2002/746/EC: Commission Decision of 5 July 2002 relating to a proceeding pursuant to Article 81 of the EC Treaty and Article 53 of the EEA Agreement (COMP/37.730 — AuA/LH) (Text with EEA relevance) (notified under document number C(2002) 2502)

• Articles: 5

Article 1

Pursuant to Article 81(3) of the EC Treaty and Article 53(3) of the EEA Agreement, Article 81(1) of the EC Treaty and Article 53(1) of the EEA Agreement are hereby declared inapplicable to the cooperation agreement concluded on 10 December 1999 between Deutsche Lufthansa AG (Lufthansa) and Austrian Airlines Österreichische Luftverkehrs AG (AuA) for the period from 10 December 1999 to 31 December 2005.

Article 2

The exemption granted pursuant to Article 1 shall be subject to the conditions listed in the Annex. These conditions shall apply to all routes operated by the Parties between Germany and Austria. They shall be binding on the Parties, their subsidiaries, legal successors and authorised representatives. The Parties shall ensure that their subsidiaries, legal successors and authorised representatives comply with them.

Article 3

1. Until termination of the exemption granted pursuant to Article 1, AuA and Lufthansa shall provide the Commission with the following information:

(a) detailed information on the tariffs applied on all routes between Austria and Germany on which the Parties offer direct flights in competition with other airlines;

(b) detailed information on how they comply with the requirement to apply tariff reductions on three other Austrian-German routes;

(c) a list of all contracts and agreements that the Parties have entered into with competitors on the Austrian-German market with regard to slots, frequent flyer programmes, blocked space, interlining and intermodal traffic;

(d) information on tariff developments on all routes between Austria and Germany;

(e) a list of the daily frequencies applied and total capacity offered per month by AuA and Lufthansa on the ten most important routes in passenger terms;

(f) information on the Parties' progress in implementing their cost-cutting plans.

2. Information under paragraph 1, points (a) and (b) shall reach the Commission within a week of publication of the tariffs. Information under paragraph 1, points (c) to (f) shall be sent to the Commission at the end of each summer scheduling period.

Article 4

This Decision is addressed to: Austrian Airlines Österreichische Luftverkehrs AG Fontanastr. 1 PO Box 50 A - 1107 Vienna Deutsche Lufthansa Aktiengesellschaft Von-Gablenz-Straße 2-6 D - 50679 Cologne

Done at Brussels, 5 July 2002.

For the Commission

Mario Monti

Member of the Commission

(1) OJ L 374, 31.12.1987, p. 1.

(2) OJ L 240, 24.8.1992, p. 18.

(3) OJ C 193, 11.7.2000, p. 7.

(4) OJ C 356, 14.12.2000, p. 5.

(5) Business secret.

(6) One direction, 1999 figures.

(7) For example, Lufthansa offers a direct flight from Frankfurt to Kiev, whereas the AuA Frankfurt-Kiev flight involves a transfer in Vienna.

(8) OJ C 66, 2.3.1998, p. 1.

(9) See Commission Decision of 11 August 1999 in Case COMP/JV.19 - KLM-Alitalia: http://europa.eu.int/comm/competition/mergers/cases.

(10) The Parties argue in this respect that high-speed trains and the car offer alternative transport modes in competition with air transport for distances of less than 600 km.

(11) Generally speaking, business travellers are more time-sensitive than leisure travellers and tend to book fully flexible tickets. The second group of passengers are not time-sensitive but pay more attention to the price. These passengers accept longer journey times and may choose indirect flights if they are less expensive than direct ones.

(12) This conclusion is generally backed up by the findings of the Commission's investigation in the KLM-Alitalia case. The Commission found that the proportion of travellers using indirect flights on the Amsterdam-Rome and Amsterdam-Milan routes was very low. This suggest that neither category of passenger (time-sensitive or non-time-sensitive) considers indirect flights to be substitutable for direct flights. See Commission decision of 11 August 1999 in KLM-Alitalia.

(13) The Parties have claimed that passengers living in Voralberg (the westernmost part of Austria) would prefer Zürich airport to Innsbruck. At the time of the conclusion of the agreement, Swissair operated five flights daily from Zürich to Berlin. Such passengers would therefore have the choice between Swissair and AuA/LH.

