User avatar
enilria
Topic Author
Posts: 6340
Joined: Fri Feb 22, 2008 7:15 pm

EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 2:48 pm

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
 
ikramerica
Posts: 13762
Joined: Mon May 23, 2005 9:33 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 2:55 pm

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 avatar
enilria
Topic Author
Posts: 6340
Joined: Fri Feb 22, 2008 7:15 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 3:14 pm

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 avatar
robffm2
Posts: 340
Joined: Mon Dec 18, 2006 8:47 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 4:34 pm

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]
 
Amsterdam
Posts: 169
Joined: Thu Mar 17, 2011 12:52 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 4:38 pm

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.
 
mutu
Posts: 264
Joined: Tue Mar 21, 2006 7:04 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 5:06 pm

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?
 
SuperCaravelle
Posts: 261
Joined: Mon Jan 23, 2012 8:04 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 5:26 pm

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.
 
ikramerica
Posts: 13762
Joined: Mon May 23, 2005 9:33 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 6:30 pm

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.
 
SuperCaravelle
Posts: 261
Joined: Mon Jan 23, 2012 8:04 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 6:39 pm

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 avatar
enilria
Topic Author
Posts: 6340
Joined: Fri Feb 22, 2008 7:15 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 7:28 pm

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.
 
SuperCaravelle
Posts: 261
Joined: Mon Jan 23, 2012 8:04 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 7:44 pm

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?
 
ikramerica
Posts: 13762
Joined: Mon May 23, 2005 9:33 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Fri Jan 27, 2012 8:01 pm

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 avatar
jetjack74
Posts: 6580
Joined: Sun Jul 27, 2003 6:35 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Sat Jan 28, 2012 2:47 am

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!
 
ORDJOE
Posts: 648
Joined: Wed Aug 11, 2010 2:27 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Sat Jan 28, 2012 3:38 am

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.
 
blueflyer
Posts: 3633
Joined: Tue Jan 31, 2006 4:17 am

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Sat Jan 28, 2012 5:42 am

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.
Recep Tayyip Erdoğan has no clothes.
 
User avatar
usdcaguy
Posts: 1033
Joined: Mon Jan 26, 2004 12:41 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Sat Jan 28, 2012 12:24 pm

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.
 
SuperCaravelle
Posts: 261
Joined: Mon Jan 23, 2012 8:04 pm

RE: EU Questions Legality Of DL/AF/AZ Joint Venture

Sat Jan 28, 2012 1:42 pm

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.

Who is online

Users browsing this forum: Andy33, AsiaTravel, Baidu [Spider], bwest, David L, debonair, dk44, KarelXWB, leftyboarder, okay, pdxswa, posti, RalXWB, Rdeggendorfer, sassiciai, Softaero, speedbored, strfyr51, Tvilum and 241 guests