CCCS gives conditional OK to expanding SIA-Lufthansa JV to step up air passenger services in more markets.

The Consumer Commission of Singapore (CCCS) has conditionally approved the proposed expansion of a 2016 joint venture between Singapore Airlines (SIA) and Lufthansa, which would give a boost to tourism in Singapore, among other benefits.

Expanded Joint Venture

The expanded joint venture proposes to include more countries in the list of markets in which the two carriers provide scheduled air passenger services. It will also extend services operated by Swiss, Austrian Airlines, and Scoot.

The expanded list of countries includes more territories across Europe and other regions, such as Portugal, Iceland, Greece, Spain, and the United Kingdom, as well as the Asia-Pacific, Vietnam, and the Philippines.

Benefits

The expanded joint venture would boost tourism and related industries in Singapore and enable more competitive fares. Other benefits include improved connectivity for both Lufthansa and SIA, and better utilisation of both parties’ assets.

Conditions

The CCCS granted its conditional approval to the proposed expansion of the joint venture on Tuesday, provided that both carriers adhere to a list of commitments to address concerns it raised.

These conditions include carrying a minimum number of Singapore passengers on the Singapore-Frankfurt and the Singapore-Zurich routes in each calendar year, as well as maintaining seat capacity at stipulated levels on an aggregated basis on both routes.

The carriers are also to appoint an independent auditor to monitor their compliance with the commitments and to submit a yearly report to the CCCS.

Concerns Raised

When the CCCS commenced its review of the proposed expansion in August 2023, it flagged several competition concerns.

One was that the price and capacity coordination between the two carriers as a result of the expanded joint venture could restrict competition on affected routes.

It also assessed that the claimed benefits arising from the expanded joint venture were insufficient to outweigh the competition concerns in order for the net economic benefits exclusion under the Competition Act to apply.

It also pointed out that SIA and Lufthansa were the only two airlines that operated direct flights to and from Singapore across two routes – the Singapore-Frankfurt route and the Singapore-Zurich route. Both carriers have significant market shares on them.

Green Light Given

In November 2024, the CCCS held a consultation exercise to assess whether the proposed commitments would be enough to address competition concerns. Relevant stakeholders did not raise concerns with the commitments, the competition watchdog said.

After evaluating the feedback from the exercise, the CCCS determined that the proposed commitments would be sufficient to address the competition concerns arising from the expansion of the 2016 joint venture.

Conclusion

The CCCS’s conditional approval of the proposed expansion of the joint venture between SIA and Lufthansa is expected to give a boost to tourism in Singapore and enable more competitive fares. The expanded joint venture will also improve connectivity for both carriers and better utilise their assets.

Frequently Asked Questions

Q: What is the purpose of the expanded joint venture?
A: The purpose of the expanded joint venture is to include more countries in the list of markets in which SIA and Lufthansa provide scheduled air passenger services and to extend services operated by Swiss, Austrian Airlines, and Scoot.

Q: What are the benefits of the expanded joint venture?
A: The benefits of the expanded joint venture include a boost to tourism and related industries in Singapore, more competitive fares, improved connectivity for both Lufthansa and SIA, and better utilisation of both parties’ assets.

Q: What are the conditions for the conditional approval of the proposed expansion of the joint venture?
A: The conditions include carrying a minimum number of Singapore passengers on the Singapore-Frankfurt and the Singapore-Zurich routes in each calendar year, maintaining seat capacity at stipulated levels on an aggregated basis on both routes, appointing an independent auditor to monitor compliance, and submitting a yearly report to the CCCS.