sn26567 wrote:
The European Commission is currently reviewing the proposed acquisition of Olympic Air by Aegean Airlines originally announced in October 2012.
After the EC decision to prohibit the proposed acquisition of Aer Lingus by Ryanair, it will be interesting to see what will be the EC position on this one.
There is not much left anymore of Olympic Air, while smaller Greek airlines pop up on the domestic market and Cyprus Airways also started a domestic Greek adventure (tough that's already failing...). So if the EU agrees on this merger (probably asking to offer rights on some domestic routes to the competition) that's not really something to compare with Aer Lingus and Ryanair (not to say that the block of that merger wasn't a political decision, but well...that's how RYR loves to play it themself so yeay)...
When talking about the Olympic-Aegean merger, we are only talking about some domestic routes in a shrinking market. After the merger was blocked, Aegean and Olympic basicly shared the market (with Aegean taking over almost all international routes).
Aegean, a Star Alliance member, confirmed its contribution as pillar of development of Greek tourism and Greek economy, by launching its new routes program for 2013. The new program includes the addition of 29 new scheduled international routes from a total of 12 airports, 8 of which function as bases of the company.
The new routes program of Aegean was presented by the company's management at a press conference held in Heraklion, Crete, in the presence of the Minister of Tourism, Mrs Olga Kefalogianni.
Direct international flights are conducted now by 8 bases (Athens, Thessaloniki, Heraklion, Rhodes, Corfu, Kos, Kalamata, Larnaca), since Kos and Kalamata bases were unveiled in 2013, while Heraklion and Rhodes are enhanced with increased number of aircraft.
Moreover, there will be activity with direct international flights from Chania, Alexandroupolis, Zakynthos and Skiathos. The fact that the 130 scheduled and charter international routes, out of the total 158, are operated by regional airports, is characteristic of the effort that is being made by Aegean to strengthen the touristic areas of the country. At the same time as already announced, Aegean reinforces its international network from Athens, by utilizing the capacity which has been reduced domestically due to weak demand.
More specifically, Aegean’s flight network for 2013 includes 5 new countries (Ukraine, Switzerland, Poland, Sweden, Azerbaijan) and 10 new international destinations (Geneva, Manchester, Lyon, Stockholm, Kiev, Baku, Berlin, Nuremberg, Hanover, Warsaw) and it continues increasing significantly.
From Heraklion, where the press conference was held, in 2013, the company will conduct a total of 33 direct international routes to 12 countries. The base of Heraklion will now have 5 aircraft Airbus A320, and new flights will be conducted to St. Petersburg, Düsseldorf, Frankfurt, Tel Aviv and Kiev. Also, the frequencies and the capacity for existing destinations of Russia and Germany will be significantly increased.
During the press conference, Vice-President of Aegean, Mr. Eftichios Vassilakis, noted:
"Despite the crisis, the reduced domestic demand and the loss-making results of last years, we continue to invest by taking up initiatives to strengthen Greek tourism. We look forward to the synergies arising from the acquisition of Olympic Air, after receiving the approval of the competition commission, because only with extraversion and economies of scale we can continue our efforts and ensure competitiveness and sustainable development. In this context, we support the traditional destinations of our tourism such as Crete, Rhodes, Kos, Corfu with increased direct flights as well as we contribute to the development and consolidation of new destinations such as Kalamata. The presentation of our program here at Heraklion, is symbolic since Crete is the largest pillar of Greek Tourism, and, therefore, we support it with a base of 5 aircraft and 33 direct international routes. It's time for a synthesis of the forces of state, institutions and enterprises in order to form a common strategy that will bring back growth. "
The merger between Aegean-Olympic has been delayed until the second half of this year. The European Competition Authorities worry about the monopoly that would be created.
In my opinion I think this merger should go through, Greece cannot sustain 2 full service airlines. There is not enough demand for it. I think the merger will be blocked again since Cyprus Airways is stopping its Greek domestic runs.
theeuropean wrote:
In my opinion I think this merger should go through, Greece cannot sustain 2 full service airlines. There is not enough demand for it. I think the merger will be blocked again since Cyprus Airways is stopping its Greek domestic runs.
