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Airline consolidation limits competition and reduces consumer choice, study confirms

BRUSSELS – An independent research report shows that airline consolidation decreases consumer choice. The report finds that airline mergers, acquisitions, joint ventures and code-share agreements, have over time contributed to a reduction in competition, fewer choices and higher prices for consumers.

The study was conducted by aviation economists GRA and was supported by the European Federation of Travel Agents’ and Tour Operators’ Associations (ECTAA), the European Passengers Federation (EPF), the European Technology & Travel Services Association (ETTSA) and air passenger rights watchdog Friendly Flying.

As airlines and airline groups are becoming more powerful, they are increasingly driving consumers to their own websites where they avoid headon competition and comparison shopping. The study finds that many airlines do this by making less information available to travel agents and/or financially penalizing consumers who prefer to buy from those independent and neutral distributors.

“Particularly now that the airlines have consolidated, the most effective way of ensuring consumers have a fair chance of finding the best air travel option available is through neutral comparison shopping which depends on independent distribution,” finds the GRA report.

“The findings of this report expose a harmful double effect of airline consolidation,” says Christoph Klenner, Secretary General of ETTSA. “Consolidation on its own reduces the number of competing airlines, but what is more, the larger airlines and airline groups become more powerful. This power allows them to hold consumers captive to their biased websites in order to reduce transparency and deprive them of the ability to compare competing options.”

Michel de Blust, Secretary General of ECTAA, remarks: “Neutral, independent travel distribution plays a critical role in providing transparency and real choice for consumers and travel buyers. As the study shows, if powerful airline groups are allowed to engage in discrimination of the neutral distribution channels, consumers will pay the price in the form of less choice and higher fares.”

“The study shows clearly the need to reassess the effects of consolidation on
airline competition and the European consumer. An attack on transparency is an attack on twenty five years of a successful EU air transport policy. Europe has the legal instruments and the regulatory framework to prevent further detrimental impact on the consumer from airline consolidation. Obtaining tickets for the best price is the main interest of passengers of any mode of transport,”
adds Josef Schneider, Chairman of the European Passengers’ Federation (EPF).

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