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EU attacks IAG’s Air Europa acquisition

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In late 2019, IAG, parent of British Airways, Iberia and Vueling, announced its intention to acquire Air Europa. Air Europa is the third-largest airline in Spain, after Iberia and Vueling, operating around 15% of all Spanish domestic flights.

The hope was that the deal would create a ‘5th European hub’ in Madrid, bulking up the existing Iberia operation, to sit alongside London, Frankfurt, Paris and Amsterdam. You can read our original article on the plans here.

At the time, the price was €1bn. Clearly a lot has changed since then, including the worst crisis aviation has ever seen. IAG has now negotiated a 50% discount on the price. Better yet, IAG doesn’t have to pay a penny until 2026.

EU attack IAG's Air Europa acquisition

The problem for IAG is monopoly concerns in Spain, with the additional of Air Europa giving it dominance of the domestic market with 73%. Ryanair will be the biggest competitor but only has a 15% share.

The European Union has now announced an in-depth investigation into the dealsee here.

To quote:

“The Commission is concerned that the proposed transaction could significantly reduce competition on 70 origin and destination (O&D) city pairs within and to/from Spain, on which both airlines offer direct services. On some routes, IAG and Air Europa have been the only two airlines operating.

The Commission is also concerned about the effect of the proposed transaction on routes on which other airlines rely on Air Europa’s domestic and short-haul network for their own operations at the Madrid airport and a number of other EU airports. Without Air Europa’s feeder traffic, some airlines may decide to terminate their services to international destinations also served by IAG, reducing choice for travellers.

At this stage, the Commission found that competition from other airlines, including from European low-cost carriers would likely not provide a sufficient constraint on the merged entity on the routes where it would hold high market shares. Similarly, the competitive pressure of European network airlines or Latin American airlines appears insufficient.”

The EU has until 5th November to make a decision on whether the acquisition can proceed. Interestingly, IAG has not voluntarily submitted any potential remedies for consideration.

The problem is that, as you can see from the market share figures above, there is no realistic competitor to pick up those routes.

IAG may be forced to create, and then divest, a new airline to operate these routes, or to provide substantial financial backing to a small Spanish airline to fund expansion to take on Air Europa routes. Even then, it wouldn’t help SkyTeam carriers flying to Spain who need onward connectivity within the alliance.


How to earn Avios points from UK credit cards

How to earn Avios from UK credit cards (May 2022)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

In February 2022, Barclaycard launched two exciting new Barclaycard Avios Mastercard cards. You qualify for the bonus on these cards even if you have a British Airways American Express card:

Barclaycard Avios Plus card

Barclaycard Avios Plus Mastercard

25,000 Avios for signing up and an upgrade voucher for spending £10,000 Read our full review

Barclaycard Avios card

Barclaycard Avios Mastercard

5,000 Avios for signing up and an upgrade voucher for spending £20,000 Read our full review

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways BA Premium Plus American Express Amex credit card

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable card perk – the 2-4-1 voucher Read our full review

British Airways BA Amex American Express card

British Airways American Express

5,000 Avios for signing up and an Economy 2-4-1 voucher for spending £12,000 Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points.

The Platinum Card has doubled its sign-up bonus to 60,000 Membership Rewards points, which convert to 60,000 Avios, if you apply by 1st June 2022.

American Express Amex Gold

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

American Express Platinum card Amex

The Platinum Card from American Express

60,000 points (SPECIAL OFFER) and an unbeatable set of travel benefits – for a fee Read our full review

Run your own business?

We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,000 Avios.

Capital on Tap Visa card

Capital On Tap Business Rewards Visa

10,500 points bonus – the most generous Avios Visa for a limited company Read our full review

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus.

British Airways Accelerating Business American Express card

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

There are also generous bonuses on the two American Express Business cards, with the points converting at 1:1 into Avios. These cards are open to sole traders as well as limited companies.

Amex Platinum Business American Express

American Express Business Platinum

40,000 points sign-up bonus and a long list of travel benefits Read our full review

American Express Business Gold

20,000 points sign-up bonus and free for a year Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

(Want to earn more Avios?  Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)

Comments (29)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • Cabal of rabid baboons says:

    That really sounds like a hotel I’d love to stay at, targeted at clients on the lash returning back steaming to the hotel during the early hours.

  • Laura says:

    I actually bought the brunch deal before I booked the overnight stay. Didn’t think to mention it on here!

This article is closed to new comments. Feel free to ask your question in the HfP forums.

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