European consumer and travel associations have warned the European Commission against signing off on a series of airline mergers, warning consolidation among carriers threatens “higher prices, lower quality services and fewer satisfied passengers”.
The coalition of associations warn in a letter to Commission vice-president and competition commissioner Margrethe Vestager: “The European air travel industry stands at a crossroads.”
The letter from the European Travel Agents’ and Tour Operators’ Association (ECTAA), European Consumer Organisation BEUC, European Passengers’ Federation, technology association EU Travel Tech and airports association ACI Europe notes the “large and increasingly dominant airline groups” in Europe.
It points out the intra-EU market share of Europe’s top-five airline groups has increased from 47% in 2005 to almost 74% this year and notes: “Concentration is set to increase significantly with acquisitions being currently assessed by the EC or looming.”
These include Lufthansa Group’s acquisition of Italy’s ITA Airways, successor to Alitalia, the purchase of Air Europa by British Airways and Iberia-owner IAG and the acquisition by Air France-KLM of a minority stake in SAS, with the option of a full takeover later.
The associations also highlight “the anticipated sale” of TAP Air Portugal.
They warn Vestager: “This wave of airline consolidation could drastically limit competition, giving more leeway to market dominant players to abuse their positions.
“The fact that many European airports are, or will become, congested combined with outdated EU airport slot-allocation rules adds to these concerns.”
The associations argue: “In other markets, such as the United States, a high level of consolidation and the resulting lack of competition [have] led to higher prices, lower quality services and fewer satisfied air passengers.”
They note a US court recently blocked a merger between US carriers JetBlue and Spirit over competition concerns and claim consolidation in the US has damaged “connectivity, local communities and consumers”.
Yet they point out: “The major US carriers are celebrated in the airline industry for achieving historically high profit margins.”
The letter suggests: “The EU can avoid the same mistakes.”
It calls on the EC to “consider any potential anti-competitive effect when assessing operations, regardless of political pressure”, urging it “not [to] shy away from using the tools at its disposal, including considering mergers incompatible with the common market or demanding significant remedies”.