Notice pursuant to Article 16(3) of Council 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: 2001-12-14
Institutions: European Commission
Subjects: Austria, Germany, air transport, application of EU law, competition law, cooperation agreement

14.12.2001

EN

Official Journal of the European Communities

C 356/5

Notice pursuant to Article 16(3) of Council 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

(2001/C 356/04)

(Text with EEA relevance)

I. STATE OF THE PROCEDURE

1. Commitments pertaining to slots

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.

According to Article 5(2) of Regulation (EEC) No 3975/87, the
Commission published a summary of the application in the
Official Journal on 11 July 2000. The notice also summarised
the reasons given by the parties for granting an exemption
under Article 81(3).

On 4 October 2000 the Commission informed the Parties that,
in respect to Article 5(3) of Regulation (EC) 3975/87, it has
serious doubts with regard to the applicability of Article 81(3)
of the Treaty.

On 11 May 2001, the Commission sent the Parties a statement-
of-objections, confirming that the conditions of Article 81(3) of
it envisages taking a
the Treaty are not satisfied and that
decision prohibiting the notified cooperation agreement.
In
the Commission took the preliminary view that
particular,
competition on a
eliminates
the
substantial part of the Austrian-German air transport market.

cooperation agreement

If an airline that did not operate air transport services between
Austria and Germany on the date of notification (a (cid:145)new
entrant(cid:146)), which is
independent of Austrian Airlines and
Lufthansa ((cid:145)the parties(cid:146)), wishes to commence a new non-stop
service on one or more Austria-Germany city pairs (the (cid:145)new
entrant city pair or pairs(cid:146)), the parties undertake to make slots
available subject to the conditions described below. For the
purposes of these commitments a non-stop service includes a
multi-stop service using a single aircraft that begins and/or
terminates in Austria, Germany or a third country and has at
least one non-stop segment between Austria and Germany.

The parties agree to make slots available to a new entrant for a
particular new entrant city pair (the (cid:145)new entrant slots(cid:146)) up to a
maximum of 40 % of the slots the parties operated on the city
pair in question at the time of the notification. Nevertheless,
any voluntary advance slot release by the parties shall count
towards the 40 %.

The parties undertake that the new entrant slots will be within
45 minutes of the time requested by the new entrant and
allow,
in the case of one-stop services, for a transit-ground
time of the aircraft within 90 minutes, provided the parties
hold slots within the relevant time period.

Subsequently, the Commission services entered into discussions
with the parties with a view to finding appropriate and
effective remedies for the competition concerns raised by the
Commission in its statement-of-objections. As a result of these
discussions, the parties have submitted proposed commitments
which are set out in what follows. The main purpose of these
commitments is to ensure that
there can be viable new
competition on the markets concerned by removing existing
for potential competitors. The Commission
entry barriers
there are a number of
services
competitors which are interested in entering the market on
the basis of these commitments. Under these circumstances,
and to the extent that new entrants will have obtained the
necessary traffic rights to operate on the relevant markets,
the
the Commission envisages granting an exemption for
notified cooperation agreement.

received indications

that

II. PROPOSED COMMITMENTS

These commitments shall be binding on the parties,
their
subsidiaries, successors and assignees and the parties commit
to cause their subsidiaries, successors and assignees to comply
with these commitments.

to the IATA scheduling conference for

The new entrant must make a clear written request to the
least six weeks
parties concerning the intended service at
prior
the traffic
season where the new entrant intends to commence service.
A new entrant will only be eligible to receive slots pursuant to
these commitments provided that it can demonstrate that all
reasonable efforts in good faith to obtain slots for the new
entrant city pair through the normal workings of
the slot
allocation procedure at the subsequent scheduling conference
(including allocation of slots by the coordinator following the
slot-return deadline) have failed. During the whole period
(between the above-mentioned written request and the end of
the respective IATA-schedule-period)
the new entrant shall
maintain an (cid:145)open book(cid:146) policy for the respective airports.
Any slots obtained by the new entrant through the regular
slot
total
shall
is entitled to demand
number of
pursuant to this part of the commitments unless the parties
have a share of total frequencies on the city pair concerned
that is in excess of 60 %. Requests for slots pursuant to this
paragraph are valid only for a specific scheduling season.
Where a new entrant has not commenced service, has
commenced service at a lower frequency than planned, or
wishes to operate an additional frequency, the requirements
of this section shall apply to any request for additional slots
in a subsequent scheduling season.

allocation procedure
slots

the new entrant

towards

count

the

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Official Journal of the European Communities

14.12.2001

New entrant slots shall be exclusively used to operate services
on the new entrant city pairs with aircraft having a capacity of
46 or more seats. This condition does not apply where a new
entrant has commenced service prior to the date of publication
of the exemption decision in the Official Journal of the European
Communities.

