The European Union said Monday that from next year, an airline association IATA ticket pricing system under which members may fix prices among themselves for flights within the EU will be banned as a restrictive business practice.

The International Air Transport Association's (IATA) system concerning so-called "interline" tickets is currently exempt from an EU ban on restrictive practices.

That exemption will be removed at the end of the year for flights within the European Union, the EU Commission said.

Interline tickets allow passengers to jump from airline to airline within a single trip.

But Competition Commissioner Neelie Kroes said there were not enough assurances that the system could "continue to benefit passengers on journeys within the EU".

For flights in and out of the European bloc, the price agreement system will remain in place for now, but its future depended on proof that it benefited customers, said Kroes.

The current exemptions for those flights expire between July and November next year.

At present carriers within IATA may agree on prices for journeys where passengers are allowed to interline.

To facilitate this practice, the Geneva-based IATA holds passenger tariff conferences among its member airlines. The system reduces price competition but allows passengers to fly on one ticket with several carriers, to change dates, routes, carriers or even to cancel the ticket and be refunded.

IATA spokesman Anthony Concil said the association was seeking to set up a new system before the end of the year which would satisfy the EU's concerns.

He rejected the idea that the pricing system for interline tickets affected competition within the industry.

"This the ultimate high end of the airline ticketing market. Putting a Rolls Royce on the market doesn't impact the price of a Honda Civic," he told AFP.

"This is a product which gives the customer the ultimate flexibility. You can change your route, date, timing, it's fully refundable."

IATA remained in frequent contact with the European authorities as it attempts to set up a new system which is "automatic and as transparent as possible," he added.

"What the Commission is asking us to do is not out of line with some projects we have in the pipeline."

"We are confident that we will have an alternative way of doing business that will address their concerns by the end of this year".

He added that scrapping the system might end up being more expensive for customers who would then have to deal with individual airlines to cover their options.

IATA, which has been running a similar system for 60 years, is a trade association representing some 260 airlines worldwide.

According to the European Commission, the rule change should not have a major impact on the industry "because 97 percent of journeys in Europe are not interlining flights or if they are, are not covered by the joint pricing scheme".