The chief executive of International Airlines Group (IAG), the parent company of British Airways, has voiced concerns that existing European Union competition regulations present significant barriers to major airline takeovers. Luis Gallego explicitly stated that these rules would make any potential bid for budget carrier easyJet 'very difficult', calling for a fundamental reassessment of how the bloc evaluates such mergers.
Speaking recently, Mr Gallego highlighted what he perceives as a restrictive environment for airline consolidation within the EU. He argued that the current framework often prioritises maintaining competition at the expense of allowing airlines to achieve greater scale and efficiency, which he believes is crucial for long-term industry stability and resilience, especially in a post-pandemic landscape. This stance suggests a desire for a more flexible and pragmatic approach from Brussels.
IAG, which also owns airlines such as Iberia and Aer Lingus, has a history of pursuing acquisitions to expand its network and market share. However, past attempts have illustrated the challenges posed by EU regulators. For instance, IAG's previous interest in Norwegian Air Shuttle ultimately did not materialise into a successful acquisition, partly due to complexities and likely regulatory scrutiny over competition implications in key markets.
The airline industry has seen various waves of consolidation globally, driven by the pursuit of economies of scale, network expansion, and enhanced financial stability. However, in Europe, regulators have often been cautious about approving mergers that could lead to reduced choice for consumers or increased fares on specific routes, particularly where the merging entities are significant players at key airports or on popular corridors.
Mr Gallego's comments underscore a broader debate within the European aviation sector about the balance between fostering competition and allowing for the creation of larger, potentially more robust airline groups capable of competing more effectively on a global stage. An overhaul of the current rules, as suggested by IAG, would likely involve a re-evaluation of market definitions and the thresholds used to assess anti-competitive impacts.
Source: IAG statements