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Air Trade Group Seeks EC Relief From Unfair OEM Advantage

IATA says its members are deeply concerned about aftermarket competition, and joins EC investigation.

The International Air Transport Association (IATA) is a complainant in an investigation by the European Commission’s (EC) Directorate General for Competition into alleged anticompetitive practices by OEMs in the aftermarket services segment.

The airline trade organization confirmed its involvement in the action on March 23 but said it would not target monetary damages or any other forms of compensation.

In a statement, Tony Tyler, IATA’s director general and CEO, said: “This is an area of deep concern for our members. There are relatively few equipment vendors, and our members are frustrated that there is little flexibility in negotiations for aftermarket services.”

The investigation was launched in October 2015 and followed concerns expressed by carrier executives, including International Airlines Group CEO Willie Walsh, about the unfair monopoly OEMs have on the $62 million aftermarket services business. Walsh said at an IATA summit in June 2015 that narrow competition might be contributing to high costs for aircraft engines, components and MRO services.

The EC sent out questionnaires to more than 40 airlines, engine manufacturers and component providers asking for further details about their service contracts. Two of Europe’s largest OEMs, Rolls-Royce and Safran, confirmed at the time that they were participating in the investigation and were in the process of submitting questionnaires.

Tyler says the aim of IATA’s involvement is for its members to be able to negotiate contract terms more effectively and with “more options than the OEM community will entertain today.” He notes: “Our aim is to help rebalance the relationship so that airlines and OEMs can work together as true business partners in a normal commercial relationship.

“Whatever conclusion the investigation comes to, at the end of the process there will be greater clarity on the rules of the game and how they should be applied. That will be a good development for all involved,” Tyler adds.

When contacted by Aviation Week in early April, IATA said the investigation remains ongoing, with no formal date given for when the EC’s findings into the matter would be released. 

TAGS: Europe
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