In addition, the proposed expanded JV will extend to services operated by Swiss International Air Lines, Austrian Airlines AG and Scoot.
The proposed expanded JV will result in SIA and Lufthansa cooperating on additional overlapping routes; SIA operates direct services to nine of these routes while Lufthansa operates these routes on a one-stop basis.
In its application, SIA and Lufthansa noted that the expanded JV will lead to increased passenger numbers and tourists to Singapore as well as cheaper fares from the elimination of double marginalisation. The move will also provide more service offerings to its passengers through the expanded virtual networks of both airlines, improve connectivity for both SIA and Lufthansa, as well as providing “significant benefits” to corporate account customers.
In its statement, the CCCS said that the price and capacity coordination between both groups may “restrict competition on the affected routes”. The claimed benefits arising from the proposed expanded JV are also “insufficient” to outweigh the competition concerns in that the net economic benefits exclusion under the Competition Act 2004 would apply.
In response, SIA and Lufthansa committed to maintaining seat capacity on an aggregated basis on the Singapore-France and Singapore-Zurich routes at stipulated levels. They have also pledged to carry a minimum number of Singaporean passengers on both routes in each calendar year. They will also appoint an independent auditor to monitor compliance and submit reports to the CCCS annually. These two routes were highlighted as both airlines operate direct flights to and from Singapore and possess “significant market shares” for both routes. The proposed commitments, after consultations with relevant stakeholders, were deemed to be “sufficient” by the CCCS in November 2024. The proposed expanded JV was approved on Jan 28, should the commitments be made.
The CCCS had cleared SIA and Lufthansa’s JV in 2016 when it was first proposed. At the time, the JV, which includes the airlines’ commitments made then, was deemed to not infringe section 34 of the Competition Act 2004. Section 34 refers to agreements made that would prevent, restrict or distort competition within Singapore.
Some 6.58 million shares in SIA changed hands as at Jan 31.
