Parts Manufacturers Accused of Possible Anti-Competitive Activity by Freight and Passenger Airlines

WORLDWIDE – The International Air Transport Association (IATA) announced that it has become a complainant in an anti-competitive investigation being conducted by the European Commission’s Directorate General for Competition into alleged abuses of dominant positions by manufacturers of aviation equipment. Last year the Director General sent questionnaires to several industry stakeholders, including IATA member freight and passenger airlines, requesting information to validate claims of abuses of dominant positions by original equipment makers (OEMs) with respect to their control of aftermarket repairs, including parts and services.

As the complainant, IATA is making no claims for monetary damages or any other forms of compensation for past conduct, with IATA’s Director General and CEO Tony Tyler emphasising that while this is an important issue, it is only one aspect of the relationship between the original equipment producers and their customers. He commented:

"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. Airlines do not have the leverage to resolve these concerns individually. So IATA is fulfilling its role as their global trade association and representing their interests as a complainant.

"Our focus is on the future. Our members want to be able to negotiate contract terms more effectively and with more options than the OEM community will entertain today. Our aim is to help re-balance the relationship so that airlines and OEMs can work together as true business partners in a normal commercial relationship.

"OEM revenues are airline costs, so there is a natural tension on this issue. But airlines are, and will continue to be important customers for OEMs, and we all have major common interests in our dedication to the continuous improvement of safety, efficiency and sustainability. 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.”

Trouble over possible monopolies in the market for genuine replacement parts for aircraft has been brewing for some while. Last year Willie Walsh, the outspoken CEO of the International Consolidated Airlines Group was quoted as saying:

“If we don’t challenge the restrictive practices that exist [in aircraft parts supply], we will be held captive, and costs as we’ve seen before will rise well in excess anything that is justified.”

Photo: Fear of failure of a counterfeit part can result in premium prices for the genuine article.