There's almost nothing left of Olympic Air, they only operate 10 Q400's and 4 Q100's, mainly on domestic routes and some regional international routes.
Aegean Airlines has a smaller domestic network (they stopped some routes in favor of Olympic and Olympic stopped almost all of their international services) and works together with Olympic Air for that.
I think it would be WAY better for both if they could really operate as one carrier. At this moment they already do everything to operate like one carrier without being it.
But indeed, with Cyprus Airways ending their domestic adventure in Greece, it's very likely the merger will be stopped again...there is no real alternative on the Greek domestic market.
theeuropean wrote:The merger between Aegean-Olympic has been delayed until the second half of this year. The European Competition Authorities worry about the monopoly that would be created.
In my opinion I think this merger should go through, Greece cannot sustain 2 full service airlines. There is not enough demand for it. I think the merger will be blocked again since Cyprus Airways is stopping its Greek domestic runs.
"European Commission opens in-depth investigation into proposed acquisition of Olympic Air by Aegean Airlines"
The European Commission has opened an in-depth investigation under the EU Merger Regulation into the proposed acquisition of Olympic Air by Aegean Airlines. The companies are the two main Greek airlines offering passenger air transport services on Greek domestic and international routes. Each of the companies operates a base at Athens International Airport. The Commission has concerns that the transaction may lead to price increases and poorer service on several domestic Greek routes out of Athens, where the merged entity would have a monopoly or an otherwise strong market position. The opening of an in-depth inquiry does not prejudge the outcome of the investigation. The Commission now has 90 working days, until 3 September 2013, to take a decision on whether the proposed transaction would significantly impede effective competition in the European Economic Area (EEA).
Commission Vice President in charge of competition policy Joaquín Almunia said: "We have the duty to ensure that Greek passengers and people visiting Greece can travel at competitive air fares, even more so during challenging economic times."
The Commission’s initial market investigation indicated that the proposed transaction raises serious competition concerns on a number of Greek domestic routes where Aegean and Olympic currently compete or are well placed to compete. These routes are used not only by Greek passengers, but also by a large number of foreign travellers, given the popularity of Greece as a tourist destination.
The Commission's assessment takes account of relevant factors, such as the state of the Greek economy and the financial situation of the parties. However, the investigation so far showed that the proposed acquisition would give the merged entity a monopoly on the routes from Athens to Chania, Santorini, Mytilene, Corfu, Alexandroupolis and Kos, to the detriment of ticket prices and service level offered to passengers travelling on these routes. On other Greek domestic routes where both airlines operate alongside Cyprus Airways (i.e. from Athens to Thessaloniki, Heraklion and Rhodes), the transaction would remove an important competitor.
Moreover, the Commission's investigation provided indications that the two airlines' largest competitor, Cyprus Airways, may not continue to act as a viable competitive force on the Greek domestic market in the future. Finally, the Commission's initial market investigation revealed no indications of entry prospects that would occur on a scale and within a timeframe capable of constraining the merged entity and disciplining its pricing behaviour.
The commitments proposed by Aegean during the preliminary investigation did not address these serious competition concerns.
The Commission will now investigate the proposed acquisition in-depth to determine whether its initial concerns are confirmed or not.
Basically, the EC approves the merger because:
1- Olympic would otherwise be extinct soon and the Greek market would see a de facto monopoly anyway.
2- the market in Greece has shrunk by over 1/4th since the EC first rejected the merger in 2011 and is no longer big enough to sustain 2 competitors.
Following the full merger Aegean made a press release today. They are starting roughly 15 routes out of Athens: Abu Dhabi, Birmingham, Marseille, Nantes, Hamburg, Hanover, Nuremberg, Beirut, Paphos, Copenhagen, Zurich, Catania and are thinking to either start Stockholm or Oslo, Ljubljana and Dubrovnik.
