Impact on Spain: Iberia’s Air Europa Deal

Could the acquisition of Air Europa by Iberia reshape Spain’s aviation market?

This question looms as the European Commission embarks on a thorough investigation into this significant merger, which was first announced in 2023

On Wednesday, January 24 the European Commission initiated a detailed probe into the Iberia group’s purchase of Air Europa.

Margrethe Vestager, Executive Vice President and Competition Commissioner, explained, ‘IAG and Air Europa are leading airlines in Spain and key providers of connectivity within the country and with the rest of Europe and Latin America.

With our exhaustive investigation, we want to ensure that the operation does not negatively affect the prices or quality of passenger air transport services.’

Concerns over competition

The Commission’s concerns centre on several national and international routes. Particularly, Spanish internal routes are under scrutiny, especially those lacking high-speed train alternatives.

The merger’s potential impact is also under review on routes between mainland Spain and the Balearic and Canary Islands.

Concerns extend to key European destinations, including Israel, Morocco, the United Kingdom, and Switzerland, as well as vital long-distance routes to North and South America.

Impact on air travel and connectivity

The in-depth review will assess how the airlines’ significant slot holdings at Madrid-Barajas airport might affect competition.

The Commission will also examine the potential consequences on indirect routes, with a specific focus on South American destinations where one-stop connections are limited.

Additionally, the analysis will consider the effect on routes where other airlines rely on the domestic and short-haul networks of the merging parties, potentially impacting their international services.

Iberia’s response and remedies

Responding to the Commission’s investigation, Iberia downplayed the severity, stating, ‘It is what we expected, it simply signals the passage from Phase I of the process to Phase II.’

They anticipate presenting a ‘remedies’ proposal to address the identified competition concerns. This proposal could include selling rights for specific routes, aimed at maintaining a healthy competitive environment.

Iberia remains optimistic about the merger’s benefits, believing it will strengthen Spain’s connectivity and reinforce the Madrid hub.