(14) Such an exception may exist for non-time-sensitive travellers living in the catchment areas for Innsbruck and Salzburg who wish to travel from Munich to other German destinations since competitors of Lufthansa operate on these routes.

(15) For example, on the Munich-Salzburg, Munich-Linz and Munich-Vienna routes.

(16) Rheintalflug operated 86 flights between Vienna and Friedrichshafen in 1998. However, Rheintalflug was taken over by AuA in 2001.

(17) For example, to fly from Vienna to the United States, a passenger may fly direct, or indirect via Frankfurt, Amsterdam, Paris, London, etc. He or she would thus have the choice of several competing airlines.

(18) Regional transfer passengers take a regional flight before or after flying on an Austrian-German route (regional transfer). A passenger who wishes to travel from Klagenfurt to Leipzig may do so via Frankfurt, for example. However, such passengers, like direct travellers, depend as a rule on one of the Parties for at least one section of their journey.

(19) Article 53 of the EEA Agreement contains the same provision as Article 81 of the EC Treaty. All references to Article 81 of the EC Treaty should be understood to extend automatically to Article 53 of the EEA Agreement.

(20) For instance, a non-time-sensitive passenger travelling from Hamburg to Rome could have chosen either to fly direct with Lufthansa or indirect with AuA via Innsbruck.

(21) For example, on routes between Austria and Germany some 38 % of all AuA customers fly under a "corporate customer deal".

Schedules & Appendices

ANNEX

CONDITIONS

1. Conditions pertaining to slots

If an airline which did not operate air transport services between Austria and Germany on the date of notification (a new entrant) and which is independent of Austrian Airlines and Lufthansa (the Parties) wishes to commence a new non-stop service on one or more Austria-Germany city pairs (the "new entrant city pair or pairs"), the Parties shall make slots available subject to the conditions described below. For the purposes of these conditions, a non-stop service includes a multi-stop service using a single aircraft that begins and/or terminates in Austria, Germany or a third country and has at least one non-stop segment between Austria and Germany.

The parties are obliged to make available to a new entrant for a particular new entrant city pair (the "new entrant slots") at least one pair of slots and, to the totality of new entrants, up to a maximum of 40 % of the slots the parties operated on the city pair in question at the time of notification. However, any voluntary advance slot release by the Parties shall count towards the 40 %.

The new entrant slots shall be within 45 minutes of the time requested by the new entrant and shall permit, in the case of one-stop services, a transit-groundtime of the aircraft of not more than 90 minutes, provided that the Parties hold slots within the relevant time period.

The new entrant shall make a clear written request to the Parties concerning the intended service at least six weeks prior to the IATA slot conference for the traffic season in which the new entrant intends to commence service. A new entrant shall be eligible to receive slots pursuant to these commitments only provided that it can demonstrate that all reasonable efforts to obtain slots for the new entrant city pair through the normal workings of the slot allocation procedure at the subsequent slot conference (including allocation of slots by the coordinator following the slot-return deadline) have failed. During the entire period (between the written request and the end of the respective IATA scheduling period) the new entrant shall maintain an "open book" policy for the respective airports. Any slots obtained by the new entrant through the regular slot allocation procedure shall count towards the total number of slots the new entrant is entitled to receive pursuant to these commitments unless the Parties have a share of total frequencies on the city pair concerned that is in excess of 60 %. Requests for slots pursuant to this section are valid only for a specific scheduling season. Where, on the route in question, a new entrant has not commenced service, has commenced service at a lower frequency than planned or wishes to operate an additional frequency, the requirements of this section shall apply to any request for additional slots in a subsequent scheduling season.

On all routes between Austria and Germany which involve at one end Vienna or Frankfurt airports, new entrant slots shall be used exclusively to operate services on the new entrant pairs with aircraft having a capacity of 46 or more seats. This condition shall not apply to other routes between the two Member States or where a new entrant has commenced service prior to the date of publication of the exemption decision in the Official Journal of the European Communities.

