Frequent flyer programmes (FFPs) are ubiquitous marketing tools used by airlines all over the world. Many airline passengers are members of FFPs, and most of them probably perceive FFPs as something positive.
This article examines the status of FFPs under EU competition law. More precisely, the article analyses the FFPs of dominant airlines under the law on loyalty rebates in implementation of Article 82 of the EC Treaty. Five particular characteristics of FFPs are closely scrutinized: the duration of the reference period, the retrospective nature, the multiplicity of reward levels, their character as bundled rebates and the particular efficiencies which FFPs can create.
The conclusion of this analysis is that the FFPs’ characteristics may conflict with the current law, to various degrees. Based on this finding, the article advances a number of propositions on how the law on rebates could be improved.
Finally, the article goes beyond the law on rebates, and examines the effects on competition of a particular feature of FFPs—the so-called principal-agent relationship.World Competition