Regulators could force Aer Lingus and International Consolidated Airlines Group (IAG) to dispose of up to eight Heathrow routes if the pair merge, an Oireachtas committee has heard. IAG is proposing to offer €2.55 a share, a total of €1.36 billion, for Aer Lingus. Its chief executive, Irish man Willie Walsh, has begun talks with the Government which is responsible for the State’s 25.1 per cent stake.
Its move has sparked considerable disquiet among politicians within and outside Government. They fear a sale of the former State airline could threaten its valuable landing rights at London’s Heathrow airport, which are seen as vital to the Republic’s trade links.
Evan Cullen, president of the Irish Air Line Pilots Association, indicated to the Oireachtas committee on transport, tourism and sport that a deal would mean the ultimate loss of at least some slots.
He told the committee EU competition regulators would be likely to demand IAG dispose of five to eight Heathrow slots if the deal went ahead, as one of its subsidiaries, British Airways competes with Aer Lingus on routes between the London airport and Dublin and Belfast. “They would be distributed to other competitors who would be required to operate those slots on the routes for a certain period of time,” he said. “Once that time is up, they can use them for other routes.”
He argued IAG’s purchase of part of the British Midland International business from Lufthansa established a precedent. It had to dispose of some routes to rival Virgin. BA acquired its Belfast- and Dublin-to-Heathrow routes as a result of the British Midland deal. Competition regulators in Brussels are likely to scrutinise all three routes if IAG’s proposal becomes formal.
Mr Cullen told the committee he believed IAG had nothing to offer Aer Lingus, which he said was “more profitable on a like-for-like basis” than the bigger group. He added that Aer Lingus had already benefited from the purchasing power of a bigger airline through a joint deal with gulf carrier Etihad, which owns 3 per cent of the Irish company.
Separately, Clare Fine Gael TD Pat Breen, who chairs the Oireachtas committee on foreign affairs and trade, warned that an IAG takeover could be bad for the regions. He said a lack of landing slots at Heathrow was hampering IAG’s efforts to increase its share of the transatlantic market, while Aer Lingus had grown its North American-bound business by 20 per cent, partly by taking feeder traffic from Britain.
Mr Breen said the acquisition by IAG of Aer Lingus’s 23 Heathrow slots would give it scope to expand from there or they could run US services through Dublin: “In either scenario, the regionals and in particular the midwest region, would be the big loser.”
