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EU Questions Legality Of DL/AF/AZ Joint Venture  
User currently offlineenilria From Canada, joined Feb 2008, 7547 posts, RR: 14
Posted (2 years 10 months 3 days 21 hours ago) and read 5420 times:

So, my question is...are they questioning a new proposal or is the EU saying that the existing agreement is potentially illegal?


http://www.bloomberg.com/news/2012-0...eu-over-skyteam-joint-venture.html

http://travel.usatoday.com/flights/s...Air-France-KLM-Alitalia/52815340/1

16 replies: All unread, jump to last
 
User currently offlineikramerica From United States of America, joined May 2005, 21562 posts, RR: 59
Reply 1, posted (2 years 10 months 3 days 20 hours ago) and read 5390 times:

The EU is just figuring this out now, after approving it? Some of us questioned how granting monopoly pricing powers on many routes was advisable. The governments are so obsessed with LHR-JFK fairness they seemed to ignore CDG.


Of all the things to worry about... the Wookie has no pants.
User currently offlineenilria From Canada, joined Feb 2008, 7547 posts, RR: 14
Reply 2, posted (2 years 10 months 3 days 20 hours ago) and read 5311 times:

Quoting ikramerica (Reply 1):
The EU is just figuring this out now, after approving it? Some of us questioned how granting monopoly pricing powers on many routes was advisable.

So, we are pretty sure this is an investigation into the approved agreement? ...and not some new proposal?

[Edited 2012-01-27 11:48:49 by srbmod]

User currently offlinerobffm2 From Germany, joined Dec 2006, 1121 posts, RR: 0
Reply 3, posted (2 years 10 months 3 days 19 hours ago) and read 5094 times:

For further details you might want to look at the European Commission's site directly:

Antitrust: Commission opens a probe into transatlantic joint venture between Air France-KLM, Alitalia and Delta and closes proceedings against eight members of SkyTeam airline alliance

http://ec.europa.eu/competition/eloj...case_details.cfm?proc_code=1_39964

[Edited 2012-01-27 08:36:49]

User currently offlineAmsterdam From Netherlands, joined Mar 2011, 131 posts, RR: 0
Reply 4, posted (2 years 10 months 3 days 19 hours ago) and read 5070 times:

Nice, another 300 million fine for AFKL,
together with pressure from EasyJet, Ryanair, Arkefly, Air Berlin and Norwegian,
plus BA and LH, which are doing much better,
plus Emirates, Qatar and Etihad in full attack mode,
AF might as well stop now with all operations and call it a day.


User currently offlinemutu From United Kingdom, joined Mar 2006, 538 posts, RR: 0
Reply 5, posted (2 years 10 months 3 days 18 hours ago) and read 4983 times:

yes this looks like it is still an ongoing part of the objections raised in 2006 as regards certain routings only, not the entirety of the joint venture.

Perhaps the comsolidation of italian airlines into AZ and Skyteam has triggered some concerns

Remember BA/AA had to remedy competition concerns on a couple of routes...likely to be nothing more than that

Probably France/Italy routes and possibly Italy/US?


User currently offlineSuperCaravelle From Netherlands, joined Jan 2012, 259 posts, RR: 0
Reply 6, posted (2 years 10 months 3 days 18 hours ago) and read 4904 times:

Quoting mutu (Reply 6):
Probably France/Italy routes and possibly Italy/US?

Still a lot of Easyjet going between France and Italy (in fact, Easyjet now has a monopoly on CDG - MXP weirdly, although AF still serves LIN). I think long-haul is the bigger worry for the authorities.


User currently offlineikramerica From United States of America, joined May 2005, 21562 posts, RR: 59
Reply 7, posted (2 years 10 months 3 days 17 hours ago) and read 4769 times:

Quoting mutu (Reply 6):
Remember BA/AA had to remedy competition concerns on a couple of routes...likely to be nothing more than that

How do AF/DL remedy AMS/CDG-ATL? CDG-MSP? CDG-DTW? There's no competition at all now, but who else would want to fly those? Nobody. Only way to remedy it is to revoke JV on those routes.



Of all the things to worry about... the Wookie has no pants.
User currently offlineSuperCaravelle From Netherlands, joined Jan 2012, 259 posts, RR: 0
Reply 8, posted (2 years 10 months 3 days 17 hours ago) and read 4736 times:

Quoting ikramerica (Reply 8):
How do AF/DL remedy AMS/CDG-ATL? CDG-MSP? CDG-DTW? There's no competition at all now, but who else would want to fly those? Nobody. Only way to remedy it is to revoke JV on those routes.

I don't think that's the issue. I'm no expert, but there will always be many individual routes served by only one carrier. If the JV is stopped, MSP will not be getting more service. In fact, it might struggle to keep its service it has now. And after all, people from MSP (or CDG for that matter) can always hop on a plane to another hub and use that service.

It's probably more the broader picture that companies that in theory should be competing with each other, are working together. I don't know the exact market share of TATL flights from this JV, but it is substantial. In my opinion and to my limited knowledge, the main question is: is that market share combined with the JV influencing prices artificially? Do they price other companies out of the market, are they displaying predatory behavior towards new entrants, that kind of stuff.


