EasyJet to challenge Air France-KLM merger

Click to follow
The Independent Online

Easyjet, the no-frills airline, is to challenge the merger between its full-service rivals Air France and KLM Royal Dutch.

Easyjet, the no-frills airline, is to challenge the merger between its full-service rivals Air France and KLM Royal Dutch.

The Luton-based budget airline said it had asked the Court of First Instance in Luxembourg to annul a decision taken by the European Commission in February to clear the deal.

It said in its appeal to the court - part of the European Court of Justice, that deals with commercial cases - that changes were needed to the merger, which it claims will damage competition.

The tie-up between Air France and the Dutch flag carrier, creating Europe's biggest airline, is due to complete later this year. The combined company will have an annual revenue of £13bn and would be the world's third largest in passenger numbers, behind American Airlines and United.

EasyJet said it was "wholeheartedly" in favour of consolidation as long as it did not hurt consumer interests, which it said should come first. "French consumers, particularly in Paris, already have to suffer less choice of airlines and higher air fares than elsewhere in Europe, so it was vital that the European Commission did not take any steps that would have resulted in a further drop in competition. Unfortunately, the Commission got it wrong," the airline said.

EasyJet claimed the Commission had failed to assess the merger in accordance with established case-law and precedent. But it said remedies proposed by Air France and KLM to maintain competition on routes where their services overlap were inadequate. It said the Commission failed to consider the impact of the merger on the "impregnable dominance" of Air France and KLM at their hubs in Paris and Amsterdam.

Ray Webster, easyJet's chief executive, said: "It [the Commission] is allowing the two airlines to hand over a few slots on a miniscule number of routes. Any airline trying to compete on the Paris-to-Amsterdam route between the hub airports of these two national airlines without a much wider presence in the market is likely to fail."

EasyJet, which serves at least six French airports, has been campaigning for greater liberalisation of the French air market. It claims Air France and the French airline industry are stifling its attempts to set up a bigger presence in the country.

The Commission insisted its clearance of the merger provided sufficient safeguards. Tilman Lueder, a spokesman for the organisation, said: "We welcome consolidation but also have the adequate remedies in place to facilitate new entries."

He added that 94 take-off slots were made available to new entrants as part of the approval. "We think it is a very pro-competitive and pro-consumer result and we stick by that," Mr Lueder said.

Comments