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THE SAVVY TRAVELER

Good News and Bad for Air Travelers in Europe

November 12, 1989|PETER S. GREENBERG | Greenberg is a Los Angeles free-lance writer

A small revolution in the airline industry is occurring in Europe, where, less than three years from now, 12 countries will virtually dismantle their trade and traffic barriers to form a single market.

Get ready for the "United States of Europe."

The promises are great. Travel will be easier and red tape will be drastically reduced.

How did this all come about?

Slowly.

In 1957 six European countries signed the Treaty of Rome, creating the European Community (EC). A Common Market was established, within which goods, services and capital could move more freely.

But not people.

Air transport was ignored in the Common Market agreements. As a result, air fares zoomed and were tightly controlled by state-run or state-subsidized air carriers.

In 1986, however, the European Court of Justice ruled that air-transport agreements were subject to the Rome treaty, and airlines had to accept the concept of open skies.

The target date for implementation is 1992, but things already are starting to happen. New routes are being established, fares are coming down and the air transport market is about to open for more competition and new carriers.

One by one, airlines are amending their schedules, adding many destinations in Europe. And part of that European revolution is taking place in the United States.

Paris and London aren't the only destinations in France and England served by U.S. airlines. American Airlines also flies to both Lyon, France, and Manchester, England.

The foreign carriers are also expanding their European service. Last week Air France introduced service to the northern French city of Lille and the Alsatian cities of Strasbourg and Mulhouse, with three weekly flights from New York.

UTA French Airlines has started service from Newark, N.J., to Bordeaux, Marseille and Montpellier, Nantes and Toulouse, flying five times a week.

The good news is that in some cases, air fares in these and other European markets have been discounted to promote the new routes. In other markets, airlines that never discounted fares are beginning to offer limited discounts.

Earlier this year Lufthansa introduced "fly and save" fares between Frankfurt and Belgium, the Netherlands and Switzerland. In 1988 the West German airline introduced similar discounted fares for all Lufthansa destinations in Scandinavia, Spain, Portugal and Ireland. Lufthansa now markets special discount fares to 62 European cities.

There have been some other significant developments. On July 20, and after much debate, the European Commission adopted a series of proposals that would substantially liberalize air transport within Europe.

Specifically, the proposals include taking down flight barriers involving passenger capacity between European countries. What this means is that airlines in one country would be free to fly to airports in another country--traffic rights could not be automatically denied in an attempt to limit competition.

Other carriers, for example, can now fly to France on routes that have been denied by the French government in an attempt to limit competition with Air France.

That's all good news for passengers.

In the long run it could mean that the concept of flag carriers such as Air France may vanish with more competition. With the end of route monopolies, airlines will be able to choose destinations. More regional airports in Europe will be used, and there's a good chance that many more will be built.

Passengers will be free to choose between carriers. The resulting air fares will most certainly be more beneficial to travelers.

Low-fare competition already has started, and some new carriers have entered the market.

Air Europe now runs about 115 flights a week from London's Gatwick Airport to 12 cities in Europe, with average air fares 15% less than those of its competitors. EuroBerlin France is flying discounted seats to Germany. Other carriers such as German Wings and Ryanair are also discounting tickets on their routes in Europe.

Now for some bad news.

"There's no doubt that the market is changing and growing," said Dieter Uchtdorf, chief pilot for Lufthansa. "But in the move toward free-market conditions we're experiencing serious air traffic control and airport capacity problems. Last year we were clearly overloaded, and the delays were costly."

Costly indeed. In 1988 Lufthansa aircraft spent 7,900 hours in holding patterns over West Germany alone, and a record 619 flights had to be canceled simply because air traffic control was overloaded.

The delays cost Lufthansa an additional $56 million in fuel alone.

Lufthansa has been eyeing other U.S. gateway cities (Denver and Pittsburgh among them), "but attention must also be paid to handle the additional flights," Uchtdorf said.

"In the short term we'll go through a little of what America did during deregulation. We'll have some fare wars, but then we'll have to try to avoid the cartel approach.

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