EUROPEAN COMMISSION
DG Competition
Case M.8964 - DELTA / AIR FRANCE-KLM /
VIRGIN GROUP / VIRGIN ATLANTIC
Only the English text is available and authentic.
REGULATION (EC) No 139/2004
MERGER PROCEDURE
Article 6(1)(b) NON-OPPOSITION
Date: 12/02/2019
In electronic form on the EUR-Lex website under document
number 32019M8964
Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË
Tel: +32 229-91111. Fax: +32 229-64301. E-mail: COMP-MERGER[email protected].
EUROPEAN COMMISSION
Brussels, 12.02.2019
C(2019) 1325 final
PUBLIC VERSION
To the notifying parties
Subject: Case M.8964 - DELTA / AIR FRANCE-KLM / VIRGIN GROUP /
VIRGIN ATLANTIC
Commission decision pursuant to Article 6(1)(b) of Council
Regulation No 139/2004
1
and Article 57 of the Agreement on the
European Economic Area
2
Dear Sir or Madam,
(1) On 08 January 2019, the European Commission received notification of a
proposed concentration pursuant to Article 4 of the Merger Regulation by which
Air France-KLM S.A. (“AFKL”, France), Delta Air Lines, Inc. (“Delta”, the
United States of America) and Virgin Group (the British Virgin Islands) acquire
within the meaning of Article 3(1)(b) and 3(4) of the Merger Regulation joint
control of the whole of Virgin Atlantic Limited (“VAL”, the United Kingdom) by
way of purchase of shares (“the Transaction”).
3
AFKL, Delta, Virgin Group and
VAL are designated hereinafter as the “Parties”.
1
OJ L 24, 29.1.2004, p. 1 (the 'Merger Regulation'). With effect from 1 December 2009, the Treaty on
the Functioning of the European Union ('TFEU') has introduced certain changes, such as the
replacement of 'Community' by 'Union' and 'common market' by 'internal market'. The terminology of
the TFEU will be used throughout this decision.
2
OJ L 1, 3.1.1994, p. 3 (the 'EEA Agreement').
3
Publication in the Official Journal of the European Union No C 020, 16.01.2019, p. 6.
In the published version of this decision,
some information has been omitted
pursuant to Article 17(2) of Council
Regulation (EC) No 139/2004 concerning
non-
disclosure of business secrets and
other
confidential information. The
omissions are shown th
us […]. Where
possible the information omitted has been
replaced by ranges of figures or a general
description.
2
1. THE PARTIES
(2) AFKL is a French company and is the holding company of Société Air France
(“AF”), the French national carrier airline, and Koninklijke Luchtvaart
Maatschappij N.V. (“KL”), the Dutch national carrier airline.
4
AFKL provides
passenger air transport services, cargo air transport services and maintenance,
repair and overhaul services (“MRO”). In 2017, AFKL carried 99 million
passengers to 314 destinations in 116 countries with a fleet of 537 aircraft in
operation.
(3) Delta is an international airline with headquarters in the United States. Delta
provides passenger air transport services and cargo air transport services, using
belly space on its passenger aircraft, as well as MRO services. Delta carries
approximately 180 million passengers a year to more than 300 destinations in
over 50 countries with a fleet of more than 800 aircraft.
(4) Virgin Group is the holding company of a group of companies, including VAL,
active in a wide range of products and services worldwide. The Virgin Group
holding company, Virgin Group Holdings Limited, is wholly-owned by Sir
Richard Branson.
(5) VAL is the holding company of Virgin Atlantic Airways Limited (“Virgin
Atlantic”) and Virgin Holidays Limited (“Virgin Holidays”). Virgin Atlantic is an
international airline with headquarters in the United Kingdom (“UK”), providing
passenger air transport services and cargo air transport services, using belly space
on its passenger aircraft, as well as MRO services. Virgin Atlantic flies to 34
destinations worldwide. Virgin Holidays is a UK tour operator which supplies and
distributes package holidays and ancillary products.
