Last updated: January 27, 2012 6:27 pm

Brussels launches probe into airline alliance

Brussels has stepped up its scrutiny of the partnerships that underpin the transatlantic airline business by launching an investigation on Friday into a joint venture between Air France-KLM, Alitalia and Delta Air Lines.

The European Commission is examining “as a matter of priority” whether the partnership is harming the interests of passengers by limiting the competitive pressure on ticket prices for some key transatlantic routes.

The Commission is already investigating a similar joint venture involving Lufthansa and United-Continental, although it has given regulatory clearance to a partnership between British Airways, American Airlines and Iberia.

The three joint ventures have assumed a dominant position on routes between Europe and the US, controlling three-quarters of north Atlantic seating capacity, according to Deutsche Bank analysts.

The transatlantic routes are some of the most profitable in the world, and airlines participating in the joint ventures are combining their schedules to offer more daily flights, notably to higher-spending business passengers.

The competition authority, outlining its probe into the joint venture between Air France-KLM, Alitalia and Delta, said: “The Commission will investigate whether the partnership may harm passengers on certain EU-US routes where, in the absence of the joint venture, the parties would be providing competing services.”

The investigation narrows a previous inquiry, which the Commission closed formally on Friday, into SkyTeam, one of the three global airline alliances.

Air-France-KLM and Delta are leading members of SkyTeam, and the Commission said their joint venture “represents the deepest form of co-operation within SkyTeam and aims at the alignment of the parties’ commercial incentives”.

Air-France-KLM, Alitalia and Delta co-ordinate their transatlantic fares and share revenues and profits generated by the partnership.

The Commission’s investigation into the joint venture between British Airways, American Airlines and Iberia, concluded in 2010, resulted in the airlines relinquishing peak time take-off and landing slots at London’s Heathrow and New York’s JFK airports, so that the rights could be reallocated to competing carriers.

Geoff van Klaveren, analyst at Deutsche Bank, said the joint venture involving Air-France-KLM and Delta may have to give up some slots at JFK, although he did not think the partnership was “at risk” because of the Commission’s investigation.

Air France-KLM did not rule out having to make concessions to the Commission, but expressed confidence it would secure regulatory clearance for the joint venture with Delta.

Delta said it was “confident” the airline would resolve “any concerns” the Commission had about the joint venture with Air France-KLM. Alitalia said it would co-operate with the investigation.

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