(Reuters) – Aegean Airlines (AGNr.AT) may have to offer fresh concessions to secure EU approval for its second bid to buy Greek rival Olympic Air (MRFr.AT), after the EU’s competition watchdog deepened its investigation into the deal on Tuesday.

Aegean submitted concessions to the European Commission last month, including capping fares on some domestic routes. It sees the 72 million-euro ($94 million) deal as vital to its survival in the shrinking Greek air transport market.

But the Commission said in a statement on Tuesday that it was concerned a deal would lead to price rises and poorer services on some domestic routes out of Athens, where the combined group would have a monopoly or strong position.

The routes in question were used by Greek passengers as well as foreign travelers, it said.

“We have the duty to ensure that Greek passengers and people visiting Greece can travel at competitive air fares, even more so during challenging economic times,” EU Competition Commissioner Joaquin Almunia said in the statement.

The Commission will now decide on the deal by September 3. Reuters had reported the Commission still had concerns earlier this month.

The regulator blocked Aegean’s first bid for Olympic in 2011, worried that the combined group would have a quasi-monopoly in the Greek air travel market.

And blocking another deal in the sector, the Commission rejected Ireland-based carrier Ryanair’s (RYA.I) third bid for Aer Lingus (AERL.I) in February this year, saying Europe’s biggest low-cost airline had not offered sufficient concessions.

(Reporting by Foo Yun Chee; Editing by Greg Mahlich)

Flight Global
By Alan Dron

Flights to and from Greece are being severely affected as two national strikes sweep across the country to protest the government’s austerity plans.

All flights using Greek airports have been cancelled for the duration of strikes by air traffic controllers between 06:00-10:00 and 18:00-22:00 local time on 28 and 29 June.

By 10:00 GMT Greece’s largest airline, Aegean Airlines, said it had so far cancelled 26 flights and planned to reschedule a further 97 throughout the day. It added that it planned to cancel 31 flights and reschedule a further 82 on 29 June as a result of the dispute.

Olympic Air said that the 28 June strike had led it to cancel 39 round trips and reschedule 24.

Public transport to and from Athens Airport has also been stopped by the strike.

Capital.gr

Olympic Air announced on Tuesday that it signed a wide range cooperation agreement with Cyprus Airways, which focuses on the strengthening of the presence of the two airlines in the wider region of Southeastern Europe.

The agreement which was signed in Nicosia by Mr. Yiannis Karakadas, Olympic Air’s Executive Chairman, and Mr. George Mavrokostas Cyprus Airways Executive Chairman creates new horizons for the two companies, while offering important advantages to travelers. It provides for code sharing direct scheduled flights of Olympic Air and Cyprus Airways (domestic and international). Cooperation between the two companies will start on March 27th, with code shared flights from (and to) Athens, Rhodes, Herakleion and Thessaloniki, to (and from) Larnaka and Pafos. As from April 15th, it will be expanded to cover most domestic and international destinations, of Olympic Airways as well as flights of Cyprus Airways.

Travelers will have a much greater range of choices for trips, with cheaper air-fares to dozens of Greek islands and cities as well as the other European destinations that the two companies cover. Passengers of each company will collect points from the Sunmiles frequent flyers’ programmes of Cyprus Airways and the Travelair Club of Olympic Air for the entire itinerary up to their final destination, regardless of whether one leg of the trip involves one company or the other. At the same time they will have the opportunity to redeem the points they collected in both companies, winning more free trips. Details will be announced at a later date.

Cooperation between the two airlines will cover other sectors as well, such as the provision of ground services at the airports of Greece and Cyprus, the joint use of VIP lounges and the exploration of all options for the utilization of the infrastructures of the two airlines.

Olympic Air’s Executive Chairman Mr. Yiannis Karakadas made the following statement: “Our common origins and the high standard of passenger service which characterize both Cyprus Airways and Olympic Air will receive a big boost as a result of this agreement, creating an even larger network for our passengers who will benefit from the common vision of excellence in the services we provide. Today Cyprus Airways and Olympic Air are laying the foundations for cooperation with excellent prospects of further expansion.”

Cyprus Airways Executive Chairman Mr. George Mavrokostas said: “I am pleased that this common effort has born fruit and I am sure that a new era is dawning in the relations between Cyprus Airways and Olympic Air, with a promising future for both organizations. The prospects of the new cooperation lead to a stronger presence of the two companies in the wider region of Southeastern Europe during a very difficult
period for international air transport, offering important benefits and advantages to the traveling public.”

Just The Flight

Greek airline Aegean has revealed that they are to take over slots from airline Olympic Air and offer travellers a number of new flights to Paris and Heathrow. Having previously revealed that four London based slots had been bought, Aegean Airlines said that they were to add new services and increase current route frequencies.

