 billion of state aid for Alitalia, the Commission laid down a number of conditions including the fact that Alitalia would abstain from engaging in price leadership whether on domestic, intra-European or intercontinental routes. The reason for this provision - similar to that made in other state aid cases - is that a carrier in receipt of aid should not be able to use these resources in ways that provide unfair competitive advantages by comparison with carriers that are not aided.

A number of well-documented complaints presented to the Commission provided prima facie evidence that this condition, which had been accepted by the Italian authorities and Alitalia, was not being respected and that price leadership had been operated on a series of routes, including domestic routes, since 22 July 1997.

The Commission consequently made a thorough investigation and took action in order to ensure compliance with its decision and to ensure that conditions such as the prohibition of price leadership, designed to protect the legitimate interests of competitors are fully respected.

According to assurances given to the Commission on 6 February 1998 by the Italian authorities, Alitalia has discontinued its promotional campaigns within the EEA on the routes on which it faced competition. Since 1 March 1998, Alitalia may match fares offered by its competitors on those routes.

The Commission draws the Honourable Member's attention to the fact that, if the Italian government considers that the routes linking the Italian peripheral regions with other parts of the Member State are not adequately provided with scheduled air services, it may apply the provisions of Article 4 of Council Regulation No 2408/92 on access for Community air carriers to intra-Community air routes ((OJ L 240, 24.8.1992. )) which allows it to impose public service obligations. Italy might also be able to make use of Article 92 2(a) of the Treaty for the transport by air of the inhabitants of the islands. It is the responsibility of Italy to make a proposal how to apply those provisions. The Commission would need to take a position once a notification has been received.