EC unveils alliance plan details

Kevin O'Toole/LONDON

The European Commission (EC) has published details of its proposed conditions for the British Airways and Lufthansa-led transatlantic alliances, including a call for the governments involved to open up national airports to other European carriers wanting to start US services.

The official publication of the proposals, which has been promised since competition commissioner Karel van Miert issued his draft last month, spells out the detailed calculations which will be used to determine how slots will have to be redistributed to competitors at the major hubs.

The basic aim is to ensure that the alliances will have no more than 45% of the market on key transatlantic routes out of their European hubs, centring on London Heathrow and Frankfurt. On the main hub-to-hub routes that will involve the alliance partners directly surrendering frequencies if competitors request them over the first six months of the alliance.

On other routes, the alliances are allowed to retain existing service levels, but will have to make additional slots available to allow others to compete.

The total of slots to be surrendered remains the same, although the EC says that the number to be given up by the Lufthansa/SAS/ United Airlines alliance could rise, with another 17 slots on the Oslo-New York route to be given up if the Norwegian capital's new Gardemoen Airport fails to open on schedule.

The EC also calls on governments in the UK, Germany and Scandinavia to give undertakings that they will permit other European Union carriers to fly US services from their countries. The EC concedes that this would require consent from Washington and says that it will revisit the issue in three months' time, given the US response. That is unlikely to be positive without equivalent concessions for UScarriers in Europe, possibly giving the EC a back door route to its ambitions for direct open skies talks with Washington.

Few other details are given on how the new slots should be distributed, with the airport and slot allocation authorities given the task of reallocating slots and "facilities" in a "non-discriminatory manner".

The slots which are surrendered to competitors will have to be within 1h of the requested time, although there are also safeguards to ensure that the alliance partners are not stripped of precious peak positions, giving up no more than six slots in any one hour.

The EC has also used the rulings to curb the strength of joint frequent flier programmes (FFP). The alliance partners will now have the choice of either keeping their programmes separate or opening up any joint offering to competitors which lack a "comparable FFP" of their own.

European Commission alliance conditions - AA/BA

Weekly transatlantic slots 1997

NOTE Based on average 1997 slot utilisation. LHR = Heathrow LGW= Gatwick

* Alliance frequencies will be surrended on hub-to hub routes.

** Slots will be made in addition to alliance services on non-hub routes

Source: Flight International