Summary
- EC is investigating IAG’s takeover of Air Europa as a result of concerns about reduced competition in Spain’s domestic transportation markets.
- IAG currently controls a majority of Spain’s domestic market, with its market share only growing with the acquisition of Air Europa.
- The EC can also be concerned about competition on short-haul and long-haul routes, particularly flights between Madrid and European cities, in addition to North and South America.
Shortly after the European Commission (EC) launched an in-depth investigation into the Lufthansa Group’s planned acquisition of ITA Airways, the European Union (EU) lawmakers announced that they’d also look into International Airlines Group’s (IAG) planned takeover of Spain-based Air Europa on January 24, 2023.
Concentration in Spain
In line with Margrethe Vestager, the Executive Vice President in command of competition policy on the EC, each IAG and Air Europa are leading airlines in Spain, being the important thing connectivity providers inside and outdoors the country, including routes to Latin America.
IAG is the parent company of several airline brands in Europe, including British Airways and Aer Lingus. Its Spain-based brands include the full-service airline Iberia and its subsidiary Iberia Express, in addition to the Iberia Regional franchise, the low-cost carrier Vueling, and LEVEL, a low-cost long-haul airline serving routes primarily to North America and Latin America. Notably, LEVEL doesn’t have a separate Air Operator’s Certificate (AOC), which IAG wants to alter, with the airline set to grow to eight aircraft by 2026.
The EC expressed concerns that following its preliminary investigation, IAG’s acquisition of Air Europa could reduce competition for industrial air transportation on domestic, short-haul, and long-haul routes. The Commission detailed that competition might be reduced within the Spanish domestic market, where there are not any high-speed rail alternatives and on flights to the Balearic and Canary Islands.
Photo: Lukas Souza | Easy Flying
In line with data from the aviation analytics company Cirium, out of the whole 28,793 domestic one-way flights inside Spain, including the 2 archipelagos in January 2024, IAG, via Iberia, Vueling, and Iberia Express have scheduled 15,578 flights or 54.1% of the whole itineraries. Adding Air Europa’s 2,918 flights would end in the merged airline group controlling 64.2% of the domestic offering in Spain, per schedules for January 2024.
The group’s market share could change with the upcoming summer season, with other market players, equivalent to Binter Canarias or Ryanair, deploying more seats in response to the improved weather and better tourist flows to the country and its islands within the Atlantic Ocean.
Photo: Adomas Daunoravicius | Shutterstock
Cirium data showed that there are 1,788 flights scheduled out of MAD to North and South America in January 2024. Iberia and Air Europa have scheduled 1,054 flights, leading to a market share of 58.9%. In June 2024, the whole flights out of the airport to the 2 aforementioned regions are set to grow to 2,050, with Iberia and Air Europa scheduling 1,163 flights (56.7%).
IAG’s Next Airline? The History Of Air Europa
The carrier is sort of 4 a long time old.
The EC detailed that it received information concerning the transaction on December 11, 2023. Since, the Commission has had 90 days to make a call, which suggests that its final decision will probably be published until June 7, 2024, at the most recent, unless it extends that timeline. In line with the EC’s competition policy, extensions might be granted for either 15 or 20 working days.
On January 23, the Commission announced that it might also launch an in-depth investigation into Lufthansa Group’s acquisition of ITA Airways. The EC said it has been looking into whether the previous’s acquisition of the latter would cut back competition in multiple short-haul and long-haul markets, including Lufthansa’s three way partnership with United Airlines and Air Canada.
Why The European Commission Is Investigating Lufthansa’s ITA Purchase
The European Commission will provide its verdict on 6 June 2023 after the completion of an in-depth investigation.