EC Targets Europe’s Airline ‘Cartel’ : Pressure Growing to Make Carriers More Competitive

Nine years after open competition sent air fares tumbling in the United States, a faint breeze of change is beginning to blow through European skies.

The 12-nation European Communities narrowly missed securing a landmark deal to begin liberalizing its rigid air transport system when ministers met here at the end of last month.

But aviation experts say it is only a matter of time before what one Asian competitor has called the “cozy cartel” of Europe’s scheduled airlines is broken up.

“There is a general realization that there are pressures for change in Europe,” said Edward Hudson, secretary of the 22-nation European Civil Aviation Conference.

For the traveler, airline competition in Europe could mean cheaper fares, bigger discounts and a wider choice of destinations and airlines.

Fares on flights in Europe are among the highest in the world.

Travelers flying the 190 miles from Brussels to Frankfurt, for example, pay standard full fares of $159 (5,900 Belgian francs) for a one-way trip in economy class. For the same class seat on the 215-mile flight from New York to Washington, they pay as low as $52.

Aviation industry experts say European flights are costly because airlines are allowed to share profit from high fares instead of competing for business by cutting prices.

Even discount fares are agreed upon between carriers.

“When you have a near monopoly on a route, the airlines can charge what they like. When several are competing, like in the United States, it pushes prices down,” one Brussels travel agent said.

Such pacts are on the way out as the EC’s executive commission gets tough with governments and airlines alike.

Maintenance a Concern

Its hand has been strengthened by a key European Court of Justice ruling last year that gave it the legal clout to force governments to break up the cartel.

Aviation experts say there is growing recognition in Europe of the benefits that free competition brought travelers in the United States since its 1978 introduction.

But they caution that liberalization must come in tandem with tighter safety controls so that carriers, under pressure to keep planes flying as long as possible, do not skimp on maintenance.

A number of European carriers are already aware that they have to become more efficient to compete against U.S. and Asian rivals on intercontinental routes, they say.

But many governments, particularly those with national airlines that make meager profits or post losses, want to make sure that the move toward a competitive free-for-all is gradual.

Most major European carriers are wholly or partly state-owned, symbols of national prestige and sources of employment.

Any shake-up of air transport is likely to force airline mergers, experts say. Sabena of Belgium and Scandinavian Airlines System are already talking about a joint airline.

Government officials dread the idea of their airlines losing business to new rivals and want them to have time to adapt to the new regime.

Even optimists at the European Commission say it will be 1992--the date the community has set for completing a genuine common market free of trade barriers--before airlines win freedom to set the tariffs and fly the routes they want.

Others believe it will take longer.

“We might have something approaching deregulation by the end of the century,” says Geoffrey Lipman, executive director of the International Foundation of Airline Passengers’ Assns. and a staunch advocate of greater competition.