PART 3 SCOPE OF THE ENQUIRY |
37. The airline industry is a global
industry and we do not believe it is possible to study the airline
industry in the European Union in isolation from the rest of the
world. Any developments in the industry within the European Union
will inevitably impact on the global industryand vice
versaand this is true of the proposals which are the
subject of our report. This report, therefore, as a matter of
necessity, looks wider than just the European Union in assessing
the likely effect of the Commission proposals under scrutiny.
38. The Commission's proposals, in
themselves, make no fundamental change to the Community's Competition
Rules. They do, however, effect a major change in the allocation
of responsibility for their enforcement. But, in the Committee's
opinion, the implications of these Regulations would go far wider.
Indeed, we believe that the proposed Regulations would fundamentally
alter the way in which the market in air transport operates, both
within the European Union and between the European Union and third
countries. It is the wider implications of these Regulations which
form the substance of our report.
39. When the Committee originally decided
to conduct this enquiry, negotiations were continuing over the
proposed British Airways (BA)-American Airlines (AA) alliance,
and on 8 July 1998, the Commission, together with the Department
of Trade and Industry in the United Kingdom, published their draft
conditions for that alliance to gain regulatory approval.
As several of our witnesses pointed out, this proposed alliance
is a good example of the direction in which the airline industry
has moved towards consolidation in the last 20 years. However,
as negotiations in this case were still proceeding, and despite
the highly relevant nature of the proposed alliance to the subject
of this enquiry, we avoided enquiring into the details of this
case. This is reflected in the conclusions of our report which
are concerned with the implications for the European airline industry
as a whole rather than any one specific airline.
40. We received written and oral evidence
from organisations involved in the field of air transport. We
also visited Brussels to discuss the proposal with Commissioner
van Miert, Commissioner for Competition, and officials in both
DG IV (Competition) and DG VII (Transport). We are grateful to
those witnesses who gave evidence. We also thank our Specialist
Adviser, Dr George Williams of the Air Transport Group, Cranfield
University, for his guidance through this often complex enquiry.
41. We are aware of the sensitive commercial
implications raised by the subject of this enquiry, but we were
nonetheless disappointed that we were unable to consider evidence
from several organisations. We understood the reasons given by
Cathay Pacific, Singapore Airlines and the Monopolies and Mergers
Commission for declining to give evidence. It is regrettable,
however, that Air France declined even to respond to our invitation
to give evidence, either written or oral.
42. The members of Sub-Committee B
(Energy, Industry and Transport) who conducted this enquiry are
set out in Appendix 1. Our witnesses are listed in Appendix 2.
Appendix 3 shows the membership of the two largest global alliances
and, as an example of the complexity of airline alliances, lists
the airlines operating services on behalf of Lufthansa.
14 The Commission also has a number of other international
alliances under examination. Back
Press Releases, Department of Trade and Industry P/98/549 and
European Commission IP/98/641, 8 July 1998. Back