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International Airlines Group’s takeover of Aer Lingus moved another step closer today, 14 July 2015, after the European Commission gave formal approval of the deal.
It is subject to some conditions, known as “commitments” in order to assuage competition concerns of the European Commission.
These are:
1. IAG must forfeit up to five slot pairs at London Gatwick airport for use on routes between London and Dublin and London and Belfast. One slot pair must be used for London – Belfast, two slot pairs must be used for London – Dublin and the remaining two can be used for either route.
2. IAG must offer rival airlines special prorate deals for passengers connecting from Aer Lingus short-haul flights to long-haul flights operated by rival airlines at London Heathrow, London Gatwick, Manchester, Amsterdam, Shannon and Dublin airports. This is so rival airlines such as KLM and Virgin Atlantic can still offer passengers connections from Aer Lingus short-haul flights.
Full details of the European Commission’s findings are here.
The conditions are very similar to those imposed by the Commission when IAG acquired bmi three years ago.
One significant difference is that IAG is not required to forfeit any slots at London Heathrow airport. This is a significant win for IAG given the premium Heathrow slot pairs can command.
We can only surmise that the reason for this is that, following the failure of Virgin Atlantic’s Little Red domestic airline (which was set up, in part, to use slots forfeited by BA after IAG acquired bmi), it was unlikely that any airline would take up the opportunity to acquire Heathrow slots and a willing entrant at London Gatwick is more likely.
The next stage of the transaction is for it to be given approval at an Extraordinary General Meeting of Aer Lingus shareholders on Thursday 16 July 2015.