Pre-existing corporate and commercial relationships between the parties
(6) Delta is a shareholder of both AFKL and VAL, and the Parties have existing
alliance and joint venture relationships:
- AF and Delta were founding members of the SkyTeam alliance in 2001.
Since 2004 (shortly after the merger of AF and KL), KL has also been a
full member of the SkyTeam alliance.
- AFKL and Delta are also members of SkyTeam Cargo, a global airline
cargo alliance, started in 2000.
- Delta, AF, KL and Alitalia Compagnia Aerea Italiana S.P.A. (“Alitalia”)
are parties to the TATL Joint Venture, a metal neutral joint venture
arrangement covering various routes between Europe and North America,
and other geographic regions.
5
4
Delta holds an 8.8% (non-controlling) stake in AFKL.
5
See paragraph (11).
3
- Delta and Virgin Atlantic are parties to the Delta-Virgin Atlantic Joint
Venture, a metal neutral joint venture arrangement covering non-stop
routes between the UK and North America.
6
- Delta, AF, KL, Alitalia and Virgin Atlantic are also parties to a
coordination agreement dated 8 April 2013 (the “5-Way Coordination
Agreement”), pursuant to which these parties established a framework for
coordination of commercial activities covering city pair routings between
the UK and North America.
7
2. THE CONCENTRATION
(7) The Transaction concerns the proposed acquisition by AFKL of a 31% joint-
controlling interest in VAL. In addition, the Parties intend to implement a (new)
transatlantic joint venture agreement (“JVA”)
8
between AFKL, AF, KL, Delta
and Virgin Atlantic and the Enhanced Strategic Cooperation Agreement
(“ESCA”) described in the ESCA memorandum of understanding (“ESCA
MOU”)
9
between Virgin Atlantic, AFKL, AF and KL.
AFKL entering as a new shareholder
(8) Pre-Transaction, Virgin Group and Delta respectively own 51% and 49% of the
shares in VAL and have joint control over VAL.
10
(9) Pursuant to a Sale and Purchase Agreement (“SPA”)
11
, executed on 15 May 2018,
AFKL will acquire a 31% equity interest in VAL from Virgin Group.
(10) Post-Transaction, AFKL will therefore own 31%, Virgin Group 20% and
Delta 49% of the shares in VAL.
Implementation of a transatlantic joint venture agreement and the ESCA MOU
(11) Pursuant to the JVA between AFKL, AF, KL, Delta and Virgin Atlantic, the
Parties intend to establish a new transatlantic joint venture agreement combining
(i) [details of cooperation arrangement]
12
and (ii) the metal neutral joint venture
6
See paragraph (11).
7
By final order issued on 23 September 2013, the DOT granted antitrust immunity with respect to the
activities contemplated under the DL-VS Joint Venture and to the 5-Way Coordination Agreement.
8
Amended and Restated Transatlantic Joint Venture Agreement, dated 15 May 2018. Form CO, Annex
A.09e.
9
Memorandum of Understanding in respect of the Enhanced Strategic Cooperation Agreement
(“ESCA”), dated 5 October 2018. Form CO, Annex A.09f.
10
See M.6828 – Delta Airlines/Virgin Group/Virgin Atlantic Limited.
11
Sale and Purchase Agreement in respect of 31 per cent equity interest in Virgin Atlantic Limited, dated
15 May 2018. Form CO, Annex A.09b.
12
[Details on potential parties to new transatlantic joint venture agreement].
4
arrangement between Delta and Virgin Atlantic (the “Delta-Virgin Atlantic Joint
Venture”
13
). This expanded joint venture will cover the Parties [details on
potential parties to new transatlantic joint venture agreement]
14
[further details on
the joint venture agreement].
(12) In addition to the JVA, Virgin Atlantic, AFKL, AF and KL have concluded an
ESCA MOU which regulates how AFKL and Virgin Atlantic intend to organise
and implement bilateral cooperation on certain routes between Europe (including
the UK) and the rest of the world (excluding North America).
15
Scope of this Decision
(13) This Decision only assesses the impact on competition resulting from the
acquisition by AFKL of a joint-controlling interest in VAL. The Commission
does not assess the impact on competition resulting from the pre-existing
relationships between AFKL and Delta as these have been assessed in the
Commission’s Decision in case AT.39964 – Air France/KLM/Alitalia/Delta.
