Airline distribution, credit card policies, and the OEM aftermarket discussed by panel in Washington DC

A Plenary Panel on antitrust concentrated on three main areas of contention: airline distribution; credit card policies; and the original equipment manufacturer (OEM) aftermarket.

Ian Giles, Partner, Norton Rose Fulbright, led the discussion on the OEM aftermarket.

The Maintenance, Repair, and Overhaul (MRO) sector is worth more than $60 billion annually, he said, with the cost to airlines escalating well above the rate of inflation.

Giles explained that range and performance rather than MRO costs are necessarily the main influences on aircraft choice 

In 2016, IATA become a complainant in an investigation being conducted by the European Commission’s Directorate General for Competition into alleged abuses of dominant positions by manufacturers of aviation equipment.

Giles explained that range and performance rather than MRO costs are necessarily the main influences on aircraft choice.

But an airframe often comes with a single choice of engine and components.

In such a case, airlines are effectively locked into long-term deals with these suppliers as well as the airframe OEM. The fact that fleet is not renewed often, reduces airlines’ bargaining power further.

Giles pointed out that IATA’s aim is not retribution, but rather to rebalance airline-OEM relationship so that competition can thrive and airline costs are lowered.

The Panel: Antitrust and the Aviation Value Chain

(Left to right)

John Taladay, Partner, Baker Botts LLP – Moderator

MJ Moltenbrey, Partner, Paul Hastings

Ian Giles, Partner, Norton Rose Fulbright

Alycia Broz – Vorys, Sater, Seymour & Pease, LLP

Marc Rosenberg, President, Strataconnex  

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