EU clears major tie-ups in ailing airline sector

Europe's competition watchdog cleared the way for major tie-ups in the ailing airline industry on Wednesday, giving green lights to a British Airways and Iberia merger and a trans-Atlantic alliance.

BA, Iberia and American Airlines agreed last year to team up on flights between Europe and North America in order to cope with soaring fuel costs and falling demand.

The British and Spanish airlines also took a step further, signing a merger deal in April to create one of the world's biggest airlines to compete more effectively in the fast-consolidating aviation sector.

"Today's reality is one of increased consolidation in the sector due to the difficulties and changes that the sector has had to cope with," European competition commissioner Joaquin Almunia told a press conference.

The BA-Iberia tie-up will create Europe's second-biggest airline by market value after Lufthansa, combining Iberia's strong position in Latin America with BA's presence in Africa, Asia and North America.

The European Commission said its investigation found that the combined group would face sufficient competition from other carriers on the key routes between London and Spain as well as long-haul flights.

"The Commission therefore concluded that the transaction will not significantly impede effective competition on any of the markets concerned by the proposed merger," the EU regulator said.

BA said the merger is expected to be completed by the end of the year.

In a separate decision, the commission paved the way for a trans-Atlantic joint venture between "oneworld" alliance members British Airways, Iberia and American Airlines after the companies committed to competition safeguards.

The EU regulator had opened a probe in April 2009 over concerns that the alliance could harm consumers on trans-Atlantic routes.

To ease concerns, the airlines offered to free up landing and take-off slots at London Heathrow airport to facilitate the entry or expansion of competitors on routes between the British capital and New York, Boston, Dallas and Miami.

The commission said it decided to close its investigation after a market test concluded that the airlines had offered "suitable" remedies.

"This is a pragmatic decision so that we can get the joint business up and running as soon as possible," said BA chief executive Willie Walsh.

"The slot commitments provide a further guarantee that there will be no possible loss of competition as a result of our joint business," he said.

BA said it expected the US Department of Transportation to decided "shortly" whether to grant the airlines anti-trust immunity, with the hope of launching the joint business in the autumn.

The commission decided to make these commitments binding for 10 years and said it would appoint a trustee to oversee their implementation.

Almunia said the decision ensures that "the around 2.5 million passengers that use the London-New-York and other affected routes each year continue to benefit from a choice of frequencies and competitive prices."

Airlines have turned to alliances as takeovers and tie-ups are fraught with difficulty, with many countries imposing limits on foreign ownership so as to favour the national carrier and protect their domestic markets.

The alliance system was set up in part to get around such hurdles and to allow cooperation so that member airlines could enjoy the advantages of scale provided by belonging to a bigger group.

Airlines were pummeled by the global recession, losing nearly 10 billion euros last year. But the International Air Transport Association (IATA) said they would be profitable this year for the first time since 2007.

lth/hd

 

The Independent travel offers: Discover a world of inspiring destinations

News
people
Arts and Entertainment
Game Of Thrones
Uh-oh, winter is coming. Ouch, my eyes! Ygritte’s a goner. Lysa’s a goner. Tywin’s a goner. Look, a dragon
tvSpoiler warning: The British actor says viewers have 'not seen the last' of his character
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave long-running series
Sport
The Etihad Stadium, home of Manchester City
premier league

The Independent's live blog of today's Premier League action

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
Polly Borgen at the Tribeca Film Festival in 2012
peopleThe Emmy award-winner starred in Cape Fear, the Sopranos and Desperate House Wives
News
people'I hated him during those times'
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Travel
ebookHow to enjoy the perfect short break in 20 great cities
Independent Travel Videos
Independent Travel Videos
Simon Calder in Amsterdam
Independent Travel Videos
Simon Calder in Giverny
Independent Travel Videos
Simon Calder in St John's
Independent Travel Videos
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Travel

    IT Administrator - Graduate

    £18000 Per Annum: Clearwater People Solutions Ltd: ***EXCELLENT OPPORTUNITY FO...

    USA/Florida Travel Consultants £30-50k OTE Essex

    Basic of £18,000 + commission, realistic OTE of £30-£50k : Ocean Holidays: Le...

    Marketing Executive / Member Services Exec

    £20 - 26k + Benefits: Guru Careers: A Marketing Executive / Member Services Ex...

    Sales Account Manager

    £15,000 - £25,000: Recruitment Genius: A fantastic opportunity has arisen for ...

    Day In a Page

    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits
    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam