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ΕU approves Aegean Airlines – Olympic Air merger

Τhe European Union gave its blessing Wednesday to the merger of Greece‘s Aegean Airlines and its rival Olympic Air, saying that there would be no harm to competition since Olympic Air would have no choice but to shut down without the deal.

The EU‘s executive, the European Commission, had once before blocked the merger out of concerns that it would monopolize the aviation market in Greece. As recently as April, it was still expressing similar concerns.

But on Wednesday, EU Competition Commissioner Joaquin Almunia said “it is clear that, due to the ongoing Greek crisis and given Olympic‘s own very difficult financial situation, Olympic would be forced to leave the market soon in any event.”

“Therefore, we approved the merger because it has no additional negative effect on competition,” he added.

Demand for domestic flights in crisis-battered Greece has dropped by 26 per cent from 2009 to 2012, according to the commission. The first half of 2013 also saw a decrease of 6.3 per cent compared to the previous year, it said.

Olympic was founded in 1957 by late shipping tycoon Aristotle Onassis. However, it suffered for several decades under management by the Greek government before being sold to Marfin Investment Fund.

“A thorough analysis of Olympic‘s business prospects has confirmed that the company is highly unlikely to become profitable in the foreseeable future under any business plan,” the commission said.

It noted that no entity other than Aegean has shown interest in acquiring the company. The merger had been estimated at 72 million euros (97 million dollars) last year. (europeonline-magazine)

PS I can’t say whether this monopoly merger will be on cost of consumers with price hikes in flight tickets for destinations within Greece. Private Skai TV commented that “the government can intervene if prices rise”, while the reporter argued that “people prefer to fly as fuel prices make the use of vehicle very expensive”.  However a family of four may need 100 euro to go by car Athens-Thessaloniki and 400 euro to by plane. No?

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