VERALDI/ALITALIA
PRESS RELEASE
PRESS RELEASE
There is insufficient evidence that Alitalia's fares on the Milan-Lamezia Terme route are unjustifiably high
At its meeting on 14 November 2001, the Competition Authority found that no evidence could be found to indicate that Alitalia had abused its dominant position on the Milan-Lamezia Terme route by charging unjustifiably high fares to air passengers.
The investigation had begun as a result of numerous complaints from users, consumers' associations and local government authorities that fares on this route were considerably higher than those charged on the comparable Milan-Reggio Calabria route.
In order to assess the value of the service provided by Alitalia on the Milan-Lamezia Terme route, which Alitalia monopolises, the Authority compared the conditions offered by Alitalia on that route with those available on the Milan-Reggio Calabria route. This showed that a smaller range of fares were available on the Milan-Lamezia Terme route, and the fares for identical fare bases were systematically higher, while fewer seats were allocated in the cheaper fare band. This raised Alitalia's revenues by more than 50% per passenger in comparison with the Milan-Reggio Calabria route in 1999 and in the first eight months of 2000. However, the cost-revenue analysis and accounting records for the routes did not permit the Authority to reach any definite conclusions regarding the profitability of the pricing conditions applied by Alitalia on the Milan-Reggio Calabria route which it had used as the benchmark for comparison required by the Court of Justice in order to assess the unfairness of the prices on the dominated market (namely Milan-Lamezia Terme).
The Authority also made a further assessment of the economic value of the service provided by Alitalia on the Milan-Lamezia Terme route using as its yardstick an approximation of the unit production cost of the service, and the return per passenger: here again, even though there was a positive margin on this route of 32 percent in 1999 and 31 percent in the first eight months of 2000, the Authority did not consider this to be a wholly reliable indicator of any unreasonable disproportion between the price and the commercial value of the service provided.
The Authority therefore closed the case, ruling that the available evidence was not sufficient to show that the pricing conditions applied by Alitalia on the Milan-Lamezia Terme route were such as to constitute abuse of a dominant position within the meaning of section 3, lett. a) of the Competition Act.
Rome, 5 December 2001