CCS releases airline industry market study findings summary
18 Mar 2014
1. The Competition Commission of Singapore (CCS) has today released a summary of its findings from an airline industry market study, which it commenced in 2013. The study was focused primarily on cooperation arrangements between airlines, and whether these arrangements give rise to net economic benefits.
2. To date, the CCS has granted a positive decision to eight airline cooperation arrangements, with such arrangements comprising all but two of the notifications to the CCS for their consideration since the implementation of the Singapore Competition Act (Cap.50B). Two of these notifications, between Japan Airlines and American Airlines, and between All Nippon Airways, Continental and United Airlines, were scrutinised in detail in the study.
3. Ultimately, the CCS found that whilst there was no general trend of benefits arising from fare reductions (and indeed some fares may have increased) and no evidence of other cost savings, net economic benefits have arisen through increasing passenger numbers, and through other factors such as capacity, frequency, increased tourism and other benefits. Extrapolating the findings out to airline joint ventures in general, the CCS found that alliances operating through Singapore probably do give rise to net economic benefits, but (given there was no strong suggestion of fare decreases) these benefits are not of a magnitude that the literature suggests might arise in other countries. However, the study also acknowledged that it was premature to draw firm conclusions about the lifetime impact of the two case study joint ventures given only four to six quarters of post implementation data was available for each arrangement.
4. The CCS currently has two pending airline notifications before them, relating to a proposed cooperation arrangement between Scoot Pte Ltd and Tiger Airways Singapore Pte Ltd, and a proposed strategic alliance between Singapore Airlines Limited and Air New Zealand Limited.
5. A summary of the CCS’s report findings can be found by clicking here.