User currently offlineenilria From Canada, joined Feb 2008, 7547 posts, RR: 14
Reply 9, posted (2 years 10 months 3 days 16 hours ago) and read 4606 times:

Quoting SuperCaravelle (Reply 9):
I don't think that's the issue. I'm no expert, but there will always be many individual routes served by only one carrier.

Some of those routes have both AF and DL metal. I think they could be saying that DL and AF should be competing if they are the only carriers in the route.


User currently offlineSuperCaravelle From Netherlands, joined Jan 2012, 259 posts, RR: 0
Reply 10, posted (2 years 10 months 3 days 16 hours ago) and read 4537 times:

Quoting enilria (Reply 11):
Some of those routes have both AF and DL metal. I think they could be saying that DL and AF should be competing if they are the only carriers in the route.

But I think they can correctly argue that if it were not for the JV, AF wouldn't serve a destination like that. Or is that too easy?


User currently offlineikramerica From United States of America, joined May 2005, 21562 posts, RR: 59
Reply 11, posted (2 years 10 months 3 days 15 hours ago) and read 4482 times:

CDG and ATL are two of the busiest airports in the world. AF and DL are two of the largest airlines. Partnerships and code sharing are one thing, price fixing and capacity restriction are different. JV legalized the latter.


Of all the things to worry about... the Wookie has no pants.
User currently offlinejetjack74 From United States of America, joined Jul 2003, 7421 posts, RR: 50
Reply 12, posted (2 years 10 months 3 days 9 hours ago) and read 4058 times:
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More like, this is BA, LH, Oneworld and Star questioning the legality of Skyteam. That's right, go after AF/KLM while they're on financial dire straits, try and knee-cap them in court rather than compete on the open market. Silly.


Made from jets!
User currently offlineordjoe From United States of America, joined Aug 2010, 729 posts, RR: 0
Reply 13, posted (2 years 10 months 3 days 8 hours ago) and read 3874 times:

Isn't the cat out of the bag already. IAG now, LH owns os lx a part of sas I think. AF kl az are now together, they might have wanted to examine this a while ago.

User currently offlineblueflyer From United States of America, joined Jan 2006, 4120 posts, RR: 2
Reply 14, posted (2 years 10 months 3 days 6 hours ago) and read 3568 times:
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Quoting ikramerica (Reply 7):
There's no competition at all now, but who else would want to fly those? Nobody. Only way to remedy it is to revoke JV on those routes.

They can isolate specific routes from the JV or they can (based on past experience) put certain conditions on the route to limit the JV's ability to "retaliate" if a new carrier were to launch a competing service.



I've got $h*t to do
User currently offlineusdcaguy From United States of America, joined Jan 2004, 990 posts, RR: 2
Reply 15, posted (2 years 10 months 2 days 23 hours ago) and read 2693 times:

I don't get why the commission won't list the specific routes in question. In my mind, the only route of concern would be CDG-JFK. It is highly likely DL and AF would be serving that market independently of one another if they did not have a JV, although DL would really be in the for the fight of its life with AF and AA. Meanwhile, I believe the following routes would be questionable at best in the absence of a JV or at least a tight alliance:

CDG-ORD winter service operated by DL (frequency would at least be reduced by AF without a JV)
ATL-CDG operated by AF, especially 2x a day
CDG-SEA operated by DL or AF
AMS-MEM operated by DL
CDG-MSP operated by DL
CDG-DTW operated by AF
ATL-FCO operated by DL year-round (summer would be fine)
AMS-ATL operated by KL
AMS-MSP operated by DL
CDG-SLC operated by DL

Clearly, the AF/KL/DL/AZ JV SUPPORTS the flying of more routes than it hinders it terms of competition. Although the above flights I listed end up increasing the overall transatlantic market share of DL/AF/KL/AZ, travelers would likely see far fewer flights offered in the absence of a JV due to the carriers' attempts to reduce capacity and increase yield to cover the cost of fuel. These actions would ultimately harm consumers by giving them fewer flight options. This makes me think that this review is more about market share between the carriers/JVs than it is about protecting consumers.


User currently offlineSuperCaravelle From Netherlands, joined Jan 2012, 259 posts, RR: 0
Reply 16, posted (2 years 10 months 2 days 22 hours ago) and read 2446 times:

Quoting usdcaguy (Reply 15):
Clearly, the AF/KL/DL/AZ JV SUPPORTS the flying of more routes than it hinders it terms of competition. Although the above flights I listed end up increasing the overall transatlantic market share of DL/AF/KL/AZ, travelers would likely see far fewer flights offered in the absence of a JV due to the carriers' attempts to reduce capacity and increase yield to cover the cost of fuel. These actions would ultimately harm consumers by giving them fewer flight options. This makes me think that this review is more about market share between the carriers/JVs than it is about protecting consumers.

I think this is correct. There is still a lot of competition TATL, although the majority of the (non-holiday) flights is now operated by one of the three alliances (BA-AA, Star and Skyteam JV). The airlines in the Skyteam JV can argue correctly that they do everything to operate at the lowest cost possible, as AF is handing over routes to DL. Yet, the yields of DL are not high enough to punish them for exploiting a market in my view. My conclusion would be that the JV primarily helps reduce cost at this point, and not helps raising prices or cutting service.

Of course, it still can be a concern for the future.


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