Alliances: What the Competition Authorities are really looking at — February 2019

For some time now the approval of airline joint ventures by competition authorities throughout the world has become almost routine. Such joint ventures allow airlines to co-ordinate (some may prefer  ‘collude in’) their operations on specified routes, including pricing, scheduling and capacity. In most jurisdictions collusion between companies is prima facie illegal, so any airline joint venture is almost invariably closely examined by the appropriate competition authorities.

They will consider whether any restriction on competition is against the overall interests of consumers, and if it is, they will seek ways to minimise such problems. This usually involves ensuring free market access for competitors, for example via an open skies bilateral agreement. If market access is still limited, perhaps because of slot shortages at capacity constrained airports, the authorities will often insist on the applicant carriers making slots available to potential competitors. There may also be other requirements before approval is granted, such as access to frequent flyer programmes or special prorate arrangements, designed to enable new entrant airlines to compete effectively against dominant players in the market.