Where a new entrant wishes to use for services on a route between Austria and Germany an aircraft that is stationed at an airport in a third country, it can obtain slots pursuant to these provisions (including limitations on the number of slots available to support service on a city pair) for services to or from that third country to position the aircraft at the beginning or end of operations (technical slots). The Parties shall be required to provide technical slots only where the new entrant requesting such slots and/or its franchiser operate fewer than three daily frequencies to/from third countries from the airport concerned at the time that the request is made. Furthermore, the Parties shall make technical slots available within 180 minutes of the time requested by the new entrant, provided that they hold slots within the relevant time period.

Where the new entrant operates a service involving a third country and one of the airports included in the new entrant city pairs (a third-country service) and reduces frequencies on or ceases to operate the third-country service, it shall be required to use the slots previously assigned to the third-country service for service on the new entrant city pairs. It shall return the same number of new entrant slots to the Parties as were previously assigned to the third-country service.

Where a new entrant which has obtained slots pursuant to this procedure decides not to commence services on the new entrant city-pair or to operate a lower number of services, it shall inform the Parties immediately and return the slots to them. If a new entrant ceases to operate services on the new entrant city pair or has to cease operations for other reasons (e.g. misuse), it shall inform the Parties immediately and shall return the slots to them. For the purposes of this section, a new entrant and its subsidiaries will be deemed to have ceased operating on a new entrant city pair where it or they, as the case may be, have not used at least 80 % of their slots during the scheduling season for which they had been allocated for the city pair in question, unless this non-use of the slots is justified on one of the grounds referred to in Article 10(5) of Regulation (EEC) No 95/93 or in any other regulation that amends or supersedes it.

Should the new entrant notify the Parties too late in a scheduling season for them to use the returned slots pursuant to Article 10(3) of Regulation (EEC) No 95/93 with immediate effect or after the deadline provided for in Article 10(4) of that Regulation and before the effective start of the scheduling season, the Parties shall be entitled to require that the new entrant transfers to the Parties a comparable slot. If for any reason the new entrant is unable to transfer to the Parties a comparable slot, they may seek to justify the non-use of the surrendered slot on the basis of Article 10(5) of Regulation (EEC) No 95/93.

To ensure that the slots provided by the Parties are used in a manner consistent with these conditions, a mechanism shall be agreed between the Parties and the new entrant that will allow the Parties to monitor how the slots are being used. The Parties shall inform the Commission about the agreed mechanism.

Slots made available by the Parties under these commitments shall be offered without any quid pro quo.

2. Conditions pertaining to frequencies

The Parties shall not add any frequencies on a particular new entrant city pair for a minimum of four consecutive IATA traffic seasons including the traffic season in which the new entrant commences service on the new entrant city pair.

3. Conditions pertaining to fares

If the Parties reduce a published fare on a new entrant city pair, they shall apply an equivalent fare reduction (in percent) on three other Austria-Germany city pairs on which they do not face any competition. This requirement shall apply only as long as the fare reduction on the new entrant city pair remains effective. For the purposes of this requirement, a published fare shall include applicable IATA fares, carrier fares that are distributed to computerised reservation systems via the public tariff data base of ATPCO (Airline Tariffs' Publishing Corporation) and fares marketed to the general public on the Internet.

The three comparable Austria-Germany city pairs where the Parties must apply equivalent fare reductions will be determined as follows: the Parties will choose two city pairs out of the next five largest Austria-Germany city pairs by passenger volume on which they do not face any competition. The only condition to be met when selecting the third Austria-Germany city pair is that it must be operated solely by the Parties.

This condition shall not apply in those exceptional cases where the Parties can demonstrate to the Commission that a fare reduction on a specific city pair is attributable to factors, such as a reduction in costs, that are independent of the competitive activities of the new entrant.

4. Conditions pertaining to blocked space agreements

At the request of a new entrant, the Parties shall enter into a blocked space agreement pertaining to the new entrant city pair(s) operated by it if the number of frequencies offered by it is lower than the number operated by the Parties.

Any such agreement shall be based on a fixed number of seats (hard block basis) and apply for at least one entire IATA traffic season. The number of seats covered by such an agreement shall be a maximum of 15 % of the seats offered on a particular frequency and in any event not less than 12 seats and not more than 25 seats in a particular aircraft. The new entrant shall carry the full commercial risk attaching to the seats covered by the blocked space agreement.

5. Conditions pertaining to interlining

At the request of a new entrant, the Parties shall enter into an interline agreement concerning the new entrant city pair(s) operated by it if it does not have an existing interline agreement with the Parties.

