Germany’s Federal Cartel Office has approved Lufthansa’s acquisition of a 10% stake in Latvian airline Air Baltic, despite identifying competition concerns on routes between Germany and the Baltic states (Riga, Tallinn, Vilnius).
The approval was granted because these routes are considered minor markets with annual revenues under €20 million, requiring clearance under current merger laws. Ticket prices may rise, as Lufthansa and airBaltic have previously competed closely on several of these routes with limited alternative options for consumers.
Lufthansa secured the stake by purchasing convertible bonds worth €14 million and will gain a seat on airBaltic’s supervisory board.
While airBaltic remains majority-owned by the Latvian state, there are plans to involve Estonia and Lithuania ahead of a possible IPO. The Cartel Office emphasised that European competition law would only come into play if Lufthansa were to gain control of airBaltic.
airBaltic is a key wet lease partner for Lufthansa Group carriers, leasing aircraft and crews for European operations.
[…] with annual revenues under €20 million, requiring clearance under current merger laws. […] Source link [aviation […]
Of course the German Cartel Office waves through Lufthansa´s 10% investment in Air Baltic. They never put any limits on Lufthansa´s expansion. As LH is a government majority owned company. The Cartel Office, as do the European authorities, ignores criteria which is applied to other companies. AirFrance/KLM is in the same boat. It is an instrument of government policy.
This not a question of 10% investment as LH has already stated it has an intention to cover 100% of the IPO to incorporate Air Baltic into the LH fold.
Will we ever, get some equilibrium in policies?
The alternatives :
1)IAG — BA is a private company from a country outside the EU so will not be included, while Iberia is a bit player who provides some sort of saving face to the EU, It does not dictate terms as LH and AF do.
2) Turkish Airlines could provide the means for an additional alliance as it is big enough, but yet again it is outside Europe.
3) Aeroflot and its lackies – these will mean something when the geopolitics are sorted out with the EU and the rest of the world. Yet again it is outside Europe.
Thus the offers are few so the need for transparency and fairness is paramount – things which are unlikely to happen in the immediate future.
Aeroflot and its lackies
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