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
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
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 crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
Travel
ebookHow to enjoy the perfect short break in 20 great cities
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
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
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

    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    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