By Colin Baker in Edinburgh
It is alleged that SAS Braathens gained access to yield-sensitive data from low-cost competitor Norwegian through the Amadeus global distribution system (GDS). Norwegian’s chief financial officer Frode Foss claims that SAS Braathens was able to use access codes on the GDS to find the number of passengers in different price categories on every Norwegian flight from late 2002 until November 2005.
If found guilty, SAS could face a significant payout. Neil Baylis, London-based partner at law firm Kirkpatrick & Lockhart Nicholson Graham, says that European competition rules, which Norway abides by as a member of the European Economic Area, would allow fines of up to 10% of revenue.
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On top of this, he warns, the fact that SAS Braathens has a dominant market position means that Norwegian is able to bring a civil law suit, which it is indeed doing. “They face a real danger of double jeopardy,” Baylis explains.
Norwegian is confident that it has a strong case. Foss says that a facility for allowing data exchange between the two carriers when they were contractual partners was never switched off – as it should have been – after the agreement ended when Norwegian Air Shuttle (NAS) rebranded as Norwegian and SAS took control of Braathens in 2002.
“We are in the process of establishing just how this came about,” Foss says. NAS and Braathens co-operated on the Stavanger-Newcastle route until late 2002. Norwegian’s reservation system is hosted by SAS’s Scandinavian IT Group in Copenhagen, which was sold to US firm CSC in 2003.
The current case dates back to summer 2004, when Norwegian competition authorities raided the offices of SAS Braathens looking for evidence that the carrier was seeking to illegally undercut Norwegian‘s fares. Foss says that the competition authorities monitored SAS Braathens from that point onwards.
SAS Braathens denies that the airline exploited the access situation, claiming that it “took action” and contacted Norwegian in November 2005 when management became aware of the situation.
Personnel director Terje Moe Gustavsen headed an internal group that investigated the matter. “The employees did not view this as something extraordinary, but as an access other airlines also had.”
“This development originates in an official and legitimate agreement between NAS and the former Braathens airline,” comments SAS Braathens acting general manager Johnny Skoglund. “The data information from Norwegian had no commercial value for SAS Braathens beyond what we could obtain from other sources,” he adds.
SAS Braathens says that it was able to get data from publicly available sources, including information supplied by Oslo Gardermoen Airport. However, Foss says that the type of detailed data involved is not publicly available.
SAS Braathens has had a series of run-ins with the competition authorities. Last year, the carrier received fines totalling NKr50 million ($7.9 million) for predatory pricing on the Oslo-Haugesund and Oslo-Alesund routes. The carrier is appealing against these fines. This comes on the back of a NKr400,000 fine for receiving confidential information from a travel agent with ties to Norwegian. Parent company SAS was also found guilty of price-fixing with Maersk Air back in 2001.
SAS Braathens’ chief executive throughout this period was Petter Jansen, who parted company with the airline the day before the charges were filed. The airline cited differences of opinion over strategy as the reason for parting.
Baylis comments that the current case “demonstrates the importance of compliance programmes. Companies need to make sure people on the ground are educated and understand the issues involved.”
The criminal proceedings against SAS Braathens will be heard by the Asker and Baerum District Court in September this year. Norwegian will file its civil action after the criminal case has been concluded, and says its case does not rest on SAS being convicted by the criminal court proceedings. ■
Source: Airline Business
