Mon, 27 Aug 2001

Airline alliance warned to avoid unfair practices

JAKARTA (JP): An antimonopoly watchdog has warned a planned new airline alliance to abide by the law and not overstep the boundaries of unfair business practices.

Chairman of the Business Competition Supervisory Commission (KPPU) M. Iqbal said on Friday that as long as the alliance was formed to benefit customers and not to prevent other airlines from having a share of the market then it would not have any trouble from the commission.

"But if in implementation there is suspicion of unfair business practices, then the KPPU will investigate the matter," he told The Jakarta Post.

Four domestic airlines -- Mandala Airlines, Pelita Air Service, Bouraq Airlines and Dirgantara Air Service -- are planning to form an alliance early next month to cope with mounting competition from other airlines.

Head of Mandala's development division Kus Winarko said earlier that the alliance would enable the airlines to expand their businesses and provide new destinations, without the need to add more planes.

He said the four airlines would complement each others' flight routes so that passengers could have more connecting flights to more destinations.

An alliance between airlines means that if a passenger needs connecting flights to another destination he does not need several reservations, but could do so with one airline, which would reserve a seat for him on another airline in its alliance.

Iqbal said that this was vulnerable to practices of unfair business in which the allied airlines could prevent passengers from reserving flights on other airlines.

"As long as the passengers are free to make their own choices then there's no problem," he said.

Iqbal said that non-allied airlines should not see this as a threat to their business but to treat it as an incentive to further improve their services.

He said that at the moment KPPU saw no need to closely monitor the activities of the alliance as its vulnerability to unfair business practices had not yet been proven.

"But if later on there are reports of unfair business practices, then we will investigate," Iqbal said.

According to the 1999 antimonopoly law, businesses are not allowed to enter into agreements that would control the production or marketing of goods or services which could prompt a monopoly or unfair business practices.

The law also stipulates that an alliance that controls more than 75 percent of the market of a certain product or service was liable for suspicion.(tnt)