Air France-KLM, Delta, Alitalia Probed by EU Over Alliance

Air France-KLM Group (AF), Delta Air Lines Inc. (DAL) and Alitalia SpA are under investigation by European Union antitrust regulators over concerns their pact to coordinate trans-Atlantic flights may hurt competition.

The cooperation may remove rivalry on several routes where they used to compete, the European Commission said in an e- mailed statement today. Air France-KLM, Delta and Alitalia are members of the SkyTeam Alliance global marketing group and agreed in 2009 and 2010 to “fully coordinate” capacity, schedules, pricing and revenue management, regulators said.

Carriers are seeking partnerships on sales and scheduling to cut costs as rising fuel prices and a sluggish economy hurt profits. Cooperation between airlines has triggered two recent EU probes into ticket-sales agreements. Regulators also fined carriers including Air France-KLM, British Airways Plc and Japan Airlines Corp. in 2010 over colluding on air-cargo fuel and security surcharges.

“The commission will deal with the case as a matter of priority,” the Brussels-based antitrust authority said of the new probe. “The goal is to ensure that this tie-up does not harm passengers on EU-U.S. routes.”

Regulators today also closed an earlier antitrust probe into the alliance, ending an investigation that included Czech carrier Ceske Aerolinie AS, Grupo Aeromexico SAB de CV, Korean Air Lines Co. and Continental Airlines, which merged with United to form United Continental Holdings Inc. (UAL) in 2010. Continental quit SkyTeam in 2009 and the merged company is now a member of the rival Star Alliance.

‘Logical’ Probe

Air France-KLM, Europe’s biggest airline, “will of course cooperate” with regulators, said Brigitte Barrand, a spokeswoman for the Paris-based carrier. The new investigation is a “logical” step because regulators have approved one trans-Atlantic joint venture and are investigating another, she said.

A similar EU probe into an agreement by Deutsche Lufthansa AG (LHA) and United to cooperate on trans-Atlantic routes as part of the Star Alliance is “ongoing,” said Antoine Colombani, a spokesman for the commission in Brussels today. The three-year investigation also involves Continental and Air Canada. (AC/A)

Plans for British Airways and AMR Corp.’s American Airlines to jointly schedule, price and market trans-Atlantic flights won EU antitrust approval in 2010 after they offered to give up 10 operating slots in U.K. and U.S. airports.

Trans-Atlantic Routes

Delta remains “confident we will resolve any concerns” that regulators have on trans-Atlantic routes, said Debbie Egerton, a spokeswoman for Delta in London, in an e-mail.

Alitalia declined to comment. Air France-KLM owns a 25- percent stake in the Italian carrier.

Delta’s Chief Executive Officer Richard Anderson has described the joint venture with Air France-KLM and Alitalia as having the “economic effect of merging.”

Joint ventures are critical because some countries, including the U.S., have laws limiting foreign ownership of airlines. Overseas companies can hold as much as 49 percent of stock in U.S. carriers, or 25 percent of voting stock.

To contact the reporter on this story: Aoife White in Brussels at awhite62@bloomberg.net.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.

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