One day after Iberia announced it would abandon the plan to acquire Air Europa, the European Commission offered its concise interpretation of the situation. The executive body argued that the deal would harm a substantial number of flight routes and emphasized that its main concern centered on higher ticket prices and a decline in service quality.
“We conducted an in-depth assessment of the deal’s impact on competition, particularly on routes where there are few alternative flights. Our thorough review indicated that the merger would erode competition on a broad set of national routes, including short-haul and long-haul connections within, to, and from Spain where the two carriers competed closely”, stated Margrethe Vestager, the European competition commissioner, in a formal release.
The same official who had previously given her blessing to the Lufthansa-sponsored merger of the Italian ITA (formerly Alitalia) noted that her concern remained that the operation could inflict adverse effects on passengers, both business travelers and consumers, through higher prices or diminished service quality.
In this context, Vestager acknowledged that although Iberia’s parent company, IAG, had offered to divest several routes (representing 52% of Air Europa’s connections in 2023), these remedies did not fully address the competition concerns. That was the pivotal reason Iberia chose to withdraw, with the holding company’s chief executive, Luis Gallego, explaining during an analyst briefing that pursuing additional concessions would undermine the rationale of the transaction.
Moreover, the European commissioner conceded that approving the merger of the two rivals proved more challenging this time than in 2021, when the deal first reached the Commission’s competition scrutiny. “This is the second time the Commission has been asked to review Air Europa’s acquisition by IAG under EU merger-control rules, after the initial attempt failed in 2021 because of competition concerns. Air Europa stands today in a stronger position than in 2021, making the task of identifying suitable remedies even more difficult than before”, she remarked.
Observers note that the decision highlights the Commission’s willingness to intervene when market dynamics could lead to fewer flight options and higher prices, even if the parties involved are substantial players within the European aviation sector. The scrutiny centers on routes with limited alternatives where a merger could concentrate power and reduce competitive discipline, potentially harming travelers and freight customers alike.
Industry analysts have argued that the European Union’s approach underscores a broader policy interest: safeguarding connectivity and ensuring that market concentration does not translate into diminished service standards. In a sector where consumer choices hinge on schedules, frequencies, and regional coverage, regulators stress the importance of maintaining a robust competitive landscape that supports affordable travel and reliable service across both domestic and international corridors.
As the debate unfolds, questions remain about the future trajectory of Iberia’s growth strategy within Iberia’s parent group, IAG, and how the company might restructure its network and service commitments to align with regulatory expectations. The episode serves as a reminder that even well-established brands operating in a highly integrated market must navigate stringent checks designed to protect passengers and preserve healthy competition across Europe’s air travel system.
Public responses from within the industry suggest a renewed focus on transparent remedies, enhanced route planning, and customer-centric investments that can withstand regulatory scrutiny. The European Commission’s position underscores a willingness to pursue a careful balance between market reshaping and consumer welfare, with ongoing monitoring to ensure that any future reconfigurations genuinely serve the traveling public. [Citation: European Commission, press release, contemporary assessment of the Iberia-Air Europa case]