European Commission blocked (27-Feb-2013) Ryanair’s proposal to takeover Aer Lingus, stating the merger would harm consumers through the creation of a dominant company on 46 routes. This included 28 routes on which the merged carrier would have an outright monopoly, 11 routes on which competition would be very low, and seven routes on which Ryanair and Aer Lingus operate alongside other carriers however they still have very high market shares. Ryanair, which currently holds a 30% stake in Aer Lingus, stated it will appeal the Commission’s ruling and said it was a “political decision” bowing to the Irish Government’s interests. Ryanair said, “We believe that we have strong grounds for appealing and overturning this politically-inspired prohibition. We regret that this prohibition is manifestly motivated by narrow political interests rather than competition concerns. Accordingly, Ryanair has instructed its legal advisers to prepare a comprehensive appeal”. Ireland's Government holds a 25% stake in Aer Lingus and opposed Ryanair’s bid to takeover the airline. Aer Lingus CEO Christoph Mueller welcomed the decision and said, "Aer Lingus’s position from the outset has been that Ryanair’s offer should never have been made. The series of inadequate remedy offers presented by Ryanair only underlines the view that Ryanair made its offer without any reasonable belief that it could obtain clearance." The concessions offered by Ryanair included the transfer of 43 Aer Lingus routes to Flybe and three routes to British Airways. The Commission stated, “Flybe was not a suitable purchaser capable of competing sufficiently with the Ryanair/Aer Lingus merged entity” and that “IAG/BA would not constrain the merged entity to a sufficient degree”. Flybe responded to the decision stating it was “disappointed” and believes Ryanair’s proposed remedy “would have afforded credible and robust competition, including new jobs and bases in Ireland”. [more - original PR - Aer Lingus] [more - original PR - European Commission] [more - original PR - European Commission II] [more - original PR - Flybe] [more - original PR - Ryanair] [more - original PR - Ryanair II]
European Commission blocks Ryanair’s proposal to takeover Aer Lingus
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Europe summer 2017 airline capacity outlook: fifth successive summer of above trend seat growth
Airline seat growth from Europe in summer 2017 is set to stay at almost 6% for the third successive summer, according to data from OAG. This rate had not previously been reached since 2010, although this will be the fifth straight summer of growth ahead of its 10 year average rate. The summer 2017 season started on 26-Mar-2017 and, although always subject to further change, the data give a fairly clear picture.
Seat capacity on routes from Europe to Africa will grow the fastest, as the region recovers from a terrorism related drop in demand in North Africa. There will also be above trend growth in almost every other region from Europe (including intra Europe). The only exception is Europe-Middle East, where the newly cautious Gulf airlines' growth is slowing this summer.
On the North Atlantic, always important for the profitability of Europe's leading legacy airlines, growth will be faster than its 10 year trend, but it will at least be a little slower than in the past summer. The loss of market share from the immunised North Atlantic JVs to newer and smaller competitors, including LCCs, is set to continue. As ever, the OAG capacity data provide a window into the changing structure of the airline markets from Europe.
Aer Lingus part 2: vies with Icelandair, airberlin, Norwegian as leading Nth Atlantic value carrier
Aer Lingus' mission statement includes an aim to be the leading value carrier across the North Atlantic. Although this is not explicitly defined, it can validly claim to be among the top four in this category. Also vying with Aer Lingus for this title are Icelandair, airberlin and Norwegian.
Part 1 of this report on Aer Lingus looked at the development of its capacity and its financial performance, both before and after the acquisition by IAG in Aug-2015. This second part compares its North Atlantic network and its unit cost positioning with those of Icelandair, airberlin and Norwegian.
All four are currently pursuing rapid growth between Europe and North America and have similar weekly seat capacity scheduled in this market for summer 2017. Their trans Atlantic networks differ by their numbers of North American destinations, European hubs serving that region and European destinations connected to those hubs.
Aer Lingus is well placed among the four, but cannot currently claim to be the leading North Atlantic value carrier. Norwegian, with multiple European long haul bases, is developing quite differently from the other three. Moreover, although Aer Lingus is cost efficient, Norwegian has a significant CASK advantage.