the flights and the numbers that don’t convince you – WWN

In the package that the EU Competition Directorate General sent to the Ministry of Economy and Lufthansa – to explain theopening of the in-depth investigation into the marriage proposal between Ita Airways and the Germans — there are thousands of numbers, dozens of post-merger scenarios and more than a few questions. Not on the validity of the operation – he confides to Courier those who work at the EU Antitrust headquarters -, but on the negative effects it could have on consumers in terms of choices and costs.

The EU objections

The EU press release lists five critical issues regarding the operation: the dominant position at Milan Linate, on the routes between Italy and Central Europe, on connections between Italy and North America, India, Japan. And again: the risk that Lufthansa’s transatlantic joint venture reduces options for travelers. And that the German investment has a negative impact on domestic flights within Italy for foreign companies that have signed codeshare agreements with ITA.

Criticisms from experts

Three experts on mergers and acquisitions in the sector, consulted by this newspaper, do not hide their doubts about some of the critical issues highlighted. Several of these – they underline – are outdated because there is already, for example, an agreement for the transfer of a slot package in Milan Linate. On others — such as the call to reduce presence in the North American market or even abandon some routes — the European demands simply don’t make sense, they say.

Global competition

Global competition – the experts continue – cannot subject European companies to constraints, leaving the field open to all the others, starting with Turkish Airlines, the Asian, the Middle Eastern and the American ones. The EU Antitrust does not go into detail about the dossier. Ita, the Treasury and Lufthansa did not comment. But the cross-referencing of sources and data provided by specialized platforms tries to provide a picture of the critical issues.

The situation at Linate

In 2024, according to data provided by the Cirium Diio company, over 58% of the seats offered at Milan Linate airport will be in the hands of ITA. Another 7% will be offered by the Lufthansa group. Combined, the two companies would have two-thirds of the market. A fact that the European Commission considers problematic: the Milanese city airport is slot constrained, there are no longer free take-off and landing rights to allow a new carrier to enter. Hence the request to sell a package of slots to the market. The situation is different in Rome Fiumicino where together Ita and Lufthansa would have a third of the offer.

Flights to Europe

The other critical issue highlighted by the EU is that of the risk of a dominant position on connections between Italy and Central Europe, meaning Germany, Austria, Switzerland, Belgium, the countries where the European giant has its group companies: Lufthansa and Eurowings, Austrian Airlines, Swiss and Edelweiss, Brussels Airlines plus the Italian Air Dolomiti. On the Linate-Frankfurt, Linate-Brussels, Rome-Frankfurt, Rome-Munich and Rome-Zurich routes, the Italian-German marriage would lead to the creation of five monopolies. Then there would be the Rome-Brussels which would see Ita and Brussels Airlines hold almost three quarters of the offer (the rest in the hands of Ryanair).

Time sensitive customers

On this point too the Commission wants concessions. In particular on Linate, the sources claim. And here we need to get a little technical. Officially, the analysis of the impact of a merger is carried out on the conurbation which in Milan includes three airports: Linate, Malpensa and Bergamo. But EU officials – and rival airlines (Air France-KLM, Iberia, British Airways, Ryanair, easyJet, Wizz Air) – believe it is more correct to focus on Linate. The airport, given its location close to the centre, is perfect for business customers – defined in time sensitive jargon – for whom taking off from city ​​airport Milanese and from Malpensa (in the province of Varese) and Bergamo.

Intercontinental flights

The EU Antitrust also highlights problems on the intercontinental segment, citing connections with North America, India and Japan. In this case – explain Commission sources – the analysis is extended to the whole of Europe. How come? From Italy a person can go to New York or Delhi or Tokyo either with direct flights – when available – or with a stopover. According to the established parameters, travel options with arrival at destination no later than 2-3 hours are considered comparable compared to the direct connection. With the Ita-Lufthansa marriage, according to community technicians, consumers would have fewer comparable alternatives. A point that Ita, Lufthansa and several experts dispute.

The long-haul offer

According to Cirium Diio, in 2024 almost a third of the seats on sale between Europe and the USA will be in the hands of Star Alliance (Lufthansa, United Airlines), 30% of SkyTeam (Air France-KLM, Delta Air Lines) and 28% of oneworld (British Airways, American Airlines). Ita has a market share of 1.5%. Looking to the East, the Lufthansa group and Ita would have almost a fifth of the offer on the routes with India and Tokyo. But – EU technicians calculate – by also adding Lufthansa’s allies (Air India, All Nippon Airways, Turkish Airlines) the share would rise to around 50%.

Flights with North America

But the transatlantic market – the most profitable for carriers – is the real critical issue. So much so that tensions on this aspect have not been lacking in the past weeks. According to the EU Antitrust, the Ita-Lufthansa union creates a concentration problem on various routes between Rome Fiumicino and North America: here the numbers of United Airlines and Air Canada, partners of the Germans in the A++ joint venture, would also come into play. The joint venture is not just any agreement. an agreement where the participants agree on everything — prices, routes, frequencies, times — and share the revenues. And for this we need a specific green light from the regulatory authorities.

The routes under the lens

The EU Antitrust, analyzing the market, reports that Rome-New York would see the share of Ita and A++ rise to 54% of the total offer of seats in 2024. Rome-Washington would become a monopoly (only Ita and United would fly ), the same also applies to the Rome-San Francisco. Then dominant – with 75-80% – would be Ita and the joint venture on Rome-Boston and, when started by the Italian carrier, Rome-Chicago and Rome-Toronto. This only on direct flights.

Market shares

But since passengers fly to North America also with stopovers elsewhere, the Commission’s analysis focused on overall flows. In the period August 2022-July 2023 (the one consolidated by data provided by the US Department of Transport) it emerges that almost 13% of those who flew between Italy and the United States boarded an Ita flight. Another 15% on a Lufthansa group aircraft. An additional 14% on United Airlines jets and just under 2% on Air Canada jets. All of them together carried 43%. Too much for the EU Antitrust. That asks to reduce its presence on the market. And he sends the dossier back to extra time.

Subscribe to L’Economia’s newsletters

Whatever it Takes by Federico Fubini

The challenges for the economy and markets in an unstable world

Europe Matters by Francesca Basso and Viviana Mazza

The Europe, the United States and Italy that count, with innovations and important decisions, but also small notable stories

One More Thing by Massimo Sideri

From the world of science and technological innovation, news that changes our lives (more than we think)

And don’t forget the newsletters
The Economy Opinions And The Economy 6pm

Corriere della Sera also on Whatsapp. sufficient click here to subscribe to the channel and always be updated.