The European Commission has authorised the acquisition of joint control over Virgin Atlantic by Air-France-KLM, Delta and Virgin Group

On 12 February 2019, the European Commission approved the purchase of 31% of the shares of Virgin Atlantic by Air France-KLM, leading to joint control over Virgin Atlantic by Air France-KLM, Delta and Virgin Group.

Air France-KLM, based in France, is the holding company of Air France, the French national carrier airline and KLM, the Dutch national carrier airline. Delta is an international airline with headquarters in the United States. Virgin Group is the holding company of a group of companies, including the airline Virgin Atlantic, active in a wide range of products and services worldwide. All the airlines provide air transport services for passengers and for cargo, as well as provision of maintenance, repair and overhaul services.

The Commission received the notification of the proposed concentration on 8 February 2019. Having concerns on the effects of the proposed operation on competition, the Commission examined the impact of the transaction on the market for air transport of passengers, cargo air transport services and maintenance, repair and overhaul services.

As regards air transport of passengers, the Commission observed that the proposed operation gives rise to overlaps on direct/indirect flights (i.e. one of the companies provides a direct flight from one city to another, while the other provides a one-stop flight for the same route) and indirect/indirect flights (i.e. the companies provide one-stop flights between two cities). However, since Virgin Atlantic, Delta and Air France-KLM are not close competitors and they continue to face significant competition from other carriers on the routes where the activities of the airlines overlap, the Commission found that the overlapping routes do not raise competition concerns. Moreover, the increase in the companies’ combined slot portfolio at specific airports (namely London Heathrow and Manchester) is unlikely to have a negative effect on passengers.

With regard to cargo air transport markets, the transaction is unlikely to raise competition concerns notably because Air France-KLM, Delta and Virgin Atlantic are not close competitors and continue to face strong competition on the affected cargo routes (e.g. from Lufthansa or Cargolux). Finally, the transaction does not raise competition concerns also with regard to maintenance, repair and overhaul services, because of its limited impact on these markets.

The Commission therefore concluded that the proposed transaction would raise no competition concerns in any of the relevant markets and authorised the concentration.

Sara Capruzzi