Wednesday 7 December 2016

Impact on fares to be scrutinised by watchdog amid fears of price hikes

Published 28/05/2015 | 02:30

A passenger aircraft, operated by British Airways, a unit of IAG SA, passes above an Airbus A320 passenger aircraft, operated by Aer Lingus Group Plc, as it prepares to land at Dublin Airport, operated by Dublin Airport Authority, in Dublin, Ireland, on Wednesday, Feb. 18, 2015. Aer Lingus Group's chief executive officer-designate Stephen Kavanagh said a bid approach from IAG SA comes at a time when the Irish carrier has been mulling the need for a partnership and presents a
A passenger aircraft, operated by British Airways, a unit of IAG SA, passes above an Airbus A320 passenger aircraft, operated by Aer Lingus Group Plc, as it prepares to land at Dublin Airport, operated by Dublin Airport Authority, in Dublin, Ireland, on Wednesday, Feb. 18, 2015. Aer Lingus Group's chief executive officer-designate Stephen Kavanagh said a bid approach from IAG SA comes at a time when the Irish carrier has been mulling the need for a partnership and presents a "fast-track" growth opportunity. Photographer: Aidan Crawley/Bloomberg

The State's competition watchdog will scrutinise the likely impact on airfares if IAG buys Aer Lingus, as officials in Brussels launch a probe into the planned €1.4bn takeover.

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Aer Lingus and IAG-owned British Airways are currently the only airlines that fly between Dublin and London Heathrow, raising fears that the buy-out will rule out any price wars.

Because of the size of the planned takeover, the decision on whether or not it happens lies with competition chiefs in the European Commission.

The State's Competition and Consumer Protection Commission (CCPC) will be feeding into that probe, which was begun yesterday. The so-called phase one investigation by Brussels lasts 25 working days.

The Department of Transport and IAG have had preliminary talks with the European Commission over the past number of weeks as they thrashed out a deal that includes pledges on the use of slots at Heathrow, and giving the Government a veto over any possible future sale of those Aer Lingus slots.

But fears have already been raised by the Consumer Association of Ireland and other commentators that the Aer Lingus takeover will result in higher fares out of Ireland.

An IAG spokeswoman insisted that this won't be the case. She said that Ireland is such a competitive market for airlines, particularly given the presence of Ryanair, that there's "no reason" to think that fares would rise as a result of the sale.

A 7.40am flight with Aer Lingus from Dublin to London Heathrow on Monday June 29, returning the following day at 6.10pm, costs €251.97 including taxes. That's the cheapest ticket available for those times. With British Airways, return flights on the same day at similar times cost €209.57, according to its website.

Hub

IAG claimed that fares on services from Ireland to North America are also unlikely to increase as a result of a takeover.

Dublin Airport, which IAG wants to use as a hub for traffic to the United States in particular, has seen a surge in transatlantic traffic in the past couple of years.

Aviation industry publication 'Anna Aero' yesterday reported that Dublin is currently the fastest-growing airport in Europe for long-haul services, mostly to North America. It's already the sixth largest European airport for the number of transatlantic services it provides.

The European Commission might tell IAG that it must relinquish some slots at Heathrow to be allowed buy Aer Lingus. That could facilitate the entry of a new competitor on the route. It's unlikely to be Ryanair.

The CCPC will also examine the planned Aer Lingus takeover in terms of how it would impact services in the entire island of Ireland.

Irish Independent

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