The purchase of Air Europa by IAG, the parent company of Iberia, received “objections” from the European Commission yesterday. Brussels considered that the initial approach presented by the group led by Luis Gallego may entail adverse effects for competition on part of the routes, both in Spain and towards Europe and Latin America, and that the traveler could suffer an increase of ticket prices.
The problems for competition that Brussels saw in the merger of the two Spanish airlines focus on several aspects. On national routes, the European Commission pointed out that there could be a dominant position between destinations without a high-speed train alternative or in the connections of the Peninsula with the Canary Islands and the Balearic Islands. On routes that affect destinations outside Spain and the EU, the community authorities concluded that competition would not be respected either. In particular, they appreciated a hegemonic position in short-distance routes with several countries in Europe and the Middle East. They also indicated that on some long-distance routes between Spain and America, after the merger there will be no direct competition, and on others it will be limited.
These objections do not necessarily mean that the operation must be wrecked, but they can be a brake. The European Commission and IAG open from now on what is considered a decisive period to close the operation that would turn the Madrid-Barajas airport into a key connection center with Latin America and equal the Frankfurt facilities in the ranking european At this moment, a new negotiation is started for Competencia to evaluate the so-called remedies, that is to say, the assignment of routes to competitors that IAG has proposed so that the merger does not entail this harm to competition.
IAG had this obstacle in the form of objections and therefore designed an “ambitious proposal for the transfer of routes”, assure sources of the airline. “Our proposal is very solid and we believe it will manage to respond to all the concerns of the Commission”, add the same sources. The new president of Iberia, Marco Sansavini, assured weeks ago that his airline is considering the transfer to other competitors of 40% of the flights operated by Air Europa in 2023. In this way, IAG commits to Brussels that no route with origin or destination in Spain is operated exclusively by Iberia and Air Europa.
But IAG is willing to expand this package and cede more routes. The group is in advanced talks with several competitors interested in taking over routes that would free up the future merger, both for short-haul and long-haul routes.
“We continue to work with the Commission to reconcile positions and agree on a definitive solution that will allow us to carry out this fundamental operation for the boost of connectivity and the economy of Spain with all the guarantees for consumers”, defends IAG.
The airline group that owns Iberia and Vueling has guaranteed to the Commission that, if it receives the go-ahead to buy Air Europa, they are open to ceding to competitors “everything they need to launch the ceded routes and maintain a service competitive”, assures the company.
The calendar with which IAG is working is to have the purchase operation of Air Europa in the second half of 2024.
