The recent approval of Lufthansa’s deal to acquire a 41% stake in Italy’s ITA Airways for 325 million euros has marked a significant move in the European aviation sector. This deal will not only boost Lufthansa’s presence in the southern European market but will also provide key long-haul routes to the German airline. The agreement includes the transfer of Italian short-haul routes to rival airlines such as Easyjet and Volotea, as well as interlining agreements to enhance connectivity and frequency on long-haul routes.
To address competition concerns, Lufthansa and ITA have agreed to transfer slots at Milan’s Linate airport to competitors, ensuring a competitive environment in the region. The approval of this deal by the EU antitrust watchdog comes with the condition that rivals, approved by the regulator, begin operating the routes before Lufthansa can finalize the deal. This measure aims to prevent a monopolistic situation where competitors are unable to compete effectively.
Despite the potential benefits of the deal for Lufthansa, analysts are skeptical about the future of ITA Airways, given the challenges faced by its predecessor, Alitalia. Lufthansa may need to make significant investments to rebuild ITA and improve its financial performance. The European regulators are also concerned about the dominance of the region’s largest airline groups, including Lufthansa, and are closely monitoring consolidation efforts in the industry.
In addition to the Lufthansa-ITA deal, other high-profile transactions in the European aviation sector are under scrutiny. The European Commission is evaluating British Airways-owner IAG’s bid to acquire Air Europa and Air France-KLM’s offer to take a stake in SAS. The approval of these deals will have implications for competition and consumer choice in the region. Despite these concerns, IAG has welcomed the recognition of the benefits of airline consolidation by the Commission.
Overall, the approval of Lufthansa’s deal to acquire a stake in ITA Airways highlights the ongoing consolidation efforts in the European aviation sector. The move is expected to increase competition, enhance connectivity, and provide consumers with more options for air travel. However, concerns remain about the potential impact on consumer choice and affordability in the region. As the industry continues to evolve, regulatory bodies will play a crucial role in ensuring fair competition and a healthy market environment for all stakeholders.
