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EC to Allow Air Fare Cuts Within Europe

December 08, 1987|From Reuters

BRUSSELS — European Community agreed Monday to allow cheaper air fares in Europe, where ticket prices are among the highest in the world.

"Immediately, ordinary people will begin to get a squarer deal than they had before," said EC Transport Commissioner Stanley Clinton Davis after the 12-nation bloc's transport ministers approved the package in Brussels.

British Transport Minister Paul Channon, however, said he did not expect fares to be cut as soon as the treaty took effect Jan. 1, because airlines would still be applying winter schedules and tariffs. "I think there could be a noticeable change in prices by next summer."

Channon called the agreement a milestone for the EC's heavily regulated air sector. "No longer will two airlines be able to operate a cozy cartel and monopolize a route," he told reporters. The EC's Executive Commission has been fighting to break up such cartels, which are widely blamed for inflating Europe's air fares.

The current deal will reduce governments' powers to restrict competition between scheduled airlines, giving carriers greater freedom to fix prices independently and expand their business on routes shared with rivals.

Governments will be obliged to let airlines offer discount fares as low as 45%of the standard economy tariff, although such discounts would still be tied to a number of conditions. The deal will also allow smaller airlines to compete with established carriers on the busiest routes and open up new services between major and regional airports in most countries.

Clinton Davis and European Community Competition Commissioner Peter Sutherland said the deal was only a first step toward much greater competition between airlines in the future. "It will not bring miracles," Sutherland said.

Details of the package had been agreed to in principle by the ministers last June after almost three years of tough bargaining. But a dispute between Britain and Spain over the airport at Gibraltar, the British-ruled colony that is claimed by Madrid and sits off the tip of the Iberian peninsula, had prevented it from going into effect.

Britain and Spain settled that dispute Thursday.

The 21-member Assn. of European Airlines said in a statement that its members would waste no time in making use of the new freedom.

Its secretary-general, Karl-Heinz Neumeister, said he was certain that airlines would offer new or cheaper promotional fares by April 1, when summer schedules go into effect.

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