Where a new entrant wishes to use an aircraft for services on a
route between Austria and Germany that is stationed at an
airport in a third country, the new entrant can obtain slots
pursuant
to these provisions (including limitations on the
number of slots available to support service on a city pair)
for services from or to that third country to position that
aircraft at
the beginning or end of operations ((cid:145)technical
slots(cid:146)). The parties shall be required to provide technical slots
only where the new entrant requesting such slots and/or its
franchiser operate fewer than three daily frequencies to/from
third countries from the affected airport at the time that the
the parties agree to make
request
technical
the time
slots available within 180 minutes of
requested by the new entrant provided the parties hold slots
within the relevant time period.

is made. Furthermore,

Where the new entrant operates a service involving a third
country and one of the cities included in the new entrant
city pairs
(a (cid:145)third-country service(cid:146)) and the new entrant
reduces frequencies on or ceases to operate the third-country
service, the new entrant shall be required to use the slots
previously devoted to the third-country service for service on
the new entrant city pairs. The new entrant will in such a case
be required to return the same number of new entrant slots to
the parties as were previously devoted to the third-country
service.

Where a new entrant which has obtained slots pursuant to this
procedure decides not
to commence services on the new
entrant city-pair or to operate a lower number of services,
the new entrant shall
inform the parties immediately and
shall return the slots to the parties. If any new entrant which
has obtained slots pursuant to these commitments ceases to
operate services on the new entrant city pair or stands to lose
them in another way (e.g. misuse), the new entrant shall inform
the parties immediately and shall return the slots to the parties.
For the purposes of this paragraph, a new entrant and its
subsidiaries will be deemed to have ceased operating on a
new entrant city pair where it or they, as the case may be,
have not used their slots for at least 80 % during the sche-
duling season for which they had been allocated for the city
pair in question, unless the new entrant justifies the non-use of
the slots on one of the grounds referred to in Article 10(5) of
Council Regulation (EEC) No 95/93 or any other Regulation
that may amend or supersede it.

(EEC) No 95/93 with immediate effect or after the deadlines
provided for in Article 10(4) of that Regulation and before the
effective start of the scheduling season, the parties shall be
entitled to require that
transfers to the
parties a slot which is comparable to the returned slots. If
for any reason the entrant is unable to transfer to the Parties
a slot which is comparable to the returned slot, the Parties may
seek to justify the non-utilisation of the surrendered slot on the
basis of Article 10(5) of Regulation (EEC) No 95/93.

the new entrant

To ensure that the slots provided by the parties are used consis-
tently with these commitments, a mechanism will be agreed
between the parties and the new entrant that will allow the
parties to monitor how the slots are being used. The parties
will inform the Commission of the nature of such mechanism.

Slots made available by the parties under these commitments
will be offered without any compensation.

2. Commitments pertaining to frequencies

The parties agree not to add any frequencies on a particular
new entrant city pair for a minimum of four consecutive IATA
tariff seasons beginning with and including the tariff season in
which the new entrant commences service on the new entrant
city pair.

3. Commitments pertaining to fares

Each and every time that the parties reduce a published fare on
a new entrant city pair, they agree to apply an equivalent fare
reduction (in percent) on three other Austria-Germany city
pairs on which they do not have
competition. This
commitment applies only as long as the fare reduction on
the new entrant city pair remains effective. For purposes of
this commitment, a published fare shall
include applicable
IATA fares, carrier fares that are distributed to CRSs via the
public tariff data base of ATPCO (Airline Tariffs’ Publishing
Corporation) and fares marketed on the Internet where such
fares are available to the general public.

the next

The three other comparable Austria-Germany city pairs where
fare reductions will be
the parties will apply equivalent
determined as follows: The parties will choose two city pairs
out of
five largest Austria-Germany city pairs by
passenger volume on which they do not have competition.
The parties will not be subject to any constraints in selecting
the third Austria-Germany city pair provided that it is a city
pair on which the parties do not have competition.

In the case that the new entrant notifies the parties too late in
a scheduling season to allow the parties to use the returned
slots according to the provisions of Article 10(3) Regulation

This commitment shall not apply in those exceptional cases
where the Parties can demonstrate to the Commission that a
fare decrease is justified because of changes in conditions on a
specific city pair that are independent of
the competitive
activities of the new entrant.

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Official Journal of the European Communities

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4. Commitments pertaining to blocked space agreements

Upon request by a new entrant, the parties will enter into a
blocked space agreement pertaining to the new entrant city
pair(s) operated by a new entrant
in any case where the
frequencies offered by the new entrant are less
number of
than the number operated by the parties.

Any such blocked space agreement shall be based on a fixed
number of seats (hard block basis) and apply for at least one
entire IATA tariff season. The number of seats covered by such
agreements shall be a maximum of 15 % of the seats offered on
a particular frequency and in any event not less than 12 seats
and no more than 25 seats in a particular aircraft. The new
entrant shall carry the full commercial risk for the seats
covered by the blocked space agreement.

5. Commitments pertaining to interlining

Upon request, the parties undertake to enter into an interline
agreement concerning the new entrant city pair(s) operated by
a new entrant in any case where the new entrant does not have
an existing interline agreement with the parties.

