The antitrust approach to airline alliances under EU and US law

Abstract

Prior to the 1980s there were ongoing debates as to whether competition rules applied in the field of air transport. This question was resolved by the Nouvelles Frontières case, delivered in April 1986 by the then European Court of Justice. This case together with other judgements and the provisions applicable to competition is discussed under Chapter 1. The applicability of the competition rules to the aviation market brought with it market liberalisation. The process was divided into three stages spread over a span of five years, followed by a recasting of the latter stage after fifteen years. Chapter 2 refers to these stages, which stages are technically referred to as 'packages'. These packages increased bilateral agreements and made it possible for airline companies to enter into alliances. As is shown in Chapter 3, there is no fixed definition of airline alliance. There are tactical (also known as marketing) alliances and strategic alliances, both being subdivided into a number of different agreements. Different alliance agreements are subject to investigations by the Commission. Chapter 4 analyses a number of alliances and investigations in the European sphere and beyond. It will be shown that, both the European Commission and the American Department of Transportation approve alliances on a number of conditions. Some authors have argued that alliances reduce competition due to the fact that airlines which were once competitors now enter into agreements specifying which one of them is to operate which route, removing the possibility of overlapping of routes. Airline alliance could ultimately also lead to higher market 4 power and therefore make it more difficult for new airlines to enter the market. Furthermore, it has been claimed that alliances are to be considered as a bypass to regulations and also as a means to avoid mergers. These matters are discussed in Chapter 5. Briefly, this dissertation will show how airline alliances influenced competition in the aviation sector. It will also explain in depth the process of liberalisation which is the departing point for the creation of airline alliances. Reference to CJEU judgements is inevitable.