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HomeLatest NewsIberia hopes to overcome Brussels' objections to the purchase of Air Europa

Iberia hopes to overcome Brussels’ objections to the purchase of Air Europa

Date: July 18, 2024 Time: 04:36:38

Iberia will try to convince the European Commission that the merger with Air Europa can be achieved without affecting competition in the sector with a very ambitious package of ‘remedies’ or route concessions. Before this, Brussels will publish a document detailing all its objections to the operation.

The European Commission’s “sheet of objections” to the airline of the IAG group (to which British Airways, Vueling, Aer Lingus and Level also belong), whose publication is scheduled for this week, will include objections about the purchase operation of 80 % of the capital of Air Europa that Iberia does not yet control for 400 million euros.

Iberia trusted that the package of ‘remedies’ presented, the details of which have not yet been released, will be enough to convince Brussels that they have taken the appropriate measures to guarantee competition. Specifically, Iberia would transfer 40% of the routes carried out by Air Europa to other airline operators in 2023.

The resolution by the community authorities of the purchase of 41% of the capital of Ita – the former Alitalia – by Lufthansa, a process that is more advanced than the Spanish one, may give clues about the Commission’s position. In that case, the community bodies understand that they could reduce competition on routes that connect Italy with Central European countries and on other long-haul routes between Italy and the United States, Canada and Japan and have doubts about the dominant position at Mil airport. in -Linate.

Not a single solo route

The president of Iberia, Marco Sansavini, has insisted that there will not be a single route on which the two airlines operate alone, but that there will be at least a third party on all of them. He has committed to not being the only operator in any American country from Barajas, which links with 21 countries on that continent.

Of these 21 countries, Iberia and Air Europa have 100% of frequencies in six of them, a lower concentration than that of Air France-KLM at Amsterdam airport, from where it is the sole operator in 10 countries, or the Parisian Charles de Gaulle, with 12.

The group defends that the operation is also positive to configure a powerful “hub” (air traffic distribution center) in Madrid that can compete with the majors on the continent -Paris, Amsterdam and Frankfurt-, in which there is a reference airline , Air France-KLM in the first and second, and the Lufthansa Group in the third.

Air France-KLM is, in its two hubs, 23 times larger than the next competitor and Lufthansa is seven times larger. Meanwhile, Iberia-Air Europa would be in Madrid six times ahead of the second, Ryanair. The CEO of IAG, Luis Gallego, assures that once the merger is completed – which is expected in the second half – Barajas would have about 70 long-haul aircraft, a figure similar to what KLM has in Amsterdam.

The Commission wants to ensure that the operation does not negatively affect prices or the quality of service inside and outside Spain, according to the vice president of the Community Executive responsible for Competition, Margrethe Vestager. She understands that the merger would reduce competition on domestic routes, especially those where high-speed rail does not offer an alternative, as well as on links between the peninsulas and the islands.

It also has doubts about short-haul routes that connect Madrid with European capitals, with the United Kingdom, Israel, Morocco or Switzerland, and on long-haul connections with America, where both airlines have few competitors in non-stop flights.

The Commission will rule on the operation before July 15 of this year, a spokesperson for the institution confirmed to EFE. However, Iberia sources believe that there could still be new “clock stops” by Brussels in the analysis, given the complexity of the operation. Volotea, Ryanair and Binter have shown interest in keeping routes that must be divested from IAG.

Another front in Brazil

The Administrative Council for Economic Defense (CADE) of Brazil has also been analyzing the operation since June 2023, after the request of Iberia and Air Europa, and in which Latam appeared last January as a third interested party. The Chilean airline considers that air traffic from Madrid will be concentrated in the hands of the two Spanish airlines, and may affect the route it manages between the São Paulo international airport in Garulhos and Madrid.

Currently, they are in the process of questioning competitors (including airlines that do not fly to Madrid, but to other destinations in Europe, such as Turkish, AirChina, TAP, Lufthansa, Swiss, Qatar, Air France-KLM) and the interested parties themselves. IAG has recently explained to CADE that they have no capacity to harm competitors and that the merger will not alter the market.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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