Four years after – with a pandemic in the midst – of the first Air Europa purchase agreement, Iberia has presented to the European Commission its proposal to absorb the rival airline at the Barajas airport without harming competition. IAG, the holding company that owns Iberia and other companies such as Vueling, Iberia Express, British Airways or Aer Lingus, assures that its offer proposes a greater renunciation of routes and flights transferred to rivals, called remedies in competition terms. The offer “will fully respond to the Commission’s possible concerns,” the company explained. “The proposal made on the previous occasion is significantly increased to guarantee strong competition on all routes.”
What it means to present this offer at the European Commission window is that the largest merger of companies in Spanish airports will now be thoroughly analyzed by the European competition supervisors. Although the deadlines are set in a period that is divided into two phases, the analysis of complex operations can lead European officials to request what is called “stopping the clock.” The outcome may last more than a year, so it could be extended to 2025. Iberia, however, assures that it will work “intensely” to close the process next year. The agreement signed with Globalia in November 2022 includes a penalty clause of 50 million euros if the purchase has not been concluded by February 2025.
IAG has not provided any details about the routes and flights it is offering to sacrifice to receive approval from Brussels, although it states that the process has aroused “a lot of interest” in rival companies potentially awarded. In this sense, for example, the greatest interest of the competition authorities lies in guaranteeing users residing on the islands sufficient connections with the peninsula, both in number and price. The fact that Barajas is the most important hub in Europe in its connections with Latin America thanks to Iberia and Air Europa also makes competition on these routes an object of special study.
The operation, IAG assures, will create 500 new combinations of origin and destination, especially facilitating routes to Asia from Spain; It will allow Barajas to compete with the hubs of Paris, Munich, Frankfurt and Amsterdam, where Air France, KLM or Lufthansa have higher market shares; It will increase traffic by 1.6 million passengers annually and will generate between 1,250 and 1,800 direct jobs with an increase in annual income for the airport of 30 million euros.