Airline Alliance Avoids|EU Antitrust Action

(CN) - Star Alliance members Air Canada, Lufthansa and United avoided antitrust showdowns with the European Commission over a revenue-sharing agreement aimed at premium passengers.

Commissioners brought an action against the three airlines after learning that a joint venture between them harms first, business and flexible-economy class passengers on their Frankfurt-New York routes.

Specifically, the commission believed the agreement - which eliminated price and capacity competition between them - resulted in higher ticket prices and kept other airlines from entering that transatlantic market.

The airlines argued that their cooperation made Frankfurt-New York flights more efficient and had a trickle down effect on connection itineraries, like Prague-Frankfurt-New York and Frankfurt-New York-Seattle. But regulators found that those benefits did not outweigh the negative impact of the trilateral pact.

Under the commitments accepted by the commission and announced Thursday, the three airlines will make landing and takeoff slots available to other carriers at both Frankfurt and New York airports. They will also extend their pact to other interested airlines, which commissioners believe will improve pricing and services for premium ticketholders.

"The commission is committed to ensuring that consumers are not harmed by cooperation between airlines," said competition policy commissioner Joaquin Almunia. "Thanks to the commitments offered by the three airlines, passengers on the Frankfurt-New York route will benefit from stronger competition. This decision is a further milestone in our effort to create a level playing field on transatlantic aviation markets, following our decision on Oneworld in 2010."

Oneworld, an air carrier revenue sharing group similar to Star Alliance, targets frequent international travelers. Commissioners accepted commitments from its 12 members aimed at leveling the playing field for transatlantic air travel three years ago.

According to the commission, a similar antitrust investigation of the Skyteam alliance is ongoing.

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