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Process of the Icelandic Civil Aviation Administration hinders competition in domestic flights

The Icelandic Competition Authority directs instructions to the ICAA

2/7/2011

flugmalastjorn_og_IcelandExpressThe Icelandic Competition Authority (ICA) has published its decision no. 4/2011. In that decision ICA has come to conclusion that The Icelandic Civil Aviation Administration (ICAA) passes in licenses in commercial flights from and to Iceland does disrupt competition. Condition in a recently published decision from the ICAA to Astraeus, which is an flight operator for Iceland Express (IE) travelling agency, would unchanged prevent IE intention to establish a flight rout from Keflavík airport in Iceland to Winnipeg in Canada next summer. The ICA has direct binding conditions to the ICAA to change their work procedure with the objective to increase competition in international flight to Iceland.

In this case the IE intention is to offer a flight from London UK to Winnipeg in Canada with a stop at Keflavík airport. Because Astraeus is a British flight operator they have permission to fly from UK to Canada due to a flight agreement between EU and Canada. 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 a permission to fly this route. ICAA decision to their request was bound to condition that Iceland Express and Astraeus would provide similar flight permission for other Icelandic flight operators from the Canadian authority. ICAA has maintained their point of view that this is a standard procedure in cases like this. Both IE and Astraeus has stated that they cannot, as a privately owned companies, established a flight agreement between two countries and also that it could be an illegal act by the ICAA to want them to take care of their competitors interests. IE and Astraeus consider that ICAA decision equals to a denial in their request.

The ICA decision is that those conditions given by the ICAA have no references in laws and also those conditions have harmful impact on competition. Especially in this case ICAA decision prevents competition because IE is Icelandair main competitor in commercial flight to Iceland and by this, cannot increase flight destinations.

Therefore it is necessary for ICAA to change their procedure with the main goal to promote and strengthen competition so new competitors can establish them self in the market with a minimum restriction and offer new flight destinations and promote effective competition for the benefit of the public. Last summer the ICAA put on those conditions on when IE applied for the same flight but the ministry of transport intervened and cancelled those conditions.

The Icelandic Competition Authority therefore addresses to the ICAA those binding instructions:

·         That the ICAA will abolish its conditions for a flight permission to foreign flight operators that they will have to provide similar privilege for Icelandic flight operators.

·         That the ICAA will not put on those conditions for a flight permission given to foreign flight operators operating here in Iceland that they will have to apply for the same rights to other Icelandic flight operators in the country that will be flown to.

·         That the ICAA will not inform other Icelandic flight operators about their competitors' intentions, both foreign and domestic.

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