The Northern Hemisphere winter months have seen no shortage of developments in the aviation sector. Governmental shake-ups, with a new US administration and the appointment of a new Commission in Europe, may have driven a tail-off in regulatory changes. However, in the face of a continuing wave of aviation sector consolidation, competition authorities continued to finesse an increasingly critical approach to reviewing tie-ups. Airline pricing also remains an area of active interest in multiple countries. And consumer law enforcement presents an ever-greater risk for consumer-facing businesses in the aviation sector.

Consolidation continues at pace but subject to greater scrutiny

Airline mergers

The European Commission (EC) approved easyJet, IAG and Air France-KLM as beneficiaries of a package of routes and slots offered by Lufthansa and the Italian Ministry as remedies to address competition concerns arising out of Lufthansa's acquisition of a controlling minority interest in ITA. easyJet will take the short-haul routes and take-off/landing slots at Milan Linate airport. IAG and Air France-KLM were approved for the other routes. The EC's decision (running to just under 600 pages), to clear the acquisition only with significant remedies, highlights the increasing stringent approach to reviewing airline tie-ups. Indeed, the EC noted the uncertainty of the long-term viability of ITA led to exceptional circumstances that tipped the balance in favour of ultimately allowing the investment.

Ten months after the EC conditionally cleared Korean Air's takeover of Asiana, Air Incheon was approved as the purchaser of Asiana's global cargo freighter business (the divestiture being part of the commitments offered). The development allowed the Korean Fair Trade Commission to make minor adjustments to its own clearance decision, originally agreed to in 2022.

Late 2024 saw the last flight under the luxury Vistara brand (a joint venture between Singapore Airlines and the Tata family), after its acquisition by (Tata-owned) Air India. Singapore Airlines will maintain a 25.1% shareholding in the merged entity.

Early in 2025, Lufthansa announced a deal to acquire a minority interest in AirBaltic.

Brazil's second and third-largest airlines, Gol and Azul, announced that they are exploring a potential merger. Should the transaction proceed, Brazil's competition authority will need to consider whether it can approve a tie-up that would hold approximately 60% of the domestic market and significant slot holdings at key airports in Brazil.

The Japanese airline group ANA (which operates Japan's largest airline, All Nippon Airways) received conditional clearance from the Japanese competition authority for its acquisition of Nippon Cargo Airlines, despite raising concerns about competition on air cargo flows from Japan to the US. Those concerns were addressed through a remedy to offer cargo space to a rival cargo operator. The deal was cleared in Singapore in 2024 and remains subject to review in China.

DSV requested clearance from the EC under the EU's Foreign Subsidies Regulation for its proposed acquisition of DB Schenker (Deutsche Bahn's logistics arm). The €14.3 billion deal could create the world's largest freight forwarder. The transaction is subject to merger control approval in the EU, the US and China. DSV is aiming to complete the deal by mid-2025.

Joint ventures and cooperation agreements

Qatar Airways and Virgin Australia's request for authorisation of a codeshare arrangement on routes between Doha and various Australian cities looks set to be green lighted. The Australian government has provided foreign investment approval and the Australian competition authority (ACCC) proposes to grant authorisation. The two parties will become each other's exclusive interline, codeshare and loyalty partner within Australia and the Middle East/Turkey, respectively.

The EC took rare injunctive action against Lufthansa in connection with its antitrust investigation into potential competition concerns on transatlantic routes to/from several European airports by the A++ transatlantic joint venture between Lufthansa, United and Air Canada. The EC imposed interim remedies to require Lufthansa to reinstate its arrangements with Condor for feeder traffic to and from Frankfurt airport, asserting that the measures would be necessary to maintain competition for scheduled passenger air transport services on the Frankfurt-New York trunk route. However, six weeks after the EC started proceedings to require Lufthansa to maintain the Condor feeder arrangements, the EC backed down, saying the conditions for interim measures had not been met. The EC investigation of the A++ transatlantic joint venture is ongoing.

The Competition and Consumer Commission of Singapore provided conditional approval for Singapore Airlines and Lufthansa to expand the geographic scope of their joint venture. Clearance is subject to maintaining seat capacity and the carriage of minimum numbers of Singapore passengers on both the Singapore-Frankfurt and Singapore-Zürich routes. An independent auditor will be imposed to ensure compliance and report annually to the commission.

British Airways announced in December that it had entered an interline agreement with Porter Airlines to serve smaller cities in Canada, including Edmonton, St John's, Quebec City and Ottawa. Porter Airlines will accept onwards connections from Toronto and Montreal in Canada, as well as Newark, Washington and Boston in the US.

