European Commission Plans Stricter Concession Rules for Airline Mergers Amid Industry Consolidation
As the European Commission grapples with a surge in airline industry consolidation following a pandemic-induced lull, regulators are set to introduce more stringent concessions for carriers seeking mergers to ensure fair competition, according to interim EU antitrust chief Didier Reynders. The move comes in response to evidence indicating that existing concessions, such as granting airport slots to rivals, have not always resulted in effective competition, with some allocated slots remaining unused or not utilized on the intended routes.
In the future, the European Commission intends to demand that airlines not only allocate slots correctly but also consider divesting non-core assets in certain cases. Reynders emphasized that while slot allocations were previously deemed sufficient, the current results indicate the need for additional measures to ensure fair competition.
Antitrust lawyers have expressed skepticism toward the current concession system, with suggestions that enforcing the disposal of assets, including planes, cargo businesses, or contracts with ground handlers, would directly support the entry and viability of competitors. The proposed changes aim to enhance regulatory oversight and address potential shortcomings in the existing framework.
Recent merger proposals under scrutiny include Air France-KLM’s bid for a 20% stake in SAS Scandinavian Airlines, Lufthansa’s acquisition of a 41% stake in ITA Airways, and IAG International Airlines Group subsidiary Iberia’s merger plans with Air Europa, facing an extended investigation. Additionally, the impact on passenger and cargo connectivity in Korean Air’s proposed acquisition of Asiana Airlines is under investigation by Brussels and other regulators.
The European Commission’s proactive approach seeks to adapt to the evolving dynamics of the airline industry and ensure that concessions effectively foster fair competition, contributing to a robust and competitive aviation landscape in Europe.