European Commission approves acquisition of Flybe

posted on 8th July 2019 by Justin Burns

The European Commission on Friday (5 July) approved the merger of UK regional airline Flybe by Connect Airways – a consortium made up of Virgin Atlantic, Stobart Aviation and Cyrus.

It was made under the EU Merger Regulation and the decision is conditional on full compliance with commitments offered by Connect Airways.

The Commission investigated the impact of the proposed transaction on the market for air transport of passengers on routes from British airports to other European airports as well as some intra-UK routes.

The Commission’s investigation found the transaction, as initially notified, would have led to quasi-monopolies on two direct European routes, namely Birmingham – Amsterdam and Birmingham – Paris.

This quasi-monopoly situation would result from Air France-KLM acquiring indirect control over Flybe, via its joint control over Virgin Atlantic. The Commission approved the joint acquisition of Virgin Atlantic by Air France-KLM, Delta and Virgin group in February 2019.

The Commission also noted that entry of competitors into these routes would be difficult, considering that both Amsterdam Schiphol and Paris Charles de Gaulle airports are very congested airports.

The Commission also investigated the effects of the transaction on several other markets, such as passenger air transport to/from Amsterdam Schiphol airport, cargo air transport services, ground-handling services or airport infrastructure services but did not find competition concerns in any of these.

To address the competition concerns identified by the Commission with regard to the Birmingham – Amsterdam and Birmingham – Paris routes, Connect Airways offered a set of commitments.

Connect Airways has committed to the release of five daily slot pairs at Amsterdam Schiphol airport and three daily slot pairs at Paris Charles de Gaulle airport. Under the proposed commitments, these slots will be released to competing airlines that want to fly the Birmingham – Amsterdam and Birmingham – Paris routes.

The Commission said these commitments fully address the competition concerns identified regarding Connect Airways’ acquisition of Flybe. The Commission therefore concluded the proposed transaction, as modified by the final commitments, would no longer raise competition concerns. This decision is conditional upon full compliance with the commitments.

Connect Airways said Mark Anderson will now formally assume the role of CEO and with the leadership teams from Flybe and Stobart Air will now focus on plans to grow Flybe’s regional network, as well as expanding Stobart Air’s successful franchise business.

He said: “On behalf of Connect Airways, I couldn’t be more excited by the opportunity we have to build a strong platform in the UK and to grow our franchise flying operation in Ireland.

“Our whole team is focused on redefining the experience for our customers, as we rediscover the excitement and passion of being Europe’s largest regional airline.”

Current Flybe CEO Christine Ourmieres-Widener will leave the airline on 15 July.