Aegean To Merge With Olympic Air

The European Commission has approved the merger of Olympic Air by Aegean Airlines. The airlines first proposed the acquisition in 2010 but the deal was blocked due to its effect on competition. Since that time, Olympic Air has changed considerably, dropping from a mixed fleet of 32 aircraft to just 15 turboprops. Additionally, the pair previously competed on nine routes, flying four million passengers a year whereas they now compete on three routes, plus two more in the summer, covering 950,000 passengers. It was also noted that there is no other possible investor or purchaser for Olympic Air and that without the merger, it would be forced to exit the market due to financial constraints. This would leave Aegean as the only remaining airline in that market, and it would therefore gain Olympic Air's business regardless. "There is no doubt that the 'failing firm defence' scenario can apply and should apply to this case," the commission said in its public defence of the tie-up. "I am of course fully aware that the market situation on the five routes we have looked at is not favourable to the almost one million passengers who use them each year and, in any possible scenario, would only face one single carrier. But the merger itself is not the cause of this situation."

TAGS: Europe
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