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       After  examining  the  air fares disapproved  by  the  United Kingdom
       authorities  and referred to the Commission, the latter  has  decided
       that a number of the said fares failed to comply with the  applicable
       Community  Regulation No 2342/90.  The Decision means that the  fares
       in question will not be used as a basis for determining future fares.
       The  Commission  has  notified  the  Decision  to  the  Member States
       concerned in order that they may take it into account when  approving
       fares  for  future seasons. The English complain concerns  25  routes
       between   the  United Kingdom  and  seven  Member States   (Portugal,
       Denmark, Belgium, Spain, Italy, Greece, France).  48 fares have  been
       approved   and   40   disapproved.  The   companies   involved    are
       British Airways,  Alitalia,  Scandinavian  Airlines,  Air France  and
       Olympic Airways.
                                     - - -
   Community legislation on fares for scheduled air services.
   The Community legislation on fares for scheduled air services charged  on
   routes  between  Member States (Council Regulation  (EEC)  No 2342/90  of
   24 July 1990)  lays  down procedures which Member States  must  apply  in
   approving fares.
   These  procedures  differ  depending upon the  relationship  between  the
   proposed fares and the reference fare, which is the lowest fully flexible
   fare  (not subject to specific conditions), generally referred to as  the
   "Business" or "Club" fare.
                                     - 2 -
        Proposed fares expressed as a percentage of the reference fare
   -------------------------------------------------------------------------
       0 to 30%                  30 to 105%                 105%
   -------------------------------------------------------------------------
   Double approval             No restrictions        Double disapproval
   The fare will be            Airlines are free to   The fare will not be
   charged if it is            set their fares        charged if it is
   approved by the             (subject to the        disapproved by the
   Member States at the        requirements laid down Member States at the
   point of departure and      in the Regulation)     point of departure and
   destination                                        destination
   -------------------------------------------------------------------------
   A Member State may request the Commission to examine air fares above 105%
   of  the reference fare, as is the case with the fares challenged  by  the
   United Kingdom.  The  Commission  must  then  decide  whether  the   fare
   complies with Community legislation.  Compliance is assessed on the basis
   of the accounting data pertaining to the airlines concerned, by examining
   whether  the  fares bear a reasonable relationship to the  air  carriers'
   long term fullyeallocated relevant costs.
   The reference by the United Kingdom
   In  January 1991 the United Kingdom authorities requested the  Commission
   to   examine  the  fares  charged  during  the  winter  of   1990/91   by
   British Airways,  Sabena,  TAP,  Air  France,  SAS,  Lufthansa,   Iberia,
   Alitalia  and  Olympic Airways  on 25 different routes  from  or  to  the
   United Kingdom.
   While  examining  the fares the Commission did not avail  itself  of  its
   right  to suspend them, on account of the events  affecting the  Gulf  at
   the time, which were seriously disrupting normal airline operations.
   In  examining the fares the Commission applied the rules laid  down  with
   the flexibility needed (longaterm costs and competition were assessed  as
   well  as  the  rate of return on the  different  routes  concerned).  The
   nature  of  the  information  supplied  at the  outset  by  some  of  the
   companies,  however, did not enable it to reach a decision  initially  in
   respect  of  all  the  fares from  the  standpoint  of  the  requirements
   stipulated  in  the  Regulation, on account of  differences  between  the
   accounting  systems  used  by  the  airlines  (some  used  a  route based
   accounting  system, others a system based on profit  centres).  For  that
   reason  a (nonmnotified) partial Decision was taken in July  pending  the
   receipt  of all the information needed from all the companies  complained
   of, to prevent any unequal treatment.  Since this was the first time that
   Regulation   2342/90  had  been  applied  in  practice,  the   Commission
   departments  were  at  pains to subject the  air  fares  to  particularly
   careful scrutiny.
                                     - 3 -
   The Decision
   The Decision which the Commission has notified to the authorities of  the
   Member States  concerned finds that 40 fares (of the 88 referred) do  not
   comply  with  the  criteria laid down in the  Regulation  (regarding  the
   relationship  between costs and fares).  It should be borne in mind  that
   under the third air transport "package", introduced by the Commission  in
   July 1991 (P 50), the system of double disapproval is to apply across the
   board but it will be possible to make reference to the Commission only if
   competition  is limited on the routes concerned.  The Member States  must
   take the steps necessary to ensure that these fares, which have, in fact,
   not  been  in force since the end of the 1990/91 winter season,  are  not
   used as a basis for determining new fares.
   ----------------------
   1 See Annex
                                                         Annex
        WINTER FARES 90/91 WHICH DO NOT COMPLY WITH REGULATION 2342/90
   -------------------------------------------------------------------------
    Routes                     Airline           "outbound"*     "inbound"*
   -------------------------------------------------------------------------
   London-Copenhagen           British Airways                       x
   London-Brussels             British Airways                       x
   Manchester-Brussels         British Airways                       x
   London-Nice                 British Airways       x               x
   London-Rome                 British Airways       x               x
   London-Milan                British Airways                       x
   London-Pisa                 British Airways       x               x
   London-Venice               British Airways                       x
   London-Athens               British Airways                       x
   London-Faro                 British Airways       x               x
   London-Madrid               British Airways       x               x
   London-Lisbon               British Airways                       x
   Manchester-Paris            British Airways       x               x
   Birmingham-Paris            British Airways       x               x
   Rome-London                 Alitalia              x               x
   Milan-London                Alitalia              x
   Pisa-London                 Alitalia              x
   Venice-London               Alitalia              x
   Bologna-London              Alitalia              x
   Copenhagen-London           Scandinavian
                               Airlines              x
   Paris-Manchester            Air France            x               x
   Paris-Birmingham            Air France            x               x
   Nice-London                 Air France            x               x
   Athens-London               Olympic Airways       x               x
   -------------------------------------------------------------------------
   * Outbound        Connection at the departure of the Member State airline
                     company,  the  fare is charged in the currency  of  the
                     departure country.
                     ex.  For British Airways, a flight London-Nice will  be
                     charged in £
   * Inbound         Connection  at  the  destination of  the  Member  State
                     airline company, the fare is charged in the currency of
                     the departure country.
                     ex.  For British Airways, a flight Nice-London will  be
                     charged in FF
* * *

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