The European Commission has today announced the opening of a “thorough investigation” to evaluate whether the purchase of Air Europa by IAG will not cause harm to passengers. Specifically, Brussels appreciates “preliminary reservations” about the possibility that the operation will reduce competition in the market for air transport services on several national, short-distance and long-distance routes within and outside Spain. For this reason, this procedure is now beginning, which, although it was planned, offers an idea about the exhaustiveness that the route transfer plans that the holding company that owns Iberia and Vueling, among others, will have to present to the community authorities. The IAG group assures that it expected this investigation.
The so-called phase 2, that of in-depth investigation, begins tomorrow with the objective of clarifying that the competition rules are respected in the operation. The Commission appreciates that “IAG and Air Europa are powerful and close competitors” when it comes to providing certain routes both within Spain and with origin and destination at national airports. That is, on the routes in which IAG and Air Europa are currently bidding to attract customers. If the resulting group reduces its operations, conditions for travelers will be affected.
Specifically, Brussels points out that the purchase of the Globalia airline could reduce competition on national routes, especially on those in which the high-speed train does not offer an alternative, and on flights to the Balearic and Canary Islands archipelagos. It also appreciates future reservations for short-distance routes between Madrid and cities in the European Union, as well as connections between the capital and the United Kingdom, Morocco, Switzerland and Israel, routes in which IAG and Air Europa offer a direct connection . Finally, the European Commission seeks to ensure competition on long-distance routes between Madrid and North and South America, in which both groups offer a direct connection “and face competition from only a few competitors with wireless connection.” scales.”
“IAG and Air Europa are leading airlines in Spain and key providers of connectivity within that country and between it, the rest of Europe and Latin America. Through our exhaustive investigation we want to ensure that the operation does not negatively affect the prices or quality of passenger air transport services within and outside Spain,” said Margrethe Vestager, executive vice president responsible for competition policy.
Now it is IAG who, as announced last week, will present its proposal for “remedies”, the transfers of routes, during the aforementioned phase 2. “The note from the European Commission is what we expected, it simply signals the passage of the Phase I of the process to Phase II,” company sources say.
“The Commission points out problems on certain routes for which we will provide solutions in the ‘remedies’ proposal that we will present, as we already announced, in Phase II. This is a very ambitious ‘remedies’ proposal that will cover all competition needs. We are convinced that the operation is good for consumers and good for Spain since, among other things, it will reinforce the Madrid hub and strengthen the connectivity of our country,” IAG sources add.
The Commission assures that during this “exhaustive investigation” it will evaluate “whether the parties’ strong portfolio of slots, particularly at Madrid airport, could hinder the provision of air services by other airlines.” It will also address the effects of the merger on indirect connections, specifically on long-haul routes to South America, where one or both parties have a practical single-stop connection and where non-stop connections are limited. In addition, Brussels will monitor “the likely effects of the operation on routes where other airlines depend on access to the parties’ domestic and short-haul network for their own operations, which could affect their services to international destinations as well. exploited by IAG.”
