WRITTEN QUESTION P-2205/02

by Michael Cashman (PSE) to the Commission

(12 July 2002)

Subject: Price disparity in the travel sector

When air fares are being booked within the EU (to EU and non-EU destinations), the price for the same flight(s), using the same booking facilities, often varies according to the country in which the payee is domiciled or where the booking is made.

When booking with a ferry company in the EU, customers are asked if they are resident in the country in which they are making the booking and are sometimes asked for an address.

Could the Commission state whether this practice contravenes EU policy and could be classed as a barrier to competition?

Could the Commission outline what steps are being taken to investigate the legality of this practice, how widespread it is within the travel sector, and what is being done to put an end to it?

Answer given by Mr Monti on behalf of the Commission

(16 September 2002)

The pricing practices described by the Honourable Member might, in certain specific circumstances, constitute an infringement of European competition rules.

If a company limited some of its fare offers purely on the basis of the payee's country or residence, it would effectively be charging different prices for identical services. In certain circumstances, this might be incompatible with European competition rules. This would be the case if the company had a dominant position on the route in question, if transport companies had agreed between themselves to apply a pricing policy of this type or if a transport company prevented its distributors from selling a certain category of ticket outside the Member State in which they were based.

The Commission is carrying out a careful examination of these practices. In the airline industry, it is looking into the rules of the International Air Transport Association (IATA) governing the conditions which travel agents must satisfy in order to gain IATA accreditation and to issue tickets on that basis. In the maritime sector, it has on several occasions examined pricing and reservation practices

of the type described by the Honourable Member. Responding to concerns raised by a consumer, it recently scrutinised the pricing practices of a cross-Channel ferry operator to ensure that they did not infringe European competition rules.

It should also be noted that, in some cases, transport companies operating between two Member States may not be allowed, by virtue of differences in national laws on promotional sales, to make a special offer available to customers in one of those Member States. As a result of these differences in national legislation, potential customers in the Member States with the most restrictive laws may be discriminated against. The Commission adopted in October 2001 a proposal for a harmonisation Regulation that would abolish restrictions on the value of bonuses and reductions and replace them with transparency requirements ensuring that consumers are properly informed of the nature of such promotional offers.