EU blocks Aegean / Olympic Air merger

26 Jan 2011 by BusinessTraveller

The European Commission  has prohibited the merger of Greek carriers Aegean Airlines and Olympic Air, saying it would create a “quasi-monopoly on the Greek air transport market”.

The proposed merger was announced in February 2010, but has now been blocked by the EU, which said that the merger “would have led to higher fares for four out of six million Greek and European consumers travelling on routes to and from Athens each year”.

In a statement the European Commission said:

“Together the two carriers control more than 90 per cent of the Greek domestic air transport market and the Commission's investigation showed no realistic prospects that a new airline of a sufficient size would enter the routes and restrain the merged entity's pricing. The companies offered to cede take-off and landing slots at Greek airports, but Greek airports do not suffer from the congestion observed at other European airports in previous mergers or alliances.

The Commission said that the merger would have created a “quasi-monopoly” between Athens and Thessaloniki, the country's second-biggest city, and between Athens and eight island airports, namely Herakleion and Chania, both in Crete, Rhodes, Santorini, Mytilini, Chios, Kos and Samos.

The decision is only the second time the European Commission has prohibited an airline merger in 11 cases since 2004. The first was the blocking of Ryanair’s proposed takeover of Aer Lingus in 2007.

In response Aegean’s chairman Theodore Vassilakis said that “An important opportunity for a consolidated representation in the European aviation market has been lost”, but added that the airline would “adjust and continue”.

Andreas Vgenopoulos, chairman of the board of directors of Marfin Investment Group said  that the decision will have “negative consequences for consumers as well as our country’s economy while it will benefit foreign competitors”.

The airlines will now “review the final document of the EC decision which was received today and following internal consideration and consultation with their advisers will decide for their possible further actions within the framework of existing legislation”.

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Report by Mark Caswell

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