International Airlines Group, IAG or BA/Iberia has secured EU approval for its purchase of BMI from Lufthansa. The purchase price is c. £172.5m. The quid quo pro is the insistence by the EU regulators that IAG gives up 14/56 of BMI’s slots at Heathrow.

Access to these slots is now up for auction.

The Economist’s Gulliver blog wondered if the deal was good for consumers, given the increase in market power as IAG’s total ownership of slots at the airport rises from 43% to 51%. Conversely, the deal has allowed some BMI staff to stay in employment, Lufthansa had threatened to shut down all the BMI routes, making all the staff redundant.

IAG are not losing traffic from the long haul transatlantic route, but will give up landing and take-off rights on some UK domestic and medium-haul European routes. It remains to be seen if Virgin appeals against the decision, or whether it buys some of the discarded BMI routes.

The UK’s Office of Fair Trading had received complaints about IAG’s acquisition of BMI, but declined to act at the beginning of March 2012, passing responsibility for approval to the EU’s Competition Court.

 

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