Spain’s Vueling to take over 18 of Air France’s Orly slots
Vueling Airlines (VY, Barcelona El Prat) has been selected by the European Commission to take over up to 18 daily slots at Paris Orly rescinded by Air France (AF, Paris CDG) in return for the state bailout it received in 2020.
“This will enable Vueling to expand its activities at this highly congested airport, helping to ensure fair prices and increased choice for European consumers. It also helps ensure the significant capital support to Air France enabled the airline face financial difficulties resulting from the coronavirus outbreak, without unduly distorting competition in the Single Market,” Commission’s vice president (competition policy), Margrethe Vestager, said in a statement.
The slots were awarded to the Spanish LCC, owned by IAG International Airlines Group, through a competitive process following a request for proposals issued by the Monitoring Trustee in June 2021. Vueling Airlines has yet to finalise the agreement directly with Air France. If the process continues smoothly, the LCC would be able to use the slots starting in November 2021.
The French flag carrier received EUR4 billion euro (USD4.7 billion) bailout in April 2021 under the temporary COVID-related framework. The state aid was granted in the form of a conversion of a EUR3 billion (USD3.5 billion) loan and an additional EUR1 billion (USD1.2 billion) recapitalisation through new shares. Although granted exclusively to Air France, the bailout was formally routed through Air France-KLM. As a result, the French state became the largest shareholder in the holding with a 28.6% stake, more than triple that owned by the Dutch government.
In return for the aid, the EC ordered Air France to release some of its slots at Orly, a capacity-constrained airport where it is the dominant carrier. According to the ch-aviation capacities module, the airline currently has a 22.6% market share by scheduled capacity out of the airport (and operates 379 weekly scheduled departures), while its LCC subsidiary Transavia France controls a 23.5% market share (342 departures). Vueling is already the largest carrier at Orly not owned by Air France-KLM and holds an 11.8% market share by scheduled capacity (and 178 weekly scheduled departures).