A suitable case for tough treatment

Date: 24/06/1999

ONE of the great achievements of the EU has been the opening up of Europe's skies to competition. People whose most ambitious idea of a holiday was a long and sweaty car journey, and to whom long weekends in Rome, Barcelona or Paris were the prerogative of the rich, have been liberated as the sector has been liberalised.

It is now possible - albeit subject to restrictions and early booking - to fly from Paris to Dublin one-way for €45 or from London to Venice for €55. But, two years after the completion of the single aviation market, these great bargains are still an exception to the rule.

American Express' annual air fares report has made depressing reading since April 1997. When fares have fallen, they have tended to be time-limited promotions designed to attract leisure travellers which quickly dry up when a wave of demand hits them.

Standard transferable and non-restricted tickets have hardly been touched by market forces and, since 1997, prices have even risen on average. Big airports whose catchment areas of potential passengers appeal to new-entrant carriers often charge so heavily for use of their monopolistic groundhandling services that the competing airlines instead choose nearby secondary airports. These are, in turn, less appealing to business travellers and, consequently, to their purchasing managers.

As a result, most intra-EU routes are served by duopolies of flag-carriers, while prices have only fallen significantly when at least three airlines have competed for passengers. This is the lesson Karel van Miert has learnt from the conditions he set Deutsche Lufthansa and SAS in return for allowing them to go ahead with an alliance three years ago.

All those who have flown from Frankfurt to Stockholm and - more to the point - paid for the ticket themselves, can see that there is room for a low-cost carrier on the route. The cheapest available return fare to Stockholm with Lufthansa next weekend is €317: non-changeable, with a Saturday night stay but a requirement to get up at 5am to catch the only available cheap seat back on Sunday morning.

Whoever takes over the transport and competition portfolios in the new Commission team should act on Van Miert's advice: address the reasons surrendered slots are not taken up, bust open groundhandling and end the cosy relationships between civil services, multinationals and the established airlines.