European Union antitrust officials are expressing concerns about Lufthansa’s €325 million purchase of Italy’s state-owned ITA Airways, fearing that the takeover could lead to higher prices and less choice for flights to central Europe and the US. This has prompted airline staff representatives to call for a quick decision from Brussels to approve the deal in order to signal a focus on strength, competitiveness, and growth in the European aviation industry. The case is causing a political storm in Italy, with transport minister Matteo Salvini warning that blocking the deal would be seen as a hostile act. The deadline for the Commission’s decision is 4 July, coinciding with a politically tense time as Commission President Ursula von der Leyen seeks approval for a second term from EU leaders.
The concerns raised by the European Commission stem from fears that the Lufthansa-ITA deal could limit flight choices between Italy and central Europe, as well as give ITA a dominant position at Milan’s Linate airport. As Lufthansa is already part of the Star Alliance with major global airlines like United Airlines, there are worries that further consolidation could hinder competition on long-haul routes to destinations such as the US, Canada, and Japan. Antitrust officials are in discussions with Lufthansa to explore potential remedies to address these competition concerns, such as shedding services. While the Commission has approved the majority of merger cases, outright prohibitions are rare, and it has in the past stood firm against political pressure, as seen with the blocked rail sector tie-up between Siemens and Alstom.
The letter from aviation unions, including Germany’s ver.di and Italy’s ANPAC, emphasizes the importance of strengthening the European aviation industry, preserving jobs with European standards, and ensuring tax revenues remain in Europe. It also points to the existing challenges faced by the sector, such as EU environmental laws, Russian sanctions, and asymmetric market access. The deadline for the Commission’s decision falls during a politically sensitive time, as von der Leyen seeks reappointment and faces pressure from various stakeholders. The hope is that a swift and positive decision on the merger will demonstrate a commitment to fostering competitiveness and growth in Europe’s aviation industry.
The takeover of Italy’s state-owned ITA Airways by Lufthansa has ignited a political and economic debate in Italy, with Minister Matteo Salvini warning against any action by Brussels that could be seen as hostile. Italy’s economics and finance ministry is the sole shareholder of ITA Airways, which took over from the debt-laden Alitalia. The concerns raised by the European Commission revolve around the potential impact of the merger on flight choices, competition, and dominant market positions in key airports. The aviation unions are urging Brussels to approve the deal quickly to demonstrate a commitment to a fair market environment, competitiveness, and growth in European aviation.
As the deadline for the Commission’s decision approaches, all eyes are on Margrethe Vestager, the lead antitrust official, who is overseeing the case. Vestager has indicated that the case is ongoing, and officials are still considering potential remedies to address competition concerns. While Lufthansa remains confident of receiving approval, the final decision will have significant implications for the aviation industry in Europe. The case underscores the complex interplay between political, economic, and regulatory factors in the aviation sector, with potential implications for stakeholders across the continent. The outcome of the Lufthansa-ITA deal will be closely watched by industry observers, policymakers, and regulators as they navigate the evolving landscape of European aviation.
