Gordon Werner

Lufthansa Rejects Antitrust Claim

Tuesday, January 22, 2002
Last updated at 10:11:03 AM PT

THE ASSOCIATED PRESS

BERLIN -- Lufthansa AG was accused by antitrust regulators Tuesday of unfairly slashing airfares on a key domestic route in order to freeze out a smaller German airline.

Lufthansa said regulators appeared to have wrong information about costs on the Berlin-Frankfurt route. Lufthansa had a monopoly on the route until Germania Fluggesellschaft mbH started its service last November.

The Federal Cartel Office, which has the power to prohibit Lufthansa's pricing policy, said it appeared the carrier had cut prices on the route below cost to harm its competitor.

Ulf Boege, the agency's head, said Lufthansa was "using its superior market position to damage its competitor in an unjust way." Lufthansa has until Jan. 30 to react formally to the complaint.

Germania offered flexible one-way tickets for 99 euros ($87.50) when it started flying the route. Lufthansa then launched similar tickets for an average price of 100 euros ($88.35) - a reduction of more than 60 percent compared to previous flight prices - while sticking to its on-board service and air miles policy, the cartel office said.

Germania then cut the ticket price to 55 euros ($48.60), but raised it to 99 euros again at the beginning of 2002 for profit reasons, the office said.

Lufthansa spokesman Thomas Jachnow said that the airline would go to court if necessary to defend its pricing.

"We absolutely cannot understand" the agency's decision, Jachnow said. "We think the Cartel Office has the wrong information on costs."

Jachnow said the 99-euro one-way fare was not even the cheapest one Lufthansa offered, citing a 127-euro round trip fare also being offered.

Also Tuesday, Lufthansa said it expects to post a net loss for 2001, although it could still show an operating profit. It didn't offer more precise details, ahead of next month's release of earnings figures.

In November, Lufthansa reported that its net profit had fallen 90 percent during the first nine months of 2001 to 65 million euros ($57.2 million), from 672 million euros a year earlier.