Summary
- The European Commission has put pressure on Lufthansa-ITA merger to refuse the Italian airline’s admission to the transatlantic three way partnership.
- Lufthansa’s purchase of ITA Airways is being questioned on account of EU competition rules.
- The present proposal seeks to separate ITAs transatlantic operations for 2 years, however the Commission wants more.
The Italian every day Corriere reports that the European Commission is constant to keep off on the Lufthansa-ITA merger, specifically on transatlantic flights. Each Lufthansa and ITA consider the Commission is overstepping, requesting concessions which make the agreement financially unviable.
Lufthansa officially revealed its intention to buy 41% of ITA Airways back in November 2023, at which point the European Commission began its lengthy means of studying the agreement and whether it respects EU competition rules. The German carrier, which also owns Brussels Airlines, SWISS and Austrian Airlines to call just a few, hopes to take full control of the Italian airline further down the road.
A transatlantic problem
Because the domestic and European market becomes ever-dominated by low-cost giants including Ryanair and easyJet, traditional full-service carriers have looked to develop their long-haul networks with a purpose to keep their operations financially viable.
Photo: Vincenzo Pace | Easy Flying
ITA Airways isn’t any exception, having grown its route map in North America significantly within the lead-up to the Summer 2024 season. Only recently, the carrier opened flights to each Toronto and Chicago.
Lufthansa and its partners currently profit from the so-called “Atlantic Joint Enterprise” often known as A++. This agreements allows Lufthansa Group corporations Austrian Airlines, Lufthansa, SWISS, Brussels Airlines and Eurowings to affix forces with Air Canada and United Airlines to Initiated in 2010, the agreement has been highly lucrative and has allowed the businesses to keep up their leading positions available in the market.
Because it stands, A++ controls greater than 80% of the transatlantic market. The Italy-US market is amazingly necessary for ITA Airways, representing the fifth largest international destination from the European country.
By joining the Lufthansa Group, ITA Airways too was expected to learn from the Joint Enterprise. The Commission, nevertheless, sees otherwise. Corriere, citing sources, describes Brussels as being on its issues with connections to North America.
The compromise
Lufthansa and the Italian Finance Ministry put forth their very own proposals for sacrifices with a purpose to come to an agreement. They agreed to maintain ITA Airways’ operations across the Atlantic separate from that of the Lufthansa Group for 2 years.
The proposal on the table also highlights the potential for essentially giving up passengers traveling between Italy and the US/Canada to Air France, KLM, Iberia and British Airways through industrial agreements.
Photo: IanC66 | Shutterstock
Despite this, the EU shouldn’t be satisfied. In an interview with Corriere, Executive Vice President and European Commissioner for Competition, Margrethe Vestager denied that Brussels was being stricter than previously in its approach:
“Obviously each case needs to be seen individually. It relies on several aspects. For instance: does the merger result in an overlap on routes? And in that case, does it create a monopoly in that market? Briefly, it depends. In fact, we also learn from what we’ve got done before.”
Trade unions proceed their push
11 trade unions from each Lufthansa and ITA have sent a letter to the EU’s Competition authority, urging Brussels to approve the deal, in keeping with euronews. The letter noted that:
“A fast a positive decision [can] signal that you simply, the EU Commission, are specializing in strength, competitiveness in a good market environment and growth in Europe.”
The letter comes after Brussels decided to push the deadline for its decision from June 6 to July 4. Italian Transport Minister Matteo Salvini said that he would consider it a should the Commission block the deal.