While the long-awaited acquisition of Spain’s second largest airline, Air Europa, by its larger competitor Iberia (as part of the IAG Group) was finally agreed in February 2023. However, there is still one more obstacle it needs to overcome before the deal can be finalised: the approval from the European competition authorities.
In an interview with Diario de Mallorca, a media outlet from the Balearic Islands (where Air Europa is based), Chief Competition Economist at the European Commission, Pierre Régibeau, provided insight into the current status of the process.
The EU official confirmed that the Commission’s Competition Directorate General has already started work on the case.
The review process is in its initial stages and could take about a year to complete. He also confirmed that, as widely anticipated by the media and industry observers, the European authorities have some concerns about the loss of competition on some markets.
Of particular concern are the routes linking the Balearic and Canary Islands to the Spanish mainland as well as the dominance the consolidated airline would have over the Madrid air hub.
On routes that will see a drop in the number of operators, a potential solution could be to facilitate the entry of new competitors, preferably with the commitment to operate the route for a minimum period of three to four years.
In this regard, Iberia has reportedly been in active conversations with two other smaller Spanish airlines to take some of its slots and frequencies, and sweeten the prospect of receiving European approval for the deal.
One of these airlines in low-cost carrier Volotea, which could take over some of the domestic and short haul activity. The other is Plus Ultra Líneas Aéreas, a small long-haul airline which operates a fleet of three A330-200 and two A340-300 aircraft. In this case, the idea would be for Plus Ultra to enter some of the routes between Latin America and Spain where both Iberia and Air Europa used to be competitors.