Airline sales push sparks controversy

Date: 15/11/01

By Laurence Frost

PLANS for a sales promotion to boost Delta Air Transport (DAT), the re-launched subsidiary of bankrupt Belgian airline Sabena, could undercut rivals and break EU rules on state aid.

Lufthansa said yesterday (14 November) it would "follow up" reports that DAT would soon be offering one-way flights to around 40 European destinations at the same promotional rate.The German carrier is not ruling out a formal complaint to the European Commission if DAT uses the €125 million government loan passed on to it last week to sell tickets at below-cost prices. "State investment should not be used for this aggressive sort of price leadership," said Thomas Kropp of Lufthansa.

EU rules on rescue aid dictate that government support cannot be used if it has negative spill-over effects on other member states. DAT spokesman Wilfred Remans said he could not comment on reports that the company was considering offering tickets at €50 to all destinations. "A promotional campaign is being considered but I can't confirm it yet," he said. But he dismissed concerns that the promotion would harm rival airlines that had not received state aid. "That's a normal reaction to any promotion," he said. "We're not taking our competitors into account, we're just going out to get the passengers."

Loyola de Palacio, the EU commissioner for transport, last week approved DAT's use of the rescue loan given to its majority state-owned parent three weeks earlier. Virgin Express, in talks with DAT investors over a joint venture, has agreed to set up a code-sharing agreement with the Sabena off-shoot. Belgian investors have three weeks to build a consortium to invest €200 million in DAT.

Plans for a sales promotion to boost Delta Air Transport (DAT), the re-launched subsidiary of bankrupt Belgian airline Sabena, could undercut rivals and break EU rules on state aid.