Iberia Won’t Raise Airfares Following the Air Europa Buyout
Iberia Airlines CEO Luis Gallego said his team has done all the relevant analyses before signing the purchase of Air Europa and that these assessments allow him to make sure the move will be positive for customers.
The statement that contrasts with the opinion that some consumer associations have on the subject. Facua, for example, considered from the outset that this operation would be negative for the interests of users because "it will mean a new and important cutdown on competition," he said.
On this occasion, he asked the National Commission on Markets and Competition (CNMC) to take into account the interests of customers when assessing the proposal and issuing a verdict.
However, it is no longer just that it ensures that this increase will not take place, but that even if it wanted to, it could not because competition authorities could veto the operation or force IAG to cede some of the routes to its competitors, since with the purchase, the company would amass a staggering 72% of all passengers on domestic flights.
Asia in the Crosshairs
But Iberia does not have its eyes set on the national market, but on the synergies that the purchase can generate beyond making Madrid a great hub capable of competing with other European hubs. This is to increase our presence in Asia.
Although the airline already flies to several cities on the continent, it acknowledges that they find it difficult to fly there because they lack the necessary volume "to travel to various markets". A volume they will have if Competition approves the purchase of Air Europa.
And how? Globalia's airline is still strong in Latin America, with 7% of the market share, which undermines Iberia's effort to continue growing in the area and allows it to look the other side of the map to become strong in Asia, which is the region that both airlines and hotels are seeing the most.
But that's still what it's for. Competition authorities are studying the operation and at the moment there is no specific date on when it will be effective or not. "The process can last 18 months or two years," says Gallego, although the company plans that "it can be done in the second quarter of 2020.