Also troubles for Lufthansa-Austrian merger ?

[itami]

Just seen on ATW Daily News :

The European Commission opened its formal investigation into the privatization and restructuring of Austrian Airlines Group, including its sale to Lufthansa, saying that it "expresses doubts that the price to be paid by Lufthansa reflects the market price for what is being sold."
Its "doubts" are also centered on whether "the Austrian state has acted as private investor and whether the restructuring plan as notified is in accordance with the community framework for rescue and restructuring of firms in difficulty."

It looks the EC simply wants to halt a too much hungry LH !

[beaucaire]

EC are somehow biased in that they should have closed down Olymic Airways and Alitalia since many years for illegal state-subsidies.
France offers special loans to their car-industry.Banks get subsidized by the billions every week.
And when airlines like LH are trying to save literally bancrupt entities like Austrian,they jump in and say No,No..

[LX-LGX]

EU press release about this:

viewtopic.php?f=31&t=39111

[euroflyer]

Do not be too negative here! It is absolutely business as usual the EU opens a formal procedure if such a merger takes place. I guess they even have to do it and they do it frequently with all type of companies in all sectors. If they feel their might be an issue, they will go on and open an in-depth research (like the LH-SN deal), but all this does not automatically mean the deal will be stopped. So lets wait and see. And honestly, I had to book a FRA-BRU-FRA flight for next Friday (20 Feb) today and I have to leave very early in the morning so the LH4570 at 7h10 or so was the only option, for the return flight I was more flexible but that did not help much. The ticket (in eco, non-flex !!) was 720€ , a little more competition on such routes, if possible, would really not harm. And with the LH-OS deal there will be quite a number of routes between Austria and Germany, Switzerland and potentially Belgium as well on which you have at least a limited competition today and probably nearly no competition left after such a deal. I do not know what they should do on this, but an investigation is fair enough I would say from a pax point of view.

[tolipanebas]

A little more competition on such routes, if possible, would really not harm. And with the LH-OS deal there will be quite a number of routes between Austria and Germany, Switzerland and potentially Belgium as well on which you have at least a limited competition today and probably nearly no competition left after such a deal.

The thing quickly gets absurd if the EU commision would block a much needed merger, just to keep competition on a route alive, though!

Remember that the mergers are taking place because (smaller) airlines allover Europe are having a really though time to survive on their own in an (over)competitive market and are urgently seeking to lower their costs and increase their revenues to make ends meet again, so it can be argued that whereas competition and choice is definitely a good thing for the consumer as it has put serious pressure on ticket fares, it has also created a chronical overcapacity which has destroyed overal profitability of many routes.

Sure, it's great for consumers to have 3 or more airlines flying a route multiple times a day and competing fiercely amongst eachother, but it must be sustainable for the airlines to do so too...
On many routes, only 2 airlines compete and as this years annual results of many airlines proof, even that will be too much already, so naturally they try to work together to combine pax, cost and flights to reduce costs and command higher prices: they want to survive!

It seems however that the EU has set itself to goal to defend the rock bottom prices pax have come accustomed to over the years, even if it means preventing airlines from returning back into the black!
To me it looks like the EU is defending a certain model too fanatically, a market model which may not be in line with market reality.

The question needs to be asked if the prices we got used to over the past decade, aren't too low and the number of choices not too extended to be sustainable in the long run. The fact is that on many routes now under investigation from the EU, there is really nothing preventing others to compete should they think they can do better and cheaper while still turning a profit; the thing that nobody seems to be willing should be indicative of the fact that maybe it isn't worth it, after all...

Not saying that 720€ for a BRU-FRA return is a rock bottom price, but equally not saying that it should be possible to book this flight for under 200€ year round with at least 3 different airlines either, which is what the EU would want.

[euroflyer]

Not saying that 720€ for a BRU-FRA return is a rock bottom price, but equally not saying that it should be possible to book this flight for under 200€ year round with at least 3 different airlines either, which is what the EU would want.

I can agree with most what you said, tolipanebas and as far as I understand, the EU is "just" checking to ensure that exactly this is the case; that there is, lets say, no alternative to a merger because otherwise business would not be sustainable. However, I only think it is fair for them to check this really in-depth and to look not only at the condition which we have today and tomorrow, but as well to the one which we might have in one year or so.

And I have not seen anywhere the Commission wants to have rock bottom prices below 200€ available all-year round as you say for any connection in the EU, but they certainly want (and need) to make sure we do not end up with less competetion and more monopolies than necessary. And I still trust this is exactly what they will be doin for LH-SN and LH-OS and I hope it will be done in the same way for AZ-AF/KL and any other future deal

[LX-LGX]

It's been a long time since the previous post about this merger, but there is news now:

"... The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned acquisition of Austrian Airlines by Lufthansa of Germany. The Commission’s initial investigation indicated that the proposed acquisition could, on certain routes, give rise to reduced choice of airline services for passengers and the likelihood of higher fares and that there are therefore serious doubts as to the proposed takeover's compatibility with the Single Market in the absence of appropriate remedies. The decision to open an in-depth inquiry does not prejudge the final result of the merger investigation..."

Source:
http://europa.eu/rapid/pressReleasesAct ... IP/09/1065

[Air Key West]

Isn't LH going again through the same procedure as with SN ? Looks very similar to me.
Let's see what the Transport and Competition DGs at the EU Commission, in particular Neelie Kroes, will do when AF announces the acquisition of OK (Czech airlines). Or is that setlled already ?

[euroflyer]

Isn't LH going again through the same procedure as with SN ? Looks very similar to me.
Let's see what the Transport and Competition DGs at the EU Commission, in particular Neelie Kroes, will do when AF announces the acquisition of OK (Czech airlines). Or is that setlled already ?

Yes, it will be same procedure again I guess. At the end LH will have to make some concessions on the routes from Germany, Switzerland and Belgium to Austria and everything will be fine. But it will be tough negotiations.

On the takeover of OK bei AF/KLM, I am not sure, but I think here the negotiations between the airlines have not even been finalised? I have not read that that case has been filed with the EU already. But I might be wrong.