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EU concerned over alliances

The European Commission has raised serious concerns over recent agreements on cooperation made between Austrian<.> Airlines,…

The European Commission has raised serious concerns over recent agreements on cooperation made between Austrian<.> Airlines, Lufthansa<.> and SAS<.>. In a statement, the Commission stated that it was expected that the agreements would reduce competition on a large number of flights between Germany and Austria, as well as prompt concern in the airline markets of Austria and Scandinavia.



Austrian Airlines and Lufthansa, as well as Austrian Airlines and SAS, submitted two cooperation agreements to the Commission in December, requesting that they receive exemption from the EU<.>`s competition rules.



The agreements relate to passenger transport, airport maintenance, airport services and ground handling while they also cover coordination of flights on an international level.



The Commission was unable to allow the exemption prinicipally because Austrian Airlines and Lufthansa control around 33 percent of the market in direct flights between Austria and Germany. Another reason it did not agree to the exemption concerned the high costs which competitors would face in such an event.



The Commission stated it had told the firms that passengers would not have the right to choose between carriers and that the resulting monopoly would lead to price rises. The airlines are expected to present alternative proposals to the Commission<.> and if these are not accepted, the Commission may ban further alliances.

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