The European Commission may need to act sharply to toughen up competition law enforcement, as newcomers EasyJet, World Airlines and VLM file complaints against incumbents' alleged anti-competitive behaviour.
World Airlines says KLM affiliate Air UK is guilty of predatory behaviour on London-Amsterdam, while EasyJet accuses KLM itself of unlawful bids to drive it off the same route. One source even alleges anti-competitive collusion between KLM and Air UK.
In June, KLM reduced return fares between London and Amsterdam to DFl190 (US$114.60) from a previous cheapest regular fare of DFl405, after EasyJet's one-way Fl195 offer in April. EasyJet chairman Stelios Haji-Ioannou claims that if EasyJet were forced out of the market, KLM would immediately increase its fares again.
EasyJet is preparing a formal complaint for the Commission and brought the case before the High Court in London in August, following the leak of an internal KLM memorandum that spoke of KLM's objective to 'stop the development and growth of EasyJet and ensure that this newcomer is kept from securing a permanent position in the Dutch market'. KLM says the memo was not an official document.
World Airlines has asked the Commission to take emergency measures against alleged capacity dumping by Air UK on London/City-Amsterdam. Air UK 'completely refutes' World's claims that it offered inducements to withdraw from the route. This claim takes an added twist in the light of claims that Air UK withdrew its London/ Gatwick-Edinburgh service when offered £6 million ($9 million) by British Airways.
Meanwhile, VLM has filed a predatory pricing complaint with the Commission against CityFlyer Express. CityFlyer managing director Bradley Burgess sees this as 'a tit for tat' measure following CityFlyer's complaint that VLM secured illegal state aid.
The lawyer acting for VLM suggests the Commission needs to move quickly to establish what legal protection startups have. 'The only effective recourse startups have is often through the enforcement of EC competition rules and these are very unsettled at the moment,' says Alfred Merckx at Sinclair Roche & Temperley.
Transport Commissioner Neil Kinnock has stressed his commitment to tough action against anti-competitive activity by airlines.
The complaint against KLM is ironic given KLM's accusations that Air France was illegally using state aid to undercut competitors' fares. Air France withdrew price-leading fares between Paris and Amsterdam and Copenhagen. Then the Commission approved payment of the final tranche of Fr5 billion (US$1 billion) of state aid, on condition that Air France puts Fr1 billion on hold pending further restructuring.
Lois Jones
Source: Airline Business