16
In
that respect, the Parties have notified the Transaction based on the assumption
that the TATL Joint Venture and Delta-Virgin Atlantic Joint Venture are in place.
However, this decision is without prejudice to the application of Article 101
TFEU to any existing or envisaged agreement between the Parties, including
without limitation the TATL Joint Venture, the DL-VS Joint Venture, the JVA
and the 5-Way Coordination Agreement.
Joint control
(14) The Board of Directors of VAL will consist of [details about composition of the
Board of Directors].
17
[Details about appointment of the Chairman].
18
[Further
details about appointment of the Chairman]. [Details about appointment of
executive director].
19
(15) [Details about voting mechanism]
20
; [further details about voting mechanism].
21
13
A metal neutral joint venture arrangement covering non-stop routes between the UK and North
America.
14
Alitalia is not a party to the JVA. [Details about implementing the JVA] (Form CO, footnote 6).
15
[Details about implementation of cooperation].
16
Commission’s Decision of 12 May 2015 under Article 9(1) of Council Regulation 1/2003 in case
AT.39964 – Air France/KLM/Alitalia/Delta.
17
See [reference to confidential document], Form CO, Annex A.09g.
18
See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
19
See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
20
See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
21
See [reference to confidential document], Form CO, Annex A.09g.
5
(16) The approval of strategic business plans, annual budgets, borrowings beyond the
current annual budget, capital expenditure beyond the current annual budget, and
any material contract not authorised by the current annual budget (each a “Special
Matter”), will be subject to a special approval process, [details about voting
mechanism and veto rights].
22
[Further details about voting mechanism and veto
rights].
(17) In addition, each of Delta, AFKL and Virgin Group has a veto right over [details
about veto rights].
23
(18) Besides, for the sake of completeness, the Shareholders Agreement provides that,
upon implementation of the JVA, which is conditional upon all necessary
regulatory approvals having been obtained,
24
[details about veto rights].
25
(19) According to paragraphs 62 and 69 of the Consolidated Jurisdictional Notice, the
power to co-determine the structure of the senior management, such as the
members of the board and the power to block actions which determine the
strategic commercial behaviour of an undertaking, usually confers upon the
holder the power to exercise decisive influence on the commercial policy of an
undertaking.
(20) As a result, post-Transaction, Delta, AFKL and Virgin Group will jointly control
VAL and its subsidiaries (notably Virgin Atlantic and Virgin Holidays).
26
Full-functionality
(21) VAL has sufficient own staff, financial resources and dedicated management for
its operation and for the management of its portfolio and business interests.
Furthermore, VAL will not be limited to exercising a specific function for its
parents as it will continue to have a market presence. It also does not have
significant sale or purchase relationships with its parents. Finally, VAL is
intended to operate on a lasting basis. Therefore, VAL is a full-functional joint
venture.
22
See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c, and [reference to
confidential document], Form CO, Annex A.09g.
23
See [reference to clause], Form CO, Annex A.09c.
24
See [reference to clause] of the JVA, Form CO, Annex A.09c.
25
See [reference to clause] of the Shareholders’ Agreement, Form CO, Annex A.09c.
26
The Commission recalls that, regarding the EU air transport licensing provisions, pursuant to
paragraph 23 of the Consolidated Jurisdictional Notice, "the concept of control under the Merger
Regulation may be different from that applied in specific areas of Community and national legislation
concerning, for example, prudential rules, taxation, air transport or the media. The interpretation of
‘control’ in other areas is therefore not necessarily decisive for the concept of control under the
Merger Regulation."
6
3. EU DIMENSION
(22) The undertakings concerned have a combined aggregate worldwide turnover of
more than EUR 5 000 million
27
(AFKL: EUR 25 781 million, Delta: EUR 36 499
million, Virgin Group: EUR […] and VAL: EUR 3 038 million). Each of them
has an EU-wide turnover in excess of EUR 250 million (AFKL: EUR […],
Delta: EUR: […], Virgin Group: EUR […] and VAL: EUR […]), and they do not
achieve more than two-thirds of their aggregate EU-wide turnover within one and
the same Member State.