Any interline agreement entered into pursuant to this part will:

(cid:151) apply to the F, C and Y fare categories only,

(cid:151) provide for interlining on the basis of the parties’ published
one-way fares when a one-way ticket is issued or half of the
parties’ published round trip fares when a round-trip ticket
is issued,

(cid:151) be limited to true origin and destination traffic operated by

the new entrant,

and include

(cid:151) be subject to the MITA rules and/or normal commercial
conditions;
the new
entrant, or travel agents, to offer a return trip comprised
of services provided one-way by the parties and one-way by
the new entrant.

the possibility for

to avoid abuse,

Subject to seat availability in the relevant fare class, the parties
undertake to carry a passenger holding a coupon issued for
travel on a new entrant’s flight on a new entrant city pair.
the parties will be entitled to
However,
require that the new entrant or the passenger, where appro-
priate, pay the positive difference between the fare charged by
the parties and the fare charged by the new entrant. Also, in
cases where the new entrant’s fare is less than the value of the
coupon issued by the parties, the parties will be obliged to
endorse their coupon only up to the value of
the fare
charged by the new entrant. New entrants will have the same
protection in cases where the parties’ fare is less than the value
of the coupon issued by the new entrant.

All interline agreements entered into pursuant to this section
for a particular new entrant city pair will terminate if the new
entrant ceases to operate that new entrant city pair.

and/or

Upon request of a new entrant, the parties undertake to enter
into a special pro-rate agreement with the new entrant for
traffic with a true origin and destination in either Germany
for beyond Austria or Germany at
or Austria
third
into
comparable
non-alliance/other alliance carriers in connection with such
route.
In the case of a special pro-rate agreement covering
international transfer traffic, this commitment applies only to
routes where international transfer traffic exceeds 35 % of the
total traffic volume on the new entrant city pair.

conditions

entered

with

6. Commitments pertaining to frequent flyer programme

((cid:145)FFP(cid:146))

If a new entrant is not a participant in one of the parties’ FFPs
or does not have its own comparable FFP, then upon request,
the parties undertake to allow the new entrant to participate in
their joint FFP for the new entrant city pairs operated by the
new entrant. A contract with the new entrant will be
concluded on reasonable and non-discriminatory conditions
including as to compensation for any costs incurred by the
parties.

Any contract entered into pursuant
section will
terminate for a particular new entrant city pair if the new
entrant ceases to operate that new entrant city pair.

to this

7. Commitments pertaining to intermodal services

from a railway or other

surface transport
Upon request
company operating between Austria
(an
(cid:145)intermodal partner(cid:146)), the parties undertake to enter into an
intermodal agreement whereby the parties would provide
passenger air transport on their services between Austria and
Germany as part of an itinerary that included surface trans-
portation by the intermodal partner (an (cid:145)intermodal service(cid:146)).

and Germany

Any intermodal agreement entered into pursuant
to this
section will be based on the MITA principles (including the
Intermodal
Interline Traffic Agreement (cid:151) Passenger and
IATA Recommended Practice 1780e) and normal commercial
conditions.

The parties shall accept full prorating according to the terms of
MITA also on sectors where only railway service is performed
provided that the railway operator has filed with IATA the
sector and its mileage amount, and where no through fare
has been filed, an add-on fare.

At the request of a potential intermodal partner, the parties will
make efforts in good faith to reach an agreement on conditions
comparable to those that they may have with other intermodal
are met
partners provided the necessary
requirements
insurance
especially with regard to safety, quality of service,
such
coverage
any
agreement
arising
pursuant to this section.

the general obligations

shall override

and liability

limits. The

terms of

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8. Duration of exemption and commitments

These commitments will apply from the date the exemption
decision adopted under Article 5(4) of Regulation (EEC) No
3975/87 is published in the Official Journal. The obligations
of the parties pursuant to these commitments will expire on
the date that the Article 81(3) exemption terminates.

In the event that the Commission revokes the Article 81(3)
exemption of the cooperation agreement pursuant to Article
6 of Regulation (EEC) No 3975/87 or an equivalent provision
in any successor regulation, or the Article 81(3) exemption is
annulled, or the parties terminate the notified cooperation
these commitments will be null and void as
agreements,
the annulment
from the date of
judgment, or the date of
the
parties will have the right
to demand return of any slots
provided under these commitments to an airline which at the
time of the revocation, annulment judgment, or termination, is
operating services on routes between Austria and Germany
using those slots. The parties will also have the right
to
interlining, FFP, or
immediately terminate any block space,

In such a case,

the date of

termination.

revocation,

intermodal
commitments.

agreements

III. CONCLUSION

entered

into pursuant

to these

for six years. Before taking such a decision,

The Commission envisages to grant an exemption under Article
81(3) of the EC Treaty and under Article 53(3) of the EEA
Agreement
in
accordance with Article 16(3) of Regulation (EEC) 3875/87,
the Commission invites interested parties to submit their obser-
vations 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 C100 6/134
Rue de la Loi/Wetstraat 200
B-1049 Brussels
fax (32-2) 296 29 11
e-mail: Oliver.Stehmann@cec.eu.int