Airline Group Files Complaint Over Anticompetitive Practices by Suppliers

LONDON—The airline industry's biggest trade group on Wednesday said it has filed a complaint with the European Commission as part of the regulator's review into alleged anticompetitive practices by suppliers of aircraft parts.

The European Commission, the European Union's executive arm, last year began examining "competitive conditions" in the market for maintenance of engines and large commercial airplane parts. A formal probe hasn't been launched.

The EU's antitrust regulator has sought input from airline stakeholders and suppliers over possible market irregularities before deciding how to proceed.

"There are relatively few equipment vendors and our members are frustrated that there is little flexibility in negotiations for aftermarket services," said Tony Tyler, general director of the International Air Transport Association.

Airlines complain that their profit margins are far smaller than their suppliers. Airlines last year delivered a 4.6% profit margin, the IATA said, compared with double digit margins for many suppliers.

IATA said it wasn't seeking monetary damages or compensation for past actions. Instead, Mr. Tyler said "our aim is to help rebalance the relationship so that airlines and [equipment makers] can work together as true business partners in a normal commercial relationship."

The Commission in particular is asking about CFM56 engines built by a joint venture of General Electric Co. and France's Safran SA, as well as auxiliary power units made by Honeywell International Inc., according to documents seen by The Wall Street Journal. Suppliers previously said they were cooperating with the Commission's efforts.

The airline industry's frustration was voiced publicly at an IATA gathering last year during a meeting of more than 200 executives in Miami. "If we don't challenge the restrictive practices that exist, we will be held captive, and costs as we've seen before will rise well in excess anything that is justified," Willie Walsh, chief executive of British Airways parent International Consolidated Airlines Group SA, said at the time.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

March 23, 2016 09:05 ET (13:05 GMT)

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