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Spanish LCC Volotea has teamed up with Abra Group, the parent company of Avianca and GOL, in a new joint venture agreement that could see the partners take over slots to allow for competition authorities to approve the proposed International Airlines Group (IAG) purchase of Air Europa.
Abra and Volotea said their partnership, announced June 25, would allow them to explore commercial and operational opportunities together via their complementary networks and expand connectivity between Europe and the Americas via a fully integrated network solution.
“The complementary nature of Volotea’s short-haul operations in Europe and the long-haul and intra-Americas operations of Abra Group ... make this alliance an optimal and integral solution to act as a ‘remedy taker’ in the merger between IAG and Air Europa,” Abra and Volotea said.
The European Commission (EC) is investigating IAG’s plans to buy Air Europa to help expand its Madrid hub, where around two-thirds of traffic is connecting traffic.
The EC has expressed concerns about the effect of competition on certain routes. As part of remedies already submitted to the EC, IAG set out the names of potential remedy takers—airlines to which slots could be ceded to ease those concerns, with both Avianca and Volotea on the list.
IAG—the parent company of Aer Lingus, British Airways, Iberia, Level and Vueling—said at the end of May it was working with the EC to decide which remedy taker or combination of remedy takers would best address the EC’s concerns.
Asked if the two companies had decided to form their partnership specifically because of the possibility of taking slots as part of the IAG/Air Europa deal, Adrian Neuhauser, CEO of Abra Group, said, “The IAG/Air Europa transaction and the possibility of being a remedy taker accelerated our conversations. When we saw that a critical issue in IAG/Air Europa ... is the ability to provide a full network solution, we set about finding a way to do that.”
If Volotea and Abra Group are designated as remedy takers, Volotea, which currently has 20 bases around Europe, would establish a base in Madrid, with approximately 20 aircraft to service all short-haul routes.
“We’ve come at this from a connectivity standpoint,” Volotea CEO Carlos Munoz said. “We’ve concluded that we’re actually in agreement with the European Union that a point-to-point short-haul with a point-to-point long-haul alone are not up to the task in competing. You need to have a fully integrated network.”
“We are going to develop it, and optimize it from a joint viewpoint, [and] see what creates the biggest value to the whole connecting market,” Munoz said, noting that 20 aircraft on the short-haul side and 8-10 on the long-haul side for Abra Group would be needed.
“This alliance will optimize connectivity options to benefit millions of passengers by integrating Volotea’s European routes with Abra’s destinations in Latin America, North America, and the Caribbean,” the two groups said.
Munoz said the EC had not indicated to Volotea and Abra Group when it would make a decision, or when any agreement would go into effect, but during meetings with the EC the airlines had made clear they would be ready to begin from the IATA winter season.
“We have had many meetings with the European Union, and they asked us whether we were ready—the answer is, ‘definitely yes,’” Munoz said. “We told them we were ready from winter 2024. I cannot say for sure what they will decide, but they were very interested in knowing that.”
Munoz said he did not know whether the EC would choose one or several remedy takers but that in his view a split award “would be a bit defeating the object—we are playing on the connectivity card so if I lose a lot of points in which I can feed my partner’s long-haul flights, it’s going to make us as a remedy less powerful.”
“IAG has offered up about 52% of Air Europa’s network and we’re interested in all of that,” Neuhauser said. That is made up of around 10 long-haul routes and 25-30 short-haul ones, mostly European routes as well as some domestic ones.
The deadline for the EC to decide is Aug. 20; the deadline has been pushed back as scrutiny of the deal has dragged on.
“We can confirm that on June 10, 2024, the parties submitted commitments aimed at addressing the preliminary competition concerns arising from the proposed transaction,” an EC spokesperson said June 25. “We are now carefully assessing them. We have no further comment to make at this stage.”
The airlines said, “The solution proposed by both companies is an efficient and flexible plan that ensures Volotea’s passengers can arrive at Madrid Airport from the airline’s various bases and operational cities across Europe and the Middle East, providing them with access to intercontinental flights marketed by Abra’s airlines, along with their extensive networks in the Americas and the Caribbean.” The partnership would also consolidate the airport’s position as a connecting hub, they added.
Overall, Volotea expects to transport around 12 million passengers in 2024, offering more than 450 routes across 18 European countries, while Abra Group transports more than 62 million passengers annually with a fleet of over 250 aircraft to more than 130 destinations in over 25 countries across the Americas and Europe.
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