El Al: Foreign airlines guilty of price fixing

National carrier says it can’t compete on transatlantic routes against international aviation alliances that help each other.

By ANAT SHIHOR-AHARONSON
August 3, 2011 23:38
2 minute read.
An El Al plane taxiing down the runway

311_el al plane. (photo credit: Courtesy)

 
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El Al Israel Airlines Ltd. last week filed a complaint with the Israel Antitrust Authority over price fixing by foreign airlines on transatlantic routes, following the closing of its direct Tel Aviv-Sao Paulo route because it was unprofitable.

El Al filed the complaint against airlines in the A++ Transatlantic Airline Pact, the world’s largest airline alliance. A++ members include United- Continental Airlines, Air Canada, Lufthansa, Britain’s bmi, Swiss International Airlines and Austrian Airlines. Both the US Federal Aviation Authority and the EU regulators approved the creation of A++.

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El Al claims that the A++ pact creates impossible competitive conditions because its North American routes are its principle source of revenue and profits.

El Al says the A++ pact members are among the world’s largest international carriers, which should compete against each other. Instead, they cooperate almost fully on all subjects and even share revenue. The carriers coordinate flight frequencies, destinations, types of equipment for operating routes throughout the year (including on Shabbat and Yom Tov) and code sharing.

For example, a person traveling from Tel Aviv to San Francisco can take Lufthansa via a direct connecting flight from Frankfurt to San Francisco on a new Airbus 380 superjumbo. An alternative flight would be to take United-Continental Airlines from Tel Aviv to Newark and a connecting flight to San Francisco. A third alternative is to fly Air Canada via Toronto.

A top aviation source told Globes El Al closed its Sao Paulo route after two and a half years as a consequence of its inability to compete on transatlantic routes because it not a member of an international aviation alliance. It is doubtful if an airline like El Al has the right to exist in the long term, against such a cartel, without membership in a global alliance, the source said. The issue is highlighted in view of the “open skies” agreement with Europe, which could be signed soon.

The Israel Association of Travel and Tourism Agents says the industry is consolidating around a small number of alliances, which divide the skies between them, including Israel routes, harming the Israeli consumer. A consumer believes he is buying a ticket on a particular airline, when in fact he is buying a ticket at a price fixed with other airlines.



At a tourism convention in Eilat several months ago, Association of Travel chairman Yossi Fattal said one-third of passenger traffic between Israel and Europe is controlled by members of the Star Alliance, which comprises large carriers.

El Al declined to comment. The Antitrust Authority said it had received the complaint and that it was studying it.

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