Overview of the European Commission’s in-depth review
The European Commission has launched a comprehensive probe into the Iberia group’s acquisition of Air Europa, a deal initially notified at the end of last year. After an initial screening, Brussels is treating the operation as potentially restrictive to competition in the long-haul passenger market and in several short-haul national routes within Spain and beyond. The focus is on whether the merger could raise fares or degrade service quality for travelers across Europe and Latin America, with particular scrutiny of connectivity patterns that influence passenger choices.
IAG and Air Europa stand as Spain’s leading airline brands and key providers of international and domestic links. The Commission emphasizes that the inquiry aims to ensure that the transaction does not negatively affect prices or service quality for air travelers, according to statements attributed to the powers in Brussels. The review is being conducted to protect consumer interests and preserve healthy competition in European air travel, including connections between Europe and the Americas, as reported by the Commission.
The reservations noted by EU officials touch several routes. They highlight that on the mainland-to-Balearic and mainland-to-Canary Island corridors, where high-speed rail cannot replace air service, competition could be at risk. Short-haul links from Madrid to major European cities and connections from Madrid to destinations in Europe, Israel, Morocco, the United Kingdom, and Switzerland are also under the lens. Direct international routes to North and South America are watches for potential market impacts, as several non-stop options remain limited in this geography, per European authorities.
Elements to be examined
In the course of this in-depth review, EU analysts have noted that the airlines’ large slot portfolios, particularly at Madrid-Barajas, could influence the ability of other carriers to compete. The commission will examine possible effects on indirect linkages and the resilience of long-distance routes to South America, where one or both parties offer one-stop options and direct non-stop services are scarce. The analysis will also assess potential consequences for routes that rely on access to the other airline’s domestic and short-haul networks. The parties’ own operations and their impact on international destinations are also within scope as part of the review of IAG’s broader network. The notification of the operation to the Commission occurred on 11 December, and the launch of this in-depth process does not prejudge the outcome. A formal decision is expected within ninety working days from the launch, with June 7, 2024, marking a key deadline in the timeline, according to Brussels.
Iberia: “This is what we expected”
Iberia has downplayed the gravity of the Commission’s move, describing the announcement as a normal step in the progression from Phase I to Phase II of the competition procedure. The airline’s representatives indicate that the authorities will consider proposed remedies to address competition concerns. The discussion of remedies is a standard part of the process, and Iberia’s team sees the next phase as an opportunity to present evidence that the deal can proceed in a competitive and consumer-friendly manner. Iberia asserts that the proposed measures should satisfy all competition requirements and anticipates a favorable outcome that benefits travelers and Spain’s aviation network. The airline also argues that the operation would reinforce Madrid’s central position and improve national connectivity, in line with their public statements about the strategic value of the deal.
Within competition terminology, these remedies refer to measures intended to prevent the merger from harming competition. If deemed necessary, they could involve the sale of operating rights on certain routes to other market participants. Iberia contends that the remedies the IAG group plans to present to European regulators will meet all competition needs. In its view, the operation will ultimately be good for consumers and for Spain, strengthening Madrid’s central hub and enhancing the country’s international connections.
Beyond this case, Brussels is also pursuing several other concentration reviews at the second stage, including matters involving Orange and MásMóvil, a proposed acquisition of Asiana by Korean Air, iRobot’s sale to Amazon, and ITA Airways’ purchase by Lufthansa. These parallel cases illustrate the Commission’s active approach to maintaining competitive markets across European aviation and related sectors.