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

 

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
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

    Junior Application Support Engineer (ERP / SSRS)

    £23000 - £30000 per annum + pension, 25days holiday: Ashdown Group: An industr...

    IT Systems Analyst / Application Support Engineer (ERP / SSRS)

    £23000 - £30000 per annum + pension, 25days holiday: Ashdown Group: An industr...

    SCRUM Master

    £30 - 50k (DOE) + Benefits: Guru Careers: We are seeking a SCRUM Master to joi...

    Franchise Support Assistant

    £13,520: Recruitment Genius: As this role can be customer facing at times, the...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?