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European Airlines Group calls for fuel-pricing probe

Competition

The Association of European Airlines called for European Union regulators to investigate the jet-fuel market following Austrian Airlines Group's request for a probe into the price policies of OMV AG, central Europe's biggest energy company. Austrian Airlines asked EU competition authorities on July 25 to investigate OMV for what the carrier described as “monopolistic” practices and “abuse” of OMV's “dominant market position.” “The case in Austria may be symbolic of uncompetitive practices across the industry,” AEA spokeswoman Francoise Humbert said in a telephone interview yesterday. “Airlines are subject to competitive forces and so should fuel suppliers.” Suppliers are increasing the price of jet fuel faster than the cost of crude, said the association, which represents 31 airlines carrying 320 million passengers each year. In June, Italy's competition authority fined fuel suppliers € 315 million ($405 million) for monopolistic practices. Vienna-based Austrian Airlines estimated the cost resulting from OMV's policies was about € 35 million a year. “Our statement isn't changed: we are a good, listed company acting in accordance with all laws,” Thomas Huemer, an OMV spokesman, said. “We're not making any internal investigations.” The price of jet fuel in northwestern Europe has risen 32% this year to $726 per metric ton in spot trading. Brent crude oil for September settlement cost $77.89 a barrel on the London-based ICE Futures exchange, and has risen 26% this year. Fuel is among airlines' highest costs. For Ryanair Holdings Plc, Europe's biggest low-fare airline, jet fuel makes up about one-third of its costs. Network carriers such as Air France-KLM Group, Europe's biggest airline, are adding fuel surcharges. “Clearly there is a discrepancy between the prices of crude and jet fuel, but I wasn't aware of these sort of allegations,” said Toby Nicol, a spokesman for EasyJet Plc, Europe's second-biggest low fare airline. (Bloomberg)

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