The European Commission has raised concerns over potentially stifled competition in the wake of International Consolidated Airlines Group’s (IAG) proposed acquisition of Air Europa.
Launching an in-depth investigation, the Commission will scrutinize the deal’s impact on air travel routes across Spain, Europe, and beyond.
Extensive Networks, Narrowing Skies
Both IAG and Air Europa boast extensive networks, covering domestic Spanish routes, short-haul European connections, and long-haul flights, particularly to/from Latin America.
However, the merging entities’ presence raises red flags for the Commission, fearing reduced competition on several key routes:
Spanish Domestic: High-speed rail alternatives lacking, combined with routes to Balearic and Canary Islands.
Short-Haul: Connections between Madrid and major EEA cities, as well as specific destinations like Israel, Morocco, UK, and Switzerland.
Long-Haul: Direct flights between Madrid and North/South America, where few other airlines offer non-stop options.
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Beyond Direct Impact
The Commission delves deeper, examining potential implications beyond direct passenger routes:
Slot Constraints: The combined airlines’ strong presence at Madrid-Barajas airport might limit opportunities for other carriers.
Indirect Connections: Limited non-stop options to South America could be further impacted by reduced network choices.
International Reliance: Other airlines relying on IAG or Air Europa networks for international connections could face service disruptions.
Decision Looming
Notified in December 2023, the deal faces a June 7th, 2024 deadline for the Commission’s final decision.
While the investigation doesn’t guarantee a specific outcome, it highlights concerns about competition in the European air travel landscape.
The Parties
IAG, headquartered in Spain, is a multinational airline holding company listed on the London Stock Exchange, with secondary listings on Spanish Stock Exchanges.
It controls the Spanish carrier Iberia Líneas Aéreas de España, S.A. Operadora and the Spanish low-cost carrier Vueling Airlines, S.A., as well as the UK carrier British Airways Plc, the Irish carrier Aer Lingus Limited, and the Barcelona-based long-haul airline FLYLEVEL UK Limited.
IAG is the parent company of IAG Cargo Limited. British Airways and Iberia are members of the oneworld alliance.
Air Europa, headquartered in Spain, and its wholly owned subsidiaries constitute the airline division of Globalia. Globalia is a Spanish tourism group headquartered in Llucmajor, Spain.
Air Europa is a member of the SkyTeam alliance.
EU Merger Watch
The Commission, responsible for assessing mergers exceeding certain thresholds, aims to prevent deals significantly impeding competition within the European Economic Area. This investigation joins four other ongoing Phase II merger inquiries.
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