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European Commission tests commitments from Star alliance members Lufthansa, United and Air Canada

24-Dec-2012 7:37 AM

European Commission (EC) invited (21-Dec-2012) interested parties to comment on commitments proposed by Lufthansa, United and Air Canada to address competition concerns about their transatlantic cooperation. The EC stated "concerns that this cooperation may harm premium passengers on the Frankfurt-New York route because it could result in higher prices, in breach of EU antitrust rules". The parties have offered to make landing and take-off slots available at Frankfurt and/or New York to facilitate the entry of competitors on this route. The parties are also prepared to enter into fare combinability and special prorate agreements with competitors to enable them to offer tickets on their flights and facilitate access to connecting traffic. The EC outlined that the extensive cooperation between Lufthansa, United and Air Canada involves revenue-sharing and the joint management of schedules, pricing and capacity. At this stage, the EC has "concerns that this may result in higher prices on the Frankfurt – New York route for time-sensitive and flexibility-focussed passengers (so-called "premium passengers")". The companies jointly offered a set of commitments to alleviate the Commission's concerns. EC noted, "The commitments offered by the airlines are primarily aimed at enabling competing airlines to start operating or extend existing operations on the Frankfurt-New York route by lowering barriers to entry and to expansion. More concretely, they offer to make available landing and take-off slots at Frankfurt am Main and/or New York John F Kennedy/Newark Liberty airports on the route from Frankfurt to New York. In addition, the parties commit to enter into fare combinability and special prorate agreements with competitors on the Frankfurt-New York route. These agreements would enable competitors to offer tickets on the parties' flights and facilitate access to connecting traffic. The parties are also prepared to allow passengers of new entrants without an equivalent frequent flyer programme to accrue and redeem miles on the parties' frequent flyer programmes". [more - original PR]