Lufthansa’s Swoop on Air Berlin Stirs Concerns Regarding Competition

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With the ink barely dry on the deal of Lufthansa to take over large parts of the insolvent Air Berlin, the airline risks having its wings cut by rivals and regulators that are concerned about unfair competition.

On Thursday, Lufthansa signed a 210 million euro (187.32 million pounds) deal to take over Air Berlin units LG Walter and Niki, plus some short-haul planes, to strengthen its position in Germany and increase its Eurowings budget brand.

On Friday, Austrian competition authorities said that they believed Lufthansa, which also owns Austrian Airlines, would be too dominant in Vienna if it owned Niki which is Austria-based.

“We see an anti-competitive Lufthansa monopoly in Vienna on many routes after the takeover of Fly Niki,” said the competition authority’s spokesperson. “We will voice our concern about the takeover at the European Commission.”

The German cartel office stated that it expected the European Commission to take a close look at the deal.

The European Commission did not give any comments, with a spokesman saying that it had not yet been formally informed regardign the deal.

Late on Friday, easyJEt said separately that it was in discussion to take on up to 25 A320 aircraft that were operated by the insolvent Air Berlin of Germany at Berlin Tegel airport.

Currently, EasyJet flies from Berlin’s Schoenefeld airport.

RIVALS COMPLAIN

The deal also raised eyebrows with rival airlines. Michael O’Leary, the Ryanair CEO, has called it a “stitch-up”, stating that it would give Lufthansa a 95% share of the German domestic market. On Thursday, Ryanair said that it would take up its case with the European Union.

Lufthansa has commented back at such claims, stating that the deal would have to be carefully examined not only from the point of view of the German market but from the point of Europe as a whole.

Lufthansa has revealed that it has a market share of 34% on routes to and from Germany, while Air Berlin had 14%. With the takeover of parts of Air Berlin that will remain below 48%, which Lufthansa states is equivalent to the market share of Ryanair in Ireland.

On Friday, the CEO of British Airways parent IAG, Willie Walsh, said that he saw “significant” competition concerns with the deal, which would bring Lufthansa taking on around 80 of Air Berlin’s 130 planes.

On Thursday, Carsten Spohr, the Lufthansa CEO, said that he expected that the deal would be approved by the end of 2017.

A company source stated that Lufthansa was confident of getting approval but expected that there would be some remedies, as was the case when Lufthansa acquired Swiss International Air Lines and Austrian Airlines.

Air Berlin remains in discussions with easyJet over other assets.