Forcing Down Europe's Lofty Airfares
THE European Community is launching a bid to bring down the price of air travel between its 12 member countries. But the drive by the European Commission in Brussels to deregulate fares is running into resistance from national carriers long used to officially backed arrangements allowing them to keep prices artificially high. Chief stimulus for the Brussels blitz on high airfares is the looming date, 1992, when the European Community (EC) is supposed to create an unfettered internal market. Without price competition in air travel, a key aspect of the 1992 program would be missing.
Sir Leon Brittan, commissioner for competition, and Karel van Miert, commissioner for transport, have devised proposals aimed at offering travelers a greater choice of airlines and smaller dents in their pocketbooks.
Under current conditions, European countries typically each have a national air carrier and have negotiated deals with each other that keep fares running in tandem - as high as possible. Thus, British Airways and Air France are the dominant carriers between their respective countries, as are Lufthansa and Alitalia between West Germany and Italy.
These bilateral deals, supported by national governments, have made it exceptionally difficult for other airlines to gain a foothold. Lack of competition pushes up fares and creates anomalies.
For example, British Airways and Sabena each charge 214 ($338) for an unrestricted round-trip business class ticket on the London-Brussels run (200 miles each way). You can fly from London to New York and back (3,000 miles each way) for 15 ($24) less than that, on a restricted economy ticket.
Sir Leon and Mr. van Miert hope to bring fares down with a bump by persuading EC member-governments not to block competitive carriers on routes between cities of different Community countries.
Already some progress has been made, much of it instigated by the British government which privatized the national carrier, British Airways, three years ago. A small airline, Air Europe, now flies business class travelers London-Brussels return for 186 ($293).
These are small inroads into what amounts to a cartel system enabling the big carriers to carve up the lucrative (and expanding) European market.
The Brussels plan would to remove the right of governments to veto lower fares offered by competing carriers. At the same time, Sir Leon and van Miert hope to avoid the cutthroat competition which in the US brought airfares down but arguably lowered safety standards.
``We want to sweep away the restrictive practices that currently curb competition between airlines. It will be up to the market to deliver lower fares,'' says Sir Leon.
Turbulence is certain, however. France, Italy, and Greece strongly support their national airlines and have resisted attempts to bring European fares down.
The Brussels plan must be approved by EC transport ministers. EC officials say that they intend to remind governments resisting the plan that the Treaty of Rome gives the Commission powers to block anticompetitive practices.
The Commission intends to let debate rage for a full year and then apply heavy pressure on all governments to accept deregulation.