The European Commission (EC) has raised concerns regarding the proposed acquisition of Spanish carrier Air Europa by International Airlines Group (IAG). The EC believes that this merger could harm competition, particularly in the Spain-Americas market, the domestic Spanish market, and short-haul international markets from Spain. This acquisition would ultimately reduce competition and potentially lead to increased prices and decreased service quality for customers.
IAG currently owns 20% of Air Europa and has entered into an agreement to purchase the remaining 80% for 400 million British pounds. This is not the first time IAG has pursued a purchase of Air Europa, as a previous attempt between 2019 and 2021 fell through due to competition-related scrutiny from the EC. The Statement of Objections from the EC is a regular regulatory step for complex transactions, and IAG is working towards obtaining EC approval by offering remedies to address competition concerns.
Proposed Remedies
IAG has pledged to transfer the equivalent of 40% of Air Europa’s flights in 2023 to other airlines and ensure that no route is operated exclusively by Iberia and Air Europa. The company is committed to closing the transaction in 2024 to deliver benefits for consumers and the wider Spanish economy. In addition to divesting slots on designated routes, IAG plans to provide aircraft, maintenance technicians, and ground crew to the airlines taking over these slots, along with existing bookings. The goal is to ensure a competitive and viable business on all divested routes.
In the Spain-U.S. market, Air Europa is set to overlap with IAG’s Iberia on routes to Miami and New York JFK. American Airlines, Delta, and other carriers also operate on these routes, creating competition. However, on some routes flown by Air Europa between Spain and the Americas, an acquisition by IAG could eliminate competition. The EC pointed out that competition from other airlines on these routes is limited, with both parties holding significant market shares.
The potential acquisition of Air Europa by IAG has raised competition concerns, as highlighted by the EC’s Statement of Objections. It is essential for IAG to address these concerns through the proposed remedies to ensure fair competition in the aviation market. By providing adequate support to airlines taking over divested routes and committing to maintaining competition, IAG aims to move forward with the acquisition while benefiting consumers and the Spanish economy. However, regulatory approval and close monitoring of the competitive landscape will be crucial in determining the final outcome of this acquisition.