HomeAir LineIAG demands in Barajas the same control that Air France, Lufthansa and...

IAG demands in Barajas the same control that Air France, Lufthansa and KLM have in their airports

Ryanair, Binter, Volotea, Plus Ultra, Word2Fly and Iberojet, among the solutions to smooth the Commission’s agreement, which will present objections to the concessions package already presented

Air Europa and Iberia planes at Madrid-Barajas airport in Madrid.SUSANA VERA (REUTERS)

The game between IAG and the European Commission, in which the integration of Air Europa into the holding company of airlines, is played in the political field. The company led by Luis Gallego presented the concessions to rivals on Friday (remedies) to smooth out the operation and yesterday launched a clear request for equal treatment for her and for Spain: “This operation is positive for Iberia and IAG, and for Air Europa. Furthermore, thanks to it, Spain will be better connected and connectivity and competition will increase, not reduce. It would be a disservice to Spain if it did not achieve the same conditions at the Madrid-Barajas airport that others enjoy. hubs in France, Germany or Holland,” said an IAG spokesperson.

The firm, which includes Iberia, Vueling, British Airways and Aer Lingus, has focused on four EU member states and its main European competitors in the long-haul segment: Air France, Lufthansa and KLM. IAG defends that the coordinated management of Iberia and Air Europa would result in a quota in Madrid-Barajas similar to that of Air France in Paris and lower than that of Lufthansa in Munich or that of KLM in Amsterdam. The group estimates that the merger will boost traffic at the Madrid airport by 1.6 million travelers per year.

A good part of the chances of success of the IAG project, of including Air Europa in its scope, depends on the Commission examining it from a European perspective and not exclusively from the Spanish context. Taking into account the total operations to America in 2023, to or from the Madrid-Barajas airport, the integration would have enjoyed a total share of 58.4% of traffic (measured in number of flights). A percentage that rises to 62% taking into account exclusively the routes between Barajas and the international airports of Latin America. In addition, Iberia and Air Europa together dominate the connections between the Peninsula and the Balearic and Canary Islands, as well as other domestic destinations.

The package of remedies, according to sources close to its processing, places emphasis on the routes in which Iberia is willing to lose weight in favor of the competition. The same sources explain that the names of the possible beneficiaries of takeoff and landing rights (slots) surpluses have not been offered firmly.

IAG’s senior management has been testing the appetite in the market for weeks, with the greatest difficulty in finding solutions to the situation of dominance between Spain and Latin America. Contacts have been made at least with Binter, Volotea and Ryanair for short-distance lines, and in the market it is claimed that there have been conversations with Plus Ultra, World2Fly and Iberojet, all of them with business between Spain and different Latin American countries. A manager involved in these negotiations affirms that airlines from the other side of the Atlantic, such as Latam and the American Delta “will also have something to say.”

IAG now awaits Brussels’ objections to the plan remedies already sent in advance. And the company still had two months of margin to prepare the transfer scheme. “Our proposal for remedies is very ambitious, responds to the concerns indicated by the Commission and guarantees the entry of new competition on a large number of routes,” the company explained yesterday. But at the London headquarters they put the bandage on the wound: “We are aware of the rigor of the Commission’s scrutiny and we anticipate that there may be objections to this proposal at first, but we are convinced that we will be able to resolve these concerns. in what remains of the process,” it is added.

In the previous attempt to acquire the Hidalgo family airline, frustrated in 2021, IAG was also proactive in the face of the Brussels examination and proposed to Volotea and World2Fly to give them part of the routes and slots in the short and long radius segments, respectively. That scheme failed when the Commission estimated that the size of the competitors was not sufficient, especially in the case of World2Fly. IAG preferred to freeze the project before adding assignments. Now it will depend on the response given by the authorities, but the holding company seems willing to close the purchase of the eternal rival this year.

The tug of war is served. For IAG, the effort will already have been worth it just to acquire the young fleet of Air Europa in a context of strong demand for aircraft and very limited capacity still at both Airbus and Boeing, due to material supply problems and high costs. of production.

In 2021, the EC already identified up to 70 routes in which the sum of Iberia and Air Europa had to lower its share for the benefit of other companies. The authorities targeted flights from Madrid to Miami, Montevideo, Panama, Santo Domingo, Havana, Quito, Lima, Buenos Aires, Sao Paulo or Medellín.

The difficult marriage has found Lufthansa as an unexpected sponsor, with its defense of the creation of more powerful players in both Spain and Italy. This support, expressed by CEO Carsten Spohr in an interview with The vanguardit is no coincidence: Lufthansa is pursuing control of the Italian ITA.

More than three months of exam ahead

Until june 7th. The investigation by the EU Directorate-General for Competition, which began on December 11, entered a second phase in January (in-depth investigation) longer in term and also of greater significance. IAG did not present its remedies in the first part of the exam and does it now for the more in-depth review. The margin for ruling extends, at least, until June 7.

Warning. On January 24, it was the executive vice president of the Commission and in charge of competition policy, Margrethe Vestager, who warned that “IAG and Air Europa are leading airlines in Spain and key providers of connectivity within the country and between Spain, the rest of Europe and Latin America. With our in-depth investigation we want to ensure that the transaction does not negatively affect prices or the quality of services inside and outside Spain.”

Second try. Iberia’s interest in Air Europa was recognized in October 2019 in response to Air France-KLM’s intention to acquire the Globalia firm. The offensive tried to prevent a major rival from establishing itself in Barajas. IAG made a first offer of 1,000 million and launched the process before Brussels, but was faced with the demand for strong remedies and parked the project in December 2021. Once contacts were reestablished, the price dropped to 500 million plus a debt that exceeded 600 million.

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Source: Cincodias



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