Such an interline agreement shall be subject to the following restrictions:

(a) it shall apply to the first class, business class and leisure travel categories only;

(b) it shall provide for interlining on the basis of the Parties' published one-way fares when a one-way ticket is issued or half of the Parties' published round-trip fares when a round-trip ticket is issued;

(c) it shall be limited to true origin and destination traffic operated by the new entrant;

(d) it shall be subject to the MITA rules and/or normal commercial conditions;

(e) it shall include the possibility for the new entrant, or travel agents, to offer a return trip comprising services provided one-way by the Parties and one-way by the new entrant.

Subject to seat availability in the relevant fare category, the Parties shall carry a passenger holding a coupon issued by a new entrant for travel on a new entrant city pair. However, to avoid abuse, the Parties may require that the new entrant or the passenger, where appropriate, pay the positive difference between the fare charged by the Parties and the fare charged by the new entrant. In cases where the new entrant's fare is lower than the value of the coupon issued by them, the Parties may endorse their coupon only up to the value of the fare charged by the new entrant. A new entrant shall enjoy the same protection in cases where the Parties' fare is lower than the value of the coupon issued by it.

All interline agreements entered into pursuant to this section for a particular new entrant city pair shall lapse as soon as the new entrant ceases to operate that city pair.

At the request of a new entrant, the Parties shall enter into a special prorate agreement with it for traffic with a true origin and destination in either Germany or Austria and/or beyond Austria or Germany. The conditions shall be comparable to those entered into with third non-alliance/other alliance carriers in connection with such route. In the case of a special prorate agreement covering international transfer traffic, this commitment shall apply only to routes where international transfer traffic exceeds 35 % of the total traffic volume on the new entrant city pair.

6. Conditions pertaining to frequent flyer programmes (FFPs)

If a new entrant does not participate in one of the Parties' FFPs or does not have its own comparable FFP, the Parties shall allow it on request to participate in their joint FFP for the new entrant city pairs operated by it. The agreement with the new entrant shall be concluded on reasonable and non-discriminatory conditions, including compensation for any costs incurred by the Parties.

Any agreement relating to a particular new entrant city pair and entered into pursuant to this section shall lapse if the new entrant ceases to operate that city pair.

7. Conditions pertaining to intermodal services

At the request of a railway or other surface transport company operating between Austria and Germany (an intermodal partner), the Parties shall enter into an intermodal agreement whereby they provide passenger air transport on their services between Austria and Germany as part of an itinerary that included surface transportation by the intermodal partner (an intermodal service).

Any intermodal agreement entered into pursuant to this section shall be based on the MITA principles (including the Intermodal Interline Traffic Agreement - Passenger and IATA Recommended Practice 1780e) and normal commercial conditions.

The Parties shall accept full pro-rating according to the terms applied by MITA members, including on routes where only rail services are provided. Where the rail operator requires notification of a sector mileage, a location identifier or an add-on fare, the Parties shall make such a request to IATA under normal IATA procedures.

At the request of a potential intermodal partner, the Parties shall make efforts in good faith to reach an agreement on conditions comparable to those granted to other intermodal partners, provided that the necessary requirements are met especially with regard to safety, quality of service, insurance coverage and liability limits. The conditions of such an agreement shall override the general obligations arising pursuant to this section.

8. Duration of exemption and conditions

The conditions shall apply from the date on which the Commission has adopted the exemption decision under Article 5(4) of Regulation (EEC) No 3975/87. They shall lapse on the date on which the Article 81(3) exemption no longer applies.

Should the Commission revoke the Article 81(3) exemption of the cooperation agreement pursuant to Article 6 of Regulation (EEC) No 3975/87 or an equivalent provision in any subsequent regulation, should the Article 81(3) exemption be annulled, or the Parties terminate the notified cooperation agreements, the conditions shall be null and void as from the date of revocation, the date of the annulment or the date of termination. In such a case, the Parties shall have the right to demand the return of any slots provided under these commitments to an airline which, at the time of the revocation, annulment or termination, is operating services on routes between Austria and Germany using those slots. They shall also have the right to terminate any blocked space, interlining, FFP, or intermodal agreements entered into pursuant to these commitments.