In the US, a recent First Circuit decision upheld a lower court's ruling that the joint venture between American Airlines and JetBlue, known as the Northeast Alliance, infringed US antitrust laws. The Northeast Alliance involved the two airlines agreeing to operate together for most of their incoming and outgoing flights from Boston and New York City. American Airlines’ argument that a joint venture formed for the purpose of profit-making should be given special deference was dismissed. The court emphasised that the assessment focuses on the terms and effects of the agreement, not its intended purpose.

Enforcement action continues to target the Aviation sector

Spain's Ministry of Consumer Affairs issued fines totalling more than €175 million to five budget airlines, after finding that the airlines' policies to charge extra for hand luggage or for reserving seats adjacent to children (among other conduct) infringed consumer protection laws. Ryanair, easyJet, Norwegian and the ALA (Spain's Airline Association) have reported that they intend to appeal the decision.

The French Competition Authority fined Air Antilles and Air Caraïbes for anti-competitive collusive conduct. Its investigation found that the airlines had entered into agreements to increase fare prices and reduce services, while maintaining existing market shares. Air Caraïbes was fined €13 million. Air Antilles' parent company K Finance was fined €1 million, after the competition authority determined that Air Antilles itself would struggle to pay. Miles Plus, a consulting firm involved in the arrangements, was fined €70,000.

US Airways (now part of American Airlines) and Sabre announced they had agreed a settlement of long-running litigation brought by US Airways alleging monopolistic conduct by Sabre. US Airways had alleged that Sabre, as a dominant distributor of airline fares and content to travel agents, used various tactics (including exclusionary commitments from travel agents) to maintain its market share while raising prices and reducing innovation. The lawsuit was first announced in April 2011.

Ryanair has been subject to a complaint from the Portuguese National Association of Travel Agencies (ANAV), alleging a range of conduct amounts to an abuse of a dominant position contrary to the competition rules. The ANAV has reportedly filed a complaint with the Portuguese competition authority which includes references to Ryanair's alleged unfair practices at Porto and Faro airports.

Ryanair also failed to overturn a decision of an Irish court which held that Ryanair could not sue the Italian competition authority in Ireland for its involvement in the dawn raid at the airline's Dublin offices in March 2024. The Irish Court of Appeal agreed with the lower court's finding that the actions of the Italian competition authority amounted to public law powers and, as such, the proper jurisdiction for Ryanair's challenges would be Italy.

Canada's market study into its domestic air travel industry continues. Canada's Competition Bureau recently confirmed that it had obtained two court orders requiring Air Canada and WestJet Airlines to provide information, relying for the first time on new information-gathering powers for market studies. The Bureau's recommendations are due in spring 2025, with a final report by June 2025.

The US Justice Department (along with the Department of Transportation) recently launched a broad public inquiry into the state of competition in the air travel sector. Responses to the inquiry were due at the end of 2024. Similarly, the ACCC recently released a report on the state of domestic airline competition, expressing a desire for greater competition in the sector.

Airports are not immune from enforcement action. The EU's top court (the Court of Justice) ruled on an issue concerning a fine imposed on Cluj International Airport by the Romanian competition authority for refusing to grant a third party, Romanian Airport Services, with access to infrastructure needed to provide ground-handling services. The Court of Justice ruled that airports exempt from the ground-handling regulatory regime due to low passenger numbers could still be pursued under competition law for abusing a dominant position through such refusals.

Regulatory developments – much more to come in 2025

There are ongoing reviews of slot allocation regimes in the UK and the EU. However, significant changes have been introduced in Australia to address concerns with the slot allocation model at Australia's busiest airport, Sydney airport. The slot allocation manager had been owned by the two largest airline users at the airport, Qantas and Virgin Australia. A tender process run by the Australian government to appoint a new slot manager has seen UK-based Airport Coordination Limited selected for the role.

The UK's new rules on Sustainable Aviation Fuel (SAF) recently came into force. Fuel suppliers at UK and EU airports must supply a portion of SAF for departing flights. The UK SAF mandate requires at least 2% of jet fuel for UK departures to be SAF, increasing to 10% by 2030 and 22% by 2040, with all SAF achieving a minimum 40% greenhouse gas emissions reduction. Compliance is monitored through tradable certificates and penalties enforced by the Department for Transport. In the EU, the ReFuel EU Aviation Regulation mandates a SAF blend of 2% in 2025, rising to 6% by 2030 and 70% by 2050, alongside minimum synthetic fuel requirements of 1.2% in 2030 and 35% in 2050.

The Chinese government has released guidelines on accelerating the construction of a unified and open transportation market. The guidelines include references to the improvement of pricing mechanisms, as well as the strengthening of antitrust laws and their application to the transportation sector.