Civil aviation transportation enterprises' joint transportation acts after the amendment of the Civil Aviation Law suspected of being concerted actions
Chinese Taipei
Case:
Civil aviation transportation enterprises' joint transportation acts after the amendment of the Civil Aviation Law suspected of being concerted actions
Key Words:
joint transportation, connected transportation, accepting ticket transfers without endorsement, aviation transportation industry
Reference:
Fair Trade Commission Decision of July 22, 1998 (350th Commission Meeting)
Industry:
Civil Aviation Transportation Industry (6131)
Relevant Laws:
Summary:
According to Article 53 of the Civil Aviation Law (CAL) before amended, a civil airline that makes an agreement with another member of the same industry regarding joint transportation should file a report with the Ministry of Transportation and Communications (MOTC) through the Civil Aeronautics Administration. Therefore, under Article 46(1) of the Fair Trade Law (FTL), the FTL did not apply to civil airlines' joint transportation, which had been filed with the civil aviation authorities. However, according to Article 58 of the newly amended CAL, which was promulgated and implemented on 12 January 1998, the term "joint transportation" was replaced by "connected transportation." Thus, at present when airlines engage in "joint transportation" that falls short of "connected transportation," their cooperative action shall be subject to the FTL.
For the purpose of practicing "accepting ticket transfers without endorsement" for the same route, the participating airlines are required to an agreement to share the ticket fare. In other words, there exists a "contract, agreement or mutual consents in other forms" between the enterprises. Although the airlines' agreement to share the ticket fare is not an agreement under which both parties directly agreed on the market price of services to be provided, but an agreement under which the ticketing airline shall pay to the transportation provider in accordance with the sharing rate agreed. Usually in order to ensure its profit or prevent losses, the ticketing airline will not sell the ticket at any price lower than the rate agreed. Consequently, the airlines' agreement to share the fare will result in price fixing to bring the effect of mutual restriction on the "minimum price" between the airlines. The practice of "accepting ticket transfers without endorsement" by the airlines may increase the occupancy rate, reduce waste of resources and increase business profit. However, it may result in a price increase and reduction of competition. Though the consumer may enjoy greater convenience and more options, a higher price would have to be paid. Therefore, the Fair Trade Commission (FTC) shall regulate such practice in accordance with the law. In order to engage in the practice of "accepting ticket transfers without endorsement," a concerted action as previously mentioned, the participating airlines shall apply for the approval. Otherwise they would have to refrain themselves from the practice. With regard to the criteria for granting the approval, according to FTL Article 14, the requirement of "(being) beneficial to the national economy as a whole and to the public interests" must be fulfilled. Therefore, the FTC shall screen the application based on the policy of the authority in charge of civil aviation, market demand and supply, and the development of the industry, on a case by case basis.
Summarized by Chen Yi-cheng
Supervised by Hsin Chih-chung