EU Worries About Airline's Ties

Friday, October 13th 2000, 12:00 am
By: News On 6

BRUSSELS, Belgium (AP) — The European Commission on Friday said it has serious concerns about Austrian Airlines' recent agreements with rival carriers Lufthansa and Scandinavian Airlines System.

``As they currently stand, the agreements would eliminate competition on a large number of routes between Austria and Germany and raise similar concerns on the Austrian-Nordic aviation market,'' the commission said in a statement.

It is now up to the airlines to make proposals to address those concerns. If they fail, the commission can prohibit the agreements.

The airlines notified the commission of the cooperation agreements in December, requesting an exemption from EU competition rules.

The arrangement would cover passenger transport, maintenance, airport facilities and ground handling and would include coordination of flights and fares worldwide and integration of bilateral traffic, the commission noted.

The commission told the companies it can't given them an exemption since Austrian Airlines and Lufthansa control almost all 33 direct routes between Austria and Germany.

In addition there are high entry barriers for potential competitors, including the shortage of slots at main airports, the commission said.

It said similar problems apply on routes between Austria and the Nordic nations.

The commission said it has informed the companies of its concerns that travelers would no longer have a choice between airlines and that their effective monopoly could lead to higher prices.