EU Regulators Probe Air France/Delta Transatlantic Pacts

Published January 27, 2012

| Reuters

EU antitrust regulators are investigating whether pricing and capacity pacts between Air France-KLM, Alitalia and Delta Air Lines Inc (DAL) on routes between Europe and North America are bad for passengers.

The European Commission said in a statement on Friday that such deals could breach EU antitrust rules.

"The goal is to ensure that this tie-up does not harm passengers on EU-U.S. routes," the commission said as it announced the start of the investigation.

It said it would consider the implications of the joint venture compared to the situation where the airlines would otherwise be competing.

The agreements signed between Delta, Air France-KLM and Alitalia in 2009 and 2010 cover coordinated transatlantic operations in terms of capacity, schedules, pricing and revenues.

"The parties also share profits and losses of their transatlantic flights," said the commission, which acts as competition regulator for the European Union.

In a statement, U.S.-based Delta said the competition entity was focusing on a "very small number" of transatlantic routes that could be affected by its joint venture with Air France-KLM and Alitalia.

It added that the EU body has been reviewing the SkyTeam global alliance since its inception in 2000.

"We remain confident we will resolve any concerns that (the EU) may have on this matter," Delta said.

Alliances allow their members to streamline costs, share revenues and increase scale, a better option for airlines than mergers, which can be difficult and expensive to achieve.

The commission said on Friday it was closing separate antitrust proceedings against several members of the SkyTeam alliance, including AeroMexico, Air France and KLM , Alitalia, Czech Airlines, Delta, Korean Air Lines and Continental Airlines.

Continental left the SkyTeam alliance in 2009. It is now part of United Continental Holdings (UAL), which is a member of the Star Alliance. (Reporting by Foo Yun Chee and Rex Merrifield, additional reporting by Karen Jacobs; Editing by Jon Loades-Carter and John Wallace)

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http://www.foxbusiness.com/travel/2012/01/27/eu-regulators-probe-air-francedelta-transatlantic-pacts/