The proposed acquisition of Spanish carrier Air Europa by International Airlines Group (IAG) has raised concerns about the potential impact on competition in the aviation industry, according to the European Commission (EC). The EC believes that the merger would harm competition between Spain and the Americas, as well as in the domestic Spanish market and in short-haul international markets from Spain. This is outlined in a Statement of Objections issued by the EC on April 26.
IAG, the parent company of Spanish airlines Iberia and Vueling, as well as British Airways, Aer Lingus, and Level, currently owns 20% of Air Europa. The company entered into a purchase agreement in February 2023 to acquire the remaining 80% for 400 million British pounds. This is not the first time IAG has attempted to acquire Air Europa, as a previous attempt between 2019 and 2021 was abandoned due to competition-related scrutiny from the EC.
The EC is worried that customers could face increased prices or decreased quality of services as a result of the acquisition. In response, IAG has pledged to address these concerns by offering remedies. These include transferring 40% of Air Europa’s flights in 2023 to other airlines and ensuring that no route is exclusively operated by Iberia and Air Europa. IAG is committed to securing EC approval and closing the transaction in 2024 to deliver benefits for consumers and boost Madrid’s competitiveness as a European hub.
In the Spain-U.S. market, Air Europa is set to compete with Iberia, another IAG airline, on routes between Madrid and Miami, as well as Madrid and New York JFK. This summer, these routes will also be served by American Airlines, Iberia’s joint venture partner, on the Miami route, and by American and Delta on the JFK route. The EC has raised concerns about potential competition issues on routes operated by Air Europa between Spain and the Americas.
IAG has proposed remedies that go beyond simply divesting slots on designated routes. The company plans to provide aircraft, maintenance technicians, and ground crew to airlines taking over these slots, as well as transferring existing bookings. This comprehensive approach aims to ensure that a competitive and viable business can continue on all divested routes. IAG is optimistic that these remedies will address the EC’s concerns and allow the acquisition to proceed smoothly.
The acquisition of Air Europa by IAG has sparked competition concerns in Europe, particularly in the Spanish and short-haul international markets. While IAG is working to alleviate these concerns through various remedies, the ultimate decision rests with the European Commission. The outcome of this acquisition will have significant implications for the aviation industry in Europe and the competitiveness of key hubs like Madrid.