The European Commission, in its ongoing pursuit to ensure fair competition within the aviation industry, has recently announced the suspension of its antitrust inquiry into International Airlines Group’s (IAG) proposed acquisition of Spanish carrier Air Europa.
This decision, detailed in an update published on the commission’s website, marks a significant development in the regulatory process surrounding the €400-million deal. Effective as of February 9, 2024, the suspension comes merely two weeks after the commission initiated an official ‘in-depth investigation’ on January 24.
The focus of the commission’s scrutiny primarily rested on the carriers’ slot portfolio, particularly at Madrid-Barajas airport, and the anticipated impacts of the merger on both Spanish domestic and international routes. Initial assessments raised concerns regarding potential competition distortions, particularly concerning short-haul routes connecting Madrid with various European cities, as well as routes linking Madrid to Israel, Morocco, the UK, and Switzerland. Furthermore, long-haul routes between Madrid and destinations in North and South America came under scrutiny due to the limited competition faced by both Iberia and Air Europa, both subsidiaries of IAG.
In response to these concerns, IAG, the parent company of British Airways and Aer Lingus, submitted commitments on February 23, 2024, aimed at addressing the EU’s apprehensions. However, precise details regarding these commitments remain undisclosed to the public. The commission, initially scheduled to deliver its decision on the proposed acquisition by June 7, 2024, has now halted its proceedings pending the submission of additional data by the involved parties.
This development underscores broader industry apprehensions regarding increased consolidation within the airline sector. Stakeholders, including travel industry representatives and consumer advocacy groups across Europe, have cautioned against such mergers, citing potential adverse effects on market competition and airfares.
Notably, this isn’t the first instance of IAG’s attempted acquisition of Air Europa. A previous deal, initiated in 2021, was ultimately abandoned after regulatory concessions failed to assuage EU competition concerns. However, IAG’s financial performance in recent years has been robust, with the group reporting a significant increase in profits in 2023 compared to previous years. Despite this, the recovery of business travel, particularly in short-haul trips, continues to lag behind leisure travel demand.
Looking forward, IAG remains optimistic about its prospects for the future. The company’s commitment to strengthening its core airline businesses, alongside investments in initiatives such as IAG Loyalty, reflects its determination to navigate industry challenges while fostering sustainable growth. Luis Gallego, CEO of IAG, emphasized the company’s focus on executing long-term strategies to deliver value and enhance customer experiences while operating within a framework of financial robustness and sustainability.