Last week Aegean revealed that it had purchased slots at Heathrow which could be sold onto other airlines or leased to other companies. However, in new developments the airline revealed that it would keep the slots for itself, making use of its new Airbus A320 and A321 to offer more travel choices to customers. A new route will be launched from London Heathrow, offering daily and direct flights to Larnaca in Cyprus. Meanwhile, the number of services between Athens and Heathrow will be doubled from two daily flights to four, giving travellers even more choice.

Elsewhere, Aegean is also to alter routes available from Paris Charles de Gaulle, with the first new addition to be a three weekly flight between the French airport and Thessaloniki. Meanwhile the current daily service between Paris and Athens will be tripled to three flights a day.

The news will especially welcomed by individuals looking to book their holidays to Greece for the summer season. So with a range of new flights and routes available, people will be able to find more services appropriate to their travel needs.

Breaking Travel News

Aegean Airlines made a net loss of €23.3 million in financial 2010 as the carrier was hit by the Greek debt crisis.

The largest carrier in the country also saw revenue fall five per cent to €591 million.

“Weak domestic demand conditions, the subsequent significant reduction in average fare and the rise in the price of fuel were the main contributors to the loss,” the airline explained in a statement to markets.

With Greece still facing economic turmoil moving into 2011, Aegean managing director Dimitris Gerogiannis argued things would continue to be difficult.

This despite an expected rebound in tourist arrivals to the Mediterranean destination.

“The challenges of the acute recession of the Greek economy and the significant rise in the price of fuel, will continue to affect the company’s results during the current year” he said.

Analysts are predicting the Greek economy will contract three per cent in 2011 after a 4.5 per cent drop last year.

Aegean saw international traffic rise nine per cent in 2010 while the number of passengers on its domestic network fell 16 per cent.

New routes – including to Bogotá and Moscow – will be launched this year.

Aegean and biggest rival Olympic confirmed earlier this month they would appeal against a European Union ruling that blocked their plan to merge.

Greek Reporter
An opening to the Cypriot market has been assumed by Aegean Airlines, using the runway in Heathrow acquired by Olympic Air, for immediate flights for the route between Larnaka-London.

Aegean is attempting to get a portion of the air flights between Cyprus and Britain. Until now, it has been ruled by British Airways and the Cypriot Airlines. The flights to the British capital are expected to begin on March 27th and Aegean’s program foresees at least one daily flight.

Associated Press

ATHENS, Greece – Greece’s Olympic Air says it will cut routes to London, Paris, Vienna and Brussels as part of a reorganization in the wake of the European Commission’s decision to block a proposed merger with local competitor Aegean Airlines.

An Olympic statement says both companies will appeal to European courts against the Jan. 26 ruling, which stated the combined carrier could monopolize Greek air travel.

Wednesday’s statement said Olympic’s board decided to reorganize its routes, increasing domestic flights while maintaining or expanding services to Amsterdam, Belgrade, Bucharest, Cairo, Istanbul, Larnaca, Sofia and Tirana.

The statement said Olympic aims to become a dominant airline in southeastern Europe.

Atow

Aegean Airlines, whose proposed merger with competitor Olympic Air was blocked by the European Commission last month (ATW Daily News, Jan. 27), said it expects to report a net loss of €22-€24 million ($30-$33 million) for 2010 and warned that a loss for the current year is “very likely” owing to higher fuel prices and continued weak demand in the domestic market. It estimated 2010 revenue at about €590 million.

“Despite the difficult economic environment, the company will continue during 2011 to develop its international presence, with prudent gradual steps, in line with its strategic direction of the last five years,” MD Dimitris Gerogiannis said. “At the same time, we will continue to invest in further improving our productivity and unit cost efficiency toward international best in class levels.”

Aegean transported 6.2 million passengers last year, 5% fewer than in 2009. International boardings increased 9% to 3.06 million as it added new routes to its network. Passengers carried in the domestic network, however, declined 16% to 3.17 million with a significant reduction in average fare due to weak demand. To address the effects of the Greek economic crisis, it reduced fleet and capacity significantly, mainly in the domestic network, through the phasing out of four Boeing 737s, two ATR72-500s and two Avro RJ100s.

New Europe

The case of the merger of two private Greek airliners, Olympic and Aegean is on the spotlight again as the European Commission has to decide, next week whether such merger is possible or not.

Almost a year ago, the boards of the two airlines agreed a merger. As we reported at the time, the establishment of such a brokered agreement between Olympic and Aegean risks resulting in an infringement to national and community competition rules since it could create a dominant position and subsequent abuse of the Greek domestic air transport market.

The Commission responded quickly to our remarks and opened an in-depth investigation under the EU Merger Regulation into the planned merger of the airlines.

