The Icelandic Competition Authority (ICA) has published its decision no. 4/2011. In that decision, the ICA has concluded that the Icelandic Civil Aviation Administration (ICAA) passes on in licences for commercial flights to and from Iceland does disrupt competition. A condition in a recently published decision from the ICAA to Astraeus, which is the flight operator for the Iceland Express (IE) travel agency, would unchanged prevent IE's intention to establish a flight route from Keflavík airport in Iceland to Winnipeg in Canada next summer. The Competition Authority has directly binding conditions for the ICAA to change their working procedure with the objective of increasing competition in international flights to Iceland.
In this case, the intention of IE is to offer a flight from London, UK to Winnipeg in Canada with a stop at Keflavik Airport. Because Astraeus is a British flight operator, they have permission to fly from the UK to Canada due to a flight agreement between the EU and Canada. A similar agreement is not available between Iceland and Canada and therefore Astraeus is not allowed to fly that part of the route.
Last November, Astraeus applied for permission to fly this route. The ICAA's decision on their request was conditional on Iceland Express and Astraeus providing similar flight permission for other Icelandic flight operators from the Canadian authority. The ICAA has maintained its position that this is a standard procedure in cases like this. Both IE and Astraeus have stated that they cannot, as privately owned companies, establish a flight agreement between two countries and also that it could be an illegal act by the ICAA to want them to look after the interests of their competitors. IE and Astraeus consider that the ICAA's decision amounts to a denial of their request.
The ICA decision is that the conditions imposed by the ICAA have no basis in law and also have a harmful impact on competition. In particular, in this case the ICAA decision prevents competition because IE is Icelandair's main competitor on commercial flights to Iceland and, as a result, cannot increase flight destinations.
Therefore, it is necessary for the ICAA to change its procedure with the main aim of promoting and strengthening competition so that new competitors can establish themselves in the market with minimal restrictions and offer new flight destinations, and to promote effective competition for the benefit of the public. Last summer the ICAA imposed those conditions when IE applied for the same flight, but the Ministry of Transport intervened and cancelled them.
The Icelandic Competition Authority therefore addresses to the ICAA the following binding instructions:
· That the ICAA will abolish its condition for a flight permit for foreign flight operators that they must provide a similar privilege for Icelandic flight operators.
· That the ICAA will not impose the condition that permission for a flight granted to foreign operators flying in Iceland must be subject to them applying for the same rights for other Icelandic operators in the country to which the flight is destined.
· That the ICAA will not inform other Icelandic flight operators about their competitors’ intentions, both foreign and domestic.
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