The European Comission has considered that the purchase of Air Europe by Iberia can mean a risk to competition with the archipelagos, South America and other European countries. Furthermore, the Commission has expressed concern that customers may face higher prices or lower quality of services after the transaction.
“The Commission’s objective is to ensure that the transaction does not give rise to adverse effects for customers in terms of increased prices or decreased quality of services. The Commission is concerned that, in the absence of adequate solutions and elimination of Air Europa as an independent airline can have negative effects on competition in these already concentrated markets,” he stated.
This is how it is collected in the Statement of Objections (SO) on the purchase operation of Air Europa, published this Friday afternoon, in which the Commission explained that the possible purchase “supposes adverse effects on competition mainly due to the reduction in the number of airlines that would operate in them”.
Specifically, it explains that this purchase would reduce competition by a certain number of Spanish national routesparticularly on routes where high-speed trains do not offer an alternative, and on routes between mainland Spain and the Balearic Islands and the Canary Islands.
For some of these routes there will be no direct competition after the transaction. On other routes, competition seems limited, according to the Commission, and comes mainly from regional companies, Spanish companies or other low-cost companies such as Ryanair.
Competition would also be limited on short-haul routes that connect Spain with European and Middle Eastern countries. Again, competition on these trips comes mainly from low-cost airlines, such as Ryanair, which in many cases operate from more remote airports or from the established airline of the destination country.
In the case of America, it could even be the case that there was no direct competition after the transaction. Furthermore, the Commission has pointed out that both parties have relatively high market shares on routes between Spain and North and South America.
Expected response
Iberia has stated that it expected the European Commission to express its concern about the adverse effects on competition on several routes, both domestic and European as well as routes to America, mainly due to the reduction in the number of airlines that would operate on them.
The process now enters the decisive months during which the Commission will evaluate the solutions (remedies) that the company is proposing. “Our proposal is very solid and we believe that it will manage to respond to all the Commission’s concerns,” defended Iberia.
As the executive president of Iberia, Marco Sansavini, has already advanced, it represents the transfer to other competitors of the 40% of flights that Air Europa operated in 2023 with the commitment that no route will be operated exclusively by Iberia and Air Europa.
Thus, Iberia has explained that it continues to work with the Commission to bring positions closer together and agree on a final solution that allows this operation to be carried out “fundamental for the promotion of connectivity and the economy of Spain with all the guarantees for consumers.”
