Notice pursuant to Article 5 of Regulation (EEC) No 3975/87 of 14 December 1987 concerning case IV/37.730 - Austrian Airlines Österreichische Luftverkehrs AG/Deutsche Lufthansa AG (Text with EEA relevance)
Date: 2000-07-11
Institutions: European Commission
Subjects: Austria, Germany, air transport, competition policy, cooperation agreement

11.7.2000

EN

Official Journal of the European Communities

C 193/7

Notice pursuant to Article 5 of Regulation (EEC) No 3975/87 of 14 December 1987 concerning
case IV/37.730 (cid:151) Austrian Airlines (cid:214)sterreichische Luftverkehrs AG/Deutsche Lufthansa AG

(2000/C 193/05)

(Text with EEA relevance)

I. THE APPLICATION LODGED BY LUFTHANSA AND AUSTRIAN
AIRLINES (AUA)

On 10 December 1999, Austrian Airlines and Deutsche
Lufthansa notified a cooperation agreement pursuant
to
Article 5 of Council Regulation (EEC) No 3975/87 for a
decision applying Article 81(3) of the EC Treaty and Article
53(3) of the EEA Agreement to the alliance concluded between
them.

that, with the exception of the Austrian-German market,
their networks are mainly complementary. They therefore
claim that the agreement will enable them to establish a
more extensive European network which will, in particular,
lead to a better connection of Eastern European countries.
The enlarged network will offer customers better services, in
particular as regards an increased number of direct flights
and indirect flights, as well as a larger number of potential
connections between different routes.

II. PROVISIONS OF THE AGREEMENT

The cooperation agreement and its implementing agreements
are regarded as a step for the Austrian Airlines Group to join
the STAR alliance. The parties envisage to build a lasting
alliance by creating an integrated air traffic system which is
built on a close cooperation in commercial activities, marketing
and operational activities. The aim is to improve the use of the
parties’ respective hubs in Frankfurt, Munich and Vienna.

The parties expect the cooperation agreement to generate a
reduction of cost due to coordinated flight plans and
schedules, economies of scale by attracting more customers,
a better organisation of sales and ground-handling services
and
distribution
systems. Savings may be realised due to increased traffic
throughout the network and the rationalisation of services.

development of

cost-intensive

joint

The network arrangement, which started with the summer
season in April 2000, comprises passenger transport, main-
tenance airport facilities and ground handling. Both parties
have agreed coordinate fares and schedules for all
flights
worldwide. The world-wide cooperation includes reciprocal
assess to frequent-flyer credits, code sharing, harmonisation
of
In
service levels, and integration of data processing.
information technology the parties will partly join their
systems in areas like flight data load, reservation systems,
traffic
ticketing,
between Austria
further with the
conclusion of a so-called (cid:145)neighbourhood agreement(cid:146). The
latter provides
traffic between
Germany and Austria, leading to the share of profit and losses.

Integration in the bilateral

and Germany

inventory, etc.

joint venture

goes

for

for

a

III. REASONS FOR EXEMPTION

The parties have put forth the following arguments in support
of the application of Article 81(3):

1. Improvements in the provision of airline services and

promotion of economic progress

By establishing the alliance, Lufthansa and AUA expect to
improvements in the production and
achieve substantial
their airline services. The parties argue
distribution of

2. Consumers will share the benefits from the coop-

eration agreement

According to the parties, customers would benefit from the
creation of a more extensive network by getting access to a
Improved services can be
range of
improved services.
expected from a better coordination of
fligt schedules,
shorter waiting time, no need to move between terminals,
harmonised service standards on the plane and for ground-
handling. Cost reductions would lead to lower fares.

3. The cooperation agreement does not impose on the
parties restrictions which are not indispensable to the
attainment of the objectives of the agreement

an extensive

The parties argue that
the establishment of a larger
cooperation
European network requires
between the two airlines. The goal of operating as a single
integrated network could not be achieved if
the parties
retained the ability to compete for traffic between Austria
and Germany. The envisaged cost reductions require a
substancial pooling of material
and of human and
financial resources. According to the parties, a mere code-
sharing, or interlining agreement would not be sufficient to
achieve these gains, as it would not allow to optimise the
use of planes and thereby the fligth schedules.

C 193/8

EN

Official Journal of the European Communities

11.7.2000

4. The cooperation agreement does not afford the parties
the opportunity of eliminating competition in respect
of a substantial part of any market

limited, given the

The parties put forward that the structural effects of the
cooperation agreement are
limited
overlap between the parties networks, the importance of
transfer passengers and actual and potential competition.
The claim not to be in a position to eliminate competition
of a substancial part of traffic between Austria and Germany
or of the traffic to third countries. To the contrary, the
cooperation agreement will
in
competition between different alliances. By improving
their offer of transport services and their ability to adapt
prices in a coordinated way, the parties will force other
alliances to make similar improvements to the benefit of
their customers.

lead to an increase

IV. CONCLUSION

that

The Commission, having established prima facie
the
agreement in question meets the test of Article 81(1) of the
EC Treaty, has not taken a position as to the applicability of
Article 81(3). In accordance with Article 5 of Council Regu-
lation (EEC) No 3975/87, the Commission invites interested
parties to send their comments concerning the cooperation
agreement between Austrian Airlines and Deutsche Lufthansa,
within 30 days of the date of publication of this notice, to:

European Commission,
Directorate-General for Competition,
For the attention of Oliver Stehmann,
Unit IV/D2,
Office C 100 (cid:151) 6/134,
Rue de la Loi/Wetstraat 200,
B-1049 Brussels,
fax (32-2) 296 29 11,
e-mail: Oliver.Stehmann@cec.eu.int

Notice pursuant to Article 5 of Regulation (EEC) No 3975/87 of 14 December 1987 concerning
case IV/37.749 (cid:151) Austrian Airlines (cid:214)sterreichische Luftverkehrs AG and Scandinavian Airlines
System

(2000/C 193/06)

(Text with EEA relevance)

I. THE APPLICATION LODGED BY SCANDINAVIAN AIRLINES
SYSTEM (SAS) AND AUSTRIAN AIRLINES (AUA)

frequent flyer programme, airport facilities, cargo services and
other areas in which both parties have a mutual interest.

On 30 December 1999, Austrian Airlines and Scandinavian
Airlines System notified a cooperation agreement pursuant to
Article 5 of Council Regulation (EEC) No 3975/87 for a
decision applying Article 81(3) of the EC Treaty and Article
53(3) of the EEA Agreement to the alliance concluded between
them.

II. PROVISIONS OF THE AGREEMENT

The cooperation agreement and its implementing agreements
are regarded as a step for the Austrian Airlines Group to join
the STAR alliance. The parties envisage to cooperate in several
areas such as generally applicable service standards, network
cooperation, the establishment of a joint traffic system, code
fares and special pro-rates, marketing and sales,
sharing,

traffic system (JTS)

The worldwide cooperation includes a joint planning of
schedules in order to maximise hub feed, the coordination of
pricing policies, route programs and capacity. Services shall be
provided on equal terms to passengers on code shared flights
or joint
far reaching
cooperation has been agreed on the traffic between Austria
and the nordic countries (Norway, Sweden and Denmark).
The JTS applies to all air transport services between Austria
and the nordic countries for which the parties share profits and
losses. Any joint traffic flight shall be operated as a code-shared
flight.

flights. The most

III. REASONS FOR EXEMPTION

The parties have put forth the following arguments in support
of the application of Article 81(3):