EU blocks airline merger

European Competition affairs Commissioner Joaquin Almunia, from Spain, gives a news conference on the merger between Greek airlines Olympic Air and Aegean Airlines at the European commission headqarters in Brussels, Belgium, on 26 January 2011. Europe's top competition regulator blocked the merger saying a combined carrier could monopolize Greek air travel. The merger "would have led to higher fares for four out of six million Greek and European consumers traveling on routes to and from Athens each year," the European Commission said in a statement. Together, the two carriers control more than 90 percent of the Greek air transport market, making it impossible for a new airline to enter "routes and restrain the merged entity's pricing," the Commission said. Photo: AAP via EPA/OLIVIER HOSLET

30 January 2011 11:20am

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The European Commission on Wednesday vetoed a proposed merger between Aegean Airlines and Olympic Air, saying a tie-up would have hurt competition in the Greek air transport market.

A Commission statement said the merger between the two airlines would have led to higher prices for the four out of six million Greeks and European consumers travelling to and from Athens each year.

The two airlines control more than 90 percent of the Greek air transport market, thus blocking the entry of new airlines in domestic flights.

“The merger between Aegean and Olympic would have led to a quasi-monopoly in Greece and thus to higher prices and lower quality of service for Greeks and tourists travelling between Athens and the islands,” European Union (EU) Competition Commissioner Joaquin Almunia said.

Aegean and Olympic have proposed to hand over take-off and landing slots at Greek airports but the EU agency said the measures wouldn’t have eliminated competition concerns.

The commission said a survey of airlines showed that the offer was “unlikely to entice a credible new player” to base a competing service at Athens airport.

Aegean Airlines and the Marfin Investment Group (owner of Olympic Air) will carefully analyse the European Commission’s decision and after consultation with their advisers will decide on any further legal actions they will take, the two companies said in a joint statement.

The merger agreement was pre-agreed by the main shareholders of the two companies in February 22, 2010. Following the Commission’s decision, the agreement is annulled.

Theodore Vasilakis, chairman of Aegean Airlines said both companies presented the benefits from the proposed merger for our companies, passengers and the country’s economy and offered significant reassurances over consumers protection and facilities for the entry of new competitors in the domestic market.

“Unfortunately, the EU did not approve the merger. A significant opportunity is lost for a strong representation in the European airline market. We adjust to developments and move forward.”

Andreas Vgenopoulos, chairman of Marfin Investment Group, said the EU’s decision will have negative repercussions for both passengers and the country’s economy, while it would benefit the two airlines’ foreign competitors.

“It is obvious that we will continue to do our best for our executives and staff, our shareholders and passengers,” he said.

Greece’s two biggest airlines said in February 2010 that the deal was necessary to protect jobs, increase routes and ensure the long-term viability of both companies. Aegean and Olympic would together have 5,850 workers and a combined flight network of 106 routes, the two airlines said last year.

Source: Athens News Agency, Bloomberg