IAG’s latest attempt to acquire Spanish carrier Air Europa is being referred for in-depth investigation by the European Commission over competition concerns.
The Commission had previously rejected an earlier acquisition bid by IAG after concluding that it would negatively affect competition on a number of Spanish short- and long-haul routes.
This forced IAG to abandon its pursuit and instead seek an alternative tie-up strategy with the carrier.
IAG subsequently converted a loan to Air Europa’s parent company into a 20% shareholding in the airline, before agreeing steps last year to acquire the remaining 80%.
But the Commission has preliminary concerns that the revised agreement will still have an adverse impact on the Spanish air transport network.
“We want to make sure that the transaction does not negatively affect the prices or the quality of passenger air transport services in and out of Spain,” says competition commissioner Margrethe Vestager.
Spanish domestic routes with no high-speed rail alternative, as well as services from the mainland to the Balearic and Canary Islands, are among the networks the Commission is highlighting.
The in-depth assessment will examine short-haul links between Madrid and primary European cities, as well as routes to Israel, Morocco, Switzerland and the UK which the companies both serve.
It will also analyse long-haul services from Madrid to North America and Latin America which face only limited nonstop competition from other carriers.
IAG already owns Spanish flag-carrier Iberia and budget operator Vueling. The Commission will look into the “strong slot portfolio” of IAG and Air Europa – notably in Madrid – to determine whether it presents a barrier to other airlines.
It adds that it will scrutinise the effect of the proposed tie-up on indirect connections, particularly to Latin American destinations, as well as any impact arising from other carriers’ reliance on access to IAG’s and Air Europa’s short-haul networks.
The Commission needs to reach a decision by 7 June.
IAG, the parent company of British Airways, is affiliated to the Oneworld alliance while Air Europa is a SkyTeam partner airline.
