The European Commission announced on Wednesday the opening of an in-depth investigation into the purchase of Air Europa by the IAG group, which owns Iberia, amid suspicions that the operation would increase competition on several short- and long-haul routes within and outside the country could affect Spain.
“We want to ensure that the operation does not have a negative impact on the prices or quality of passenger air transport services within and outside Spain,” Margrethe Vestager, vice president of the municipal administration in charge of competition, said in a statement.
The department led by the Danish company now has 90 working days until June 7 to make a decision. However, this period may be extended as the parties deem appropriate in increments of 15 or 20 days.
Brussels stresses that IAG and Air Europa are “strong and close” competitors and suspects that the merger would reduce competition on Spanish national routes, especially on those “where high-speed trains do not offer an alternative”, as well as on the routes between the Peninsula and the Balearic and Canary Islands.
Short-distance routes connecting Madrid
He also believes that it could affect short-haul routes connecting Madrid with some of the “main” European cities, Israel, Morocco, the United Kingdom or Switzerland, since both airlines “offer a direct connection”.
Likewise, local authorities see potential problems on long-distance routes between Madrid and North and South America, a market in which both have “few competitors with non-stop connections”.
In addition, the Commission would like to analyze whether the “solid portfolio” of slots that the two companies have – in particular at Madrid-Barajas airport – could affect their competitors, what impact this has on indirect routes to South America and what impact on other routes Airlines rely on access to the domestic and short-haul networks of IAG or Air Europa.
Second try from IAG when it bought Air Europa
With this operation, reported to the European authorities on December 11, IAG intends to acquire 80% of the capital of Air Europa, which it does not yet control, for 400 million.
This is the second attempt to get the green light from the Commission after the two companies abandoned their first agreement in 2021.
Brussels then explained that the proposed merger was approved because the changes offered by the two airlines to obtain European recognition “did not adequately address” the problems identified, mainly related to the negative impact on competition on domestic and long-haul routes to and from from the destination to Spain.
Now the group, which also includes British Airways, Vueling, Aer Lingus and Level, considers the new commitments to be “significantly better” and defends that “various companies” have shown “great interest” in awarding possible divestments, as they explained . Company sources told EFE when they announced the merger.
They also stressed that the purchase will help strengthen their “hub” (air traffic distribution center), thanks to the existence of a single airline, with the major European companies (London-Heathrow, Amsterdam, Paris-Charles de Gaulle and Frankfurt). ) to be able to compete. Reference and that benefits consumers and optimizes flight hours.