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The European Commission puts an end to the purchase of Air Europa by Iberia via airline group IAG. What does this mean for passengers?? Photo from Iñaki Calvopiña
«The merger would have negatively affected competition on a large number of national routes, short distance and long distance within, to and from Spain in which the two airlines compete closely". This is how Margrethe Vestager, vice president of the European Commission, explained after explaining the decision..
After years of waiting and two firm attempts by Iberia – IAG, This operation that was supposed to integrate Air Europa to the international airline group made up of British Airways, Vueling, Aer Lingus and others, which would have strengthened and given even more importance to this business organization.
The purchase of Iberia from Air Europa is no longer going
The merger that occurred between Iberia and Air Europa dates from November 2019 for more than 1.000 million from Europe, went through multiple ups and downs and even, in a moment for the 2021 There was already a rejection from Brussels, managed to advance after a new agreement last year where Iberia showed the flexibility to give the competition the 52% of the routes operated by Air Europa, this in response to fears of monopolistic market accumulation, but it wasn't enough.
«Until the abandonment of the transaction, "Discussions with businesses and the proposed solutions package failed to adequately address the competition issues identified by the Commission."
Why was this operation blocked??
Brussels has weighed the possible benefits of the merger (such as greater efficiency and more routes) and risks to competition. In the end, concern has prevailed that the union of the two most important airlines in Spain could:
- Make tickets more expensive: With fewer companies competing, Airlines could raise prices without fear of losing customers.
- Reduce flight options: Fewer airlines would mean fewer routes and schedules available, limiting travelers' options.
- Decrease the quality of service: Having less competition, Airlines could relax their service standards.
“Air Europa is in a stronger position today”
The EU Competition Commission itself confirms it, Air Europa's financial statements today are stronger than when the transaction began, generating even more observations from Brussels regarding fewer ways to justify the purchase. This is also stated by the airline itself..
The airline reported that "Air Europa is a profitable company, "solvent and with a future that is taking appropriate steps to meet the expansion objective foreseen in the company's strategic plan and continues to offer the quality service that our clients deserve.".
Thus the airline reaffirms its position in the market and growth plans, where it will continue to compete with Iberia, principally, on transatlantic routes to America.
What does this mean for passengers?
Travelers will see the same thing they have seen today, this means, two strong airlines in the market between Spain and Latin America competing strongly for each of the passengers that are part of this important air market. Of course, The passenger will win by seeing more promotions and increased frequencies where both compete, in the end, We gain users by having more options to fly.
What do you think? Do you think Brussels' decision is the right one?? Are you worried about rising flight prices?? Leave me your comments!
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