The Commission’s initial market investigation indicated that the proposed merger could raise serious competition concerns, and they also had serious doubts as to the compatibility of the transaction with the Merger Regulation in connection with the provision of Public Service Obligation routes in Greece and the provision of ground handling services in Greece. The Commission expected a final decision by 7 December 2010.

Carry On As Normal
The decision was postponed until 12 January, 2011 and again to 2 February, 2011. Part of the reason for the delay was that there was high level pressure being applied, by those who wanted the deal to go ahead. The airlines are owned by the Vassilakis Group of companies (Aegean) and Marfin Investment Group (Olympic). The pressure, however, according to rumors comes only from Olympic because between the two, it is the one who is facing serious problems as if the merger is not allowed they will be obliged to proceed with capital increase.

These groups are also involved with shipping and have considerable lobbying skills and from the Greek shipping community of London, where from, according to rumors, the pressure on Brussels originates from. One example of how powerful Greek ship-owners are is the exemption from carbon emissions taxes for the maritime industry. Currently the tax negotiations have been passed to the International Maritime Organisation (IMO), who spent five years on the issue, without any progress. None is expected.

As to the merger of the two airliners, during this period, something unusual happened; the two companies acted as though the blessing of the Commission was a mere formality and made preparations for the post merger situation.

One example is the dismissal of up to 40 Olympic pilots. According to insiders, they were called in to the Flight Operations Manager’s office, where a lady from HR was also present, informed that their services are not needed any more and handed an envelope with their finishing salary.

Dismissed engineers are rumored to have extracted their revenge by destroying the logs and maintenance records of four A340 planes. Without these records, the planes are, in effect, unusable.

There also seemed to be a change in long distance flights, where a harmonious route sharing suddenly appeared. The golden rule in aviation is to keep hold of your slots. Without these, which allow you to take off and land at airports, there can be no scheduling of flights, no routes and therefore no business.

A Chance To Stand Up For Consumers
Commissioner Joaquin Almunia said in October 2010, “The big difficulty here is that the two companies hold almost all the domestic market in Greece,” Almunia added, “As with previous airline cases, we will need to ensure that consolidation in the airline sector does not happen to the detriment of consumers and businesses in Europe.”

Previously, the Commission disallowed a merger between Air Lingus and Ryan Air on competition grounds. There were some other factors involved, not least that the Irish government was opposed to the deal and the… abrasive character of the Ryan Air boss, who misses no opportunity to show his contempt for customers.

The case against the Greek merger is far stronger.

Airline experts pointed out that Aegean and Olympic Air are already the two leading airlines at Athens airport. Merging the two would give the combined entity between 65% and 70% of all flights and seats at the airport.

Not only that, but the flights are essential to the economies of countless Greek islands, who need fast and cheap connections to keep their economies going.

Handing over control of the domestic flights, even more so to companies associated with the ferry services, could create a situation where the islands and those who do business with them, would be at the mercy of a monopoly.

This is an opportunity for Joaquin Almunia to stand up for citizens, if he can resist the pressure being applied. He may well be more than tough enough.

Greece’s two major airlines, Olympic Air and Aegean Airlines SA, are merging to create a “national airline champion,” the companies said in a statement Monday.

The two airlines together have 97 per cent of the Greek domestic air travel market and will use the name Olympic Air after a transition period in which the Aegean name will be used in parallel.

The companies said they were combining to better compete within the European Union and preserve jobs in the industry.

“The prevailing conditions in the Greek economy as well as in the aviation sector dictate the combination of forces in order to maintain competitive customer prices, protect levels of employment and increase our competitiveness at a European level,” said Olympic Air chairman Andreas Vgenopoulos, head of Olympic’s 100 per cent shareholder, Marfin Investment Group (MIG).

The merger must be approved by European Union regulators, a process that “will take several months,” MIG spokesman Seraphim Konstantinidis said.

The combined airline is not expected to operate before October, 2010, at the earliest, sources say.

The merged company will have 5,850 employees, including Aegean’s current 2,500, Olympic Air’s 1,300, as well as 2,000 in Olympic Handling and 50 in Olympic Engineering, which will be 100 per cent subsidiaries of the new company.

Olympic Air is the successor airline to state-owned, debt-ridden Olympic Airways, later Olympic Airlines, which accumulated massive deficits for all but one of its 34 years of state ownership, from 1975 to 2009. It was sold to MIG, after several unsuccessful privatization attempts.

It currently flies on 41 domestic and 15 international routes, a drastic cutback from its heyday in the 1980s.

Aegean Airlines flies to 24 domestic and 26 international destinations. It is a regional partner of Lufthansa and collaborates with Brussels Airlines, Portugal’s TAP and Britain’s bmi.