Italy may have a legal basis to order foreign airlines not to undercut ailing carrier Alitalia thanks to international aviation agreements dating back some 60 years, European Commission officials said today.
Mr Frederic Vincent, European Commission spokesman
But analysts said the Italian move betrayed a sense of desperation in its attempts to protect the loss-making national airline.
Italian authorities surprised airlines by demanding that around 40 foreign carriers should not undercut Alitalia's fares on certain routes to destinations outside the European Union, prompting British Airways to lodge a complaint with the European Commission, which polices competition in the 25-nation Union.
But Commission officials said Italy may be entitled to compel competitors to its airline to raise fares under the terms of its international bilateral air service agreements and the Commission would not take immediate action against the Italian order.
The bilateral agreements have their origins in the worldwide Chicago Convention on International Civil Aviation of 1944 which produced a global network of bilateral treaties between countries which still govern where international airlines can fly to outside the European Union.
"Under the bilateral agreements air fares should receive approval from the member states concerned and should not undercut the (carrier)," Commission spokesman Mr Frederic Vincent said.
"We believe it is a bit awkward to have such agreements now that we have the (EU) internal (aviation) market. But the Commission is not in charge of these agreements."
He said the Italian move had triggered a lively discussion on air fares in Europe.
Yesterday, another Commission official said the EU executive was not sure it had a strong enough case to intervene against Rome.
Germany has contacted Italy and other countries to find a solution to the problem presented by the bilateral agreements, a German transport ministry spokesman said, adding his country favoured a more liberalised approach.