The European Commission announced on 27 October 2016 that it had issued a Statement of Objections to Brussels Airlines and TAP Portugal on their code-share cooperation for passenger services between Brussels and Lisbon.
The investigation had been launched in February 2011 at the same time as the Commission had initiated a parallel investigation regarding a similar agreement between Deutsche Lufthansa and Turkish Airlines.
The agreement at stake allows carriers to sell as many seats on their partner’s flights as they want, as long as there are seats available on the route connecting their hubs.
It should not therefore be confused with another form of code-sharing whereby an airline sells seats on the partner’s flights on routes it does not operate itself in order to extend the range of services and broaden the choice for customers.
After the preliminary investigation, the Commission is concerned that in this case Brussels Airlines and TAP Portugal may have used their code-share agreement to restrict competition and harm passengers’ interests on the Brussels–Lisbon route.
At this stage, the Commission’s concerns focus on the following issues:
- the discussion regarding a capacity reduction (number of seats available) and an alignment of the pricing policy of both airlines on the route at stake;
- the grant to each other of unlimited rights to sell seats on each other’s flights on this route, which previously they competed for;
- the implementation of these arrangements by reducing capacity and aligning their fare structure and ticket prices.
Both parties will now have the opportunity to examine the Commission’s position in this file, to submit their written comments and to request a hearing to present their arguments before the Commission.
The Commission also announced on 27 October 2016 that it had closed its investigation into the code-share agreement between Deutsche Lufthansa and Turkish Airlines as it had found that both airlines did not have full marketing rights to each other’s seats inventory, that they applied different pricing strategies and that the code-share accounted for a very small share of the airlines’ sales on the routes at stake.
It should be noted that this investigation does not question as such the principle of code-share agreements operated by partners in the same global alliance. Nevertheless, the partners may not use such agreements to restrict competition by splitting the market and fixing prices.
Annabelle Lepièce
Partner, Brussels
annabelle.lepiece@cms-db.com