28
The notified operation therefore has an EU dimension.
4. RELEVANT PRODUCT AND GEOGRAPHIC MARKETS
(23) The Parties' activities overlap in (i) passenger air transport services
29
, (ii) cargo
air transport services and (iii) maintenance, repair and overhaul (“MRO”)
services.
4.1. Identification of the relevant markets in respect of air transport services of
passengers
4.1.1. Relevance of the O&D approach
(24) In respect of air transport services of passengers, the Commission has, in its prior
decision practice related to air transport, defined the relevant markets for
scheduled passenger air transport services on the basis of two approaches: (i) the
"point of origin/point of destination" ("O&D") city-pair approach, where the
target was an active air carrier;
30
and (ii) the "airport-by-airport" approach, when
the target included an important slot portfolio.
31
(25) Under the O&D approach, every combination of an airport or city of origin to an
airport or city of destination is defined as a distinct market. Such a market
definition reflects the demand-side perspective whereby passengers consider all
possible alternatives of travelling from a city of origin to a city of destination,
27
Turnover calculated in accordance with Article 5 of the Merger Regulation.
28
AFKL, Delta and VAL calculated their turnover based on the “point of sales” methodology, but the
Parties confirmed that the turnover thresholds would also be met under the “point of origin” and the
“50/50 split” methods (with the exception of AFKL’s MRO turnover, which was calculated based on
the “point-of-origin” methodology, but AFKL confirmed that its turnover exceeds the
EUR 250 million threshold under any calculation method).
29
The Parties’ activities give rise to overlap in the provision of passenger air transport services under
both the route-by-route (or “O&D”) approach and the airport-by-airport approach.
30
See e.g. Cases M.7541 − IAG/Aer Lingus, paragraph 14; M.7333 − Alitalia/Etihad, paragraph 63;
M.6447 − IAG/bmi, paragraph 31.
31
See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraphs 96 and 116, M.8672 – easyJet/Certain Air
Berlin Assets, paragraph 41; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 58; M.6447 –
IAG/bmi, paragraph 483. For Cases M.8672 – easyJet/Certain Air Berlin Assets and M.8633 –
Lufthansa/Certain Air Berlin Assets, the Commission only carried out an airport-by-airport
assessment, since the target assets did not constitute an active air carrier (Air Berlin had definitively
ceased its flight operations on all routes due to its insolvency).
7
which they do not consider substitutable for a different city pair. The effects of a
transaction on competition are thus assessed for each O&D separately.
4.1.2. Relevance of the airport-by-airport approach
(26) Under the airport-by-airport approach, every airport (or substitutable airports) is
defined as a distinct market. Such a market definition has notably been adopted to
assess the risks of foreclosure entailed by the concentration of slots at certain
airports in the hands of a single undertaking.
32
Under this approach, the effects of
a transaction on competition are thus assessed for all O&Ds taken together to or
from an airport (or substitutable airports).
4.1.2.1. Introduction
Slots as an input for air transport services
(27) By virtue of the Slot Regulation,
33
slots, i.e. the permission to land and take-off at
a specific date and time at congested airports, are essential for airlines' operations.
Indeed, only air carriers holding slots are entitled to get access to the airport
infrastructure services delivered by airport managers and, consequently, to
operate routes to or from those airports.
(28) The Commission has, in its prior decision practice, highlighted that the lack of
access to slots constitutes a significant barrier to entry or expansion at Europe's
busiest airports, such as London Heathrow airport.
34
(29) The Commission has also insisted, in the framework of its airport policy, that
"slots are a rare resource" and "access to such resources is of crucial importance
for the provision of air transport services and for the maintenance of effective
competition."
35
(30) In addition, the Slot Regulation recalls that, with the increase of air traffic, there
is a continuously growing demand for capacity at congested airports.
36
Therefore,
the lack of available slots has become a prominent feature of the EU airline
industry and is expected to become an even more critical issue for air carriers in
the near future.
