Fare Combinability Agreement

With respect to the United States, total immunity from acting as metal neutral is only considered if there is an essential condition: there must be an open skies agreement. The simple logic is that if there is potential for additional and unregulated competition, allowing the consolidation of interests – and thus reducing direct competition – is generally less anti-competitive. If entry is limited, this cannot be the case. The U.S.-EU report states that “integrated VVs are the greatest incentive for Alliance members to cooperate on distribution and pricing, as airlines no longer seek to maximize their own revenues, but network revenues. One of the key elements of an agreement to achieve “metal neutrality” is the tariff combination, which allows customers to view fares for different segments and combine them into a single route. The report adds that “to achieve combineability, airlines must harmonize their fare cards and fare rules.” In the absence of an integrated alliance, airlines may not necessarily be encouraged to make these detailed changes to their pricing and sales processes, as they continue to focus on pricing and selling their own flights. This immunity, as well as his privileges and duties, is with him. The airlines thus vaccinated must not only cooperate fully as “metal neutrals”, they must also do so. Consumers will not otherwise benefit from the combination of tariffs and schedules – “a key element” of the neutral approach to metals. American often offers competitive rates with ULCC rates on specific lines where it competes. But if these low-fare segments are combined with other segments to create a non-stop itinerary served by the Americans – a transcontinental route, for example – the combined fare may be less than what Americana offers non-stop passengers. The next major bilateral notification of ITA is currently being considered by the European Commission. It covers Lufthansa`s application for immunity from Star Alliance, in order to work closely with All Nippon Airways on the Japanese-European market, which will effectively expand some of its divisions – and probably give Lufthansa the first globe-globe combination of neutral metal agreements.

Unlike the United States and Japan, there is no open skies agreement between Japan and Germany or the EU. American explained why it changed the rules. Ultra-low cost carriers can offer extremely low fares between some high-demand cities because they do not have the cost of operating a vast network of connections, he said. The regulator`s objective is therefore to create a “neutral” situation where no airline in the joint venture earns anything by keeping passengers on its own flight – instead of losing them to their allies. This was a mistake in many previous agreements that reduced the value to consumers, because they were interfering with an airline, usually the one they did with tickets. One example could be the fact that two airlines in an agreement between points A-B and Demaktie, but only one of the airlines continues to operate physically, between B-C, and then limit their partner to the A-C price. As a result, it retains a larger share of overall sales. This remains the situation in most bilateral agreements within alliances, which tends to give a significant internal advantage to the most dominant airlines over their partners. “The U.S. decision to keep these rates low should only apply to certain competing ULCC lines,” he said.

Comments are closed.