32
See e.g. Case M.8633 – Lufthansa/Certain Air Berlin Assets, paragraphs 164 et seq.
33
Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at
Community airports (the “Slot Regulation”).
34
See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 188 et seq.; M.6447 – IAG/bmi, paragraphs 174
and 663.
35
Recital (4) of the Commission Proposal for a Regulation of the European Parliament and of the
Council on common rules for the allocation of slots at European Union airports (COM/2011/827 final
of 01 December 2011).
36
Slot Regulation, first recital: "Whereas there is a growing imbalance between the expansion of the air
transport system in Europe and the availability of adequate airport infrastructure to meet that
demand; whereas there is, as a result, an increasing number of congested airports in the Community."
8
Rules for the allocation of slots
(31) In the context of the imbalance between demand and supply of airport capacity,
the Slot Regulation defines the rules for the allocation of slots at EU airports. It
aims to ensure that, where airport capacity is scarce, the latter is used in the fullest
and most efficient way and slots are distributed in an equitable, non-
discriminatory and transparent way.
(32) Under the Slot Regulation, the general principle regarding slot allocation is that
an air carrier having operated its particular slots for at least 80% during the
summer or winter scheduling period is entitled to the same slots in the equivalent
scheduling period of the following year (the "grandfather rights").
37
Conversely,
slots which are not sufficiently used by air carriers (below 80%) are reallocated to
other air carriers (the "use it or lose it" rule).
(33) The Slot Regulation also provides for the setting up of "pools" containing newly-
created time slots, unused slots and slots which have been given up by a carrier or
have otherwise become available (e.g. via the “use it or lose it” rule). 50% of the
slots from the slot pool shall first be offered to new entrants. The other 50% of the
slots from the slot pool shall be placed at the disposal of other applicant airlines
(incumbent airlines). If applications by new entrants amount to less than 50% of
the capacity made available through slots from the pool, this remaining capacity
shall also be placed at the other applicants' disposal.
38
(34) Under the Slot Regulation, slots cannot be traded. They may however be
exchanged or transferred between airlines in certain specified circumstances and
subject to the explicit confirmation from the coordinator under the Slot
Regulation.
39
4.1.2.2. Parties’ views
(35) The Parties do not object to the airport-by-airport approach but submit that the
Transaction does not make any material change to the position of any of the
Parties at any EEA airport.
40
4.1.2.3. Commission’s assessment
(36) According to the Explanatory Memorandum for the Commission Proposal for a
Regulation of the European Parliament and of the Council on common rules for
the allocation of slots at European Union airports,
41
"the emergence of a strong
competitor at a given airport requires it to build up a sustainable slot portfolio to
37
Slot Regulation, Article 8(2).
38
Slot Regulation, Article 10(6).
39
The coordinator is the person responsible for the allocation of slots (Slot Regulation, Article 4(5)).
According to the first sentence of Article 8a(2) of the Slot Regulation, "[t]he transfers or exchanges
referred to in paragraph 1 shall be notified to the coordinator and shall not take effect prior to the
express confirmation by the coordinator."
40
Form CO, paragraph 293.
41
COM/2011/827 final of 01 December 2011.
9
allow it to compete effectively with the dominant carrier (usually the “home”
carrier)."
(37) In this context, in a number of prior decisions related to transactions entailing the
transfer of slots at certain airports, the Commission has considered the effects of
the transaction on the operation of passenger air transport services at a given
airport in terms of the slot portfolio held by a carrier at the airport, without
distinguishing between the specific routes served to or from that airport.
42
Under
this approach, the Commission assesses how the transaction strengthens the
merged entity's position at certain airports and the potential effects thereof on the
merged entity’s ability and incentive to foreclose other air carriers from accessing
the relevant airports. Foreclosing access to airports may in turn foreclose those
other air carriers from operating routes from/to the relevant airports.
43
(38) AFKL’s major hubs are Amsterdam and Paris-Charles de Gaulle airports,
44
where
Delta holds a negligible amount of slots.
45
Delta’s slots at these airports are all
used for existing TATL Joint Venture services. Virgin Atlantic does not hold any
slot (and historic rights thereto) at Amsterdam or Paris-Charles de Gaulle airports,
nor at any EEA airport outside the United Kingdom.
46
Therefore, the Transaction
will not have any impact on any of the Parties’ slot portfolio at any EEA airport
outside the United Kingdom.
47
(39) In the United Kingdom, Delta/Virgin Atlantic hold slots (and historic rights
thereto) at London Heathrow, London Gatwick and Manchester airports in both
IATA Seasons. AFKL also holds slots at London Heathrow and Manchester
airports in both IATA Seasons. The Parties’ slot portfolios thus overlap at London
Heathrow and Manchester airports.
48
(40) Therefore, in view of the above, the Commission considers it appropriate, for the
purpose of this Decision, to apply the analytical framework designed to address
42
See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 116; M.8672 – easyJet/Certain Air Berlin
Assets, paragraph 41; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 58; M.6447 –
IAG/bmi, paragraph 483.
43
See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 506 et seq. ;M.8672 – easyJet/Certain Air
Berlin Assets, paragraphs 91 et seq.; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraphs 160 et
seq.; M.6447 − IAG/bmi, paragraph 483.
44
Form CO, paragraph 204.
45
Form CO, paragraphs 306-307. Delta holds a negligible amount of slots at AMS and CDG, namely
[20-30] daily slot pairs at AMS and [20-30] daily slot pairs at CDG.
46
Form CO, paragraph 305.
47
Without prejudice to any assessment conducted under Article 101 TFUE, the Commission considers
that the Transaction will not bring any change with regard to slot holding at non-overlap airports.
48
For the sake of completeness, it can be noted that, in the United Kingdom, AFKL has [5-10] daily slot
pairs at Birmingham, [5-10] daily slot pairs at London City, [5-10] daily slot pairs at Newcastle, [5-10]
daily slot pairs at Aberdeen, [0-5] daily slot pairs at Bristol, [0-5] daily slot pairs at Leeds Bradford,
[0-5] daily slot pairs at Southampton and [0-5] daily slot pair at Belfast City. Virgin Atlantic/Delta has
no slot pairs at any of these airports (Form CO, footnote 89).
10
the risk of foreclosure from access to airport infrastructure services potentially
resulting from the acquisition of joint control over Virgin Atlantic, at airports
where the slot portfolio of Virgin Atlantic/Delta and AFKL overlap in
Winter 2018/2019 and Summer 2019 IATA Seasons, namely London Heathrow
and Manchester airports.
4.1.3. Relevance of the market for air transport services to tour operators
(41) Carriers, both charter and scheduled airlines, may sell seats (or entire flights) to
tour operators, which then integrate the flights into package holidays or resell
seats only to end customers.
(42) In prior decisions, the Commission has regarded the wholesale supply of airline
seats to tour operators as a distinct market from the supply of scheduled air
transport services to end customers.
49
Indeed, from a demand-side perspective,
tour operators have different requirements from those of individual passengers
(for example, purchase of large seat packages in advance from the start of the
season, negotiation of rebates, taking into account passengers’ needs in terms of
flight times). In Ryanair/Aer Lingus III, the Commission stated that
“competitive conditions in this market [the supply of seats to tour operators] are
manifestly different, since tour operators have different requirements from those
of individual customers (for example, buying of large seat packages, negotiation
of rebates, taking into account of customers' needs in terms of flight times).”
50
4.1.3.1. Parties’ views
(43) The Parties stated that the distinction between retail and wholesale supply of
airline seats to tour operators is not meaningful for the competitive assessment
of specific routes in the case at hand.
51
4.1.3.2. Commission’s assessment
(44) The Commission considers that, for the purpose of assessing the horizontal
effects of the Transaction, the supply of airline seats to tour operators only
constitutes a meaningful market on routes where either AFKL or Virgin
52
are
active to a significant extent.
53
Indeed, in the absence of any (material) overlap,
49
See e.g. Cases M.8046 – TUI/Transat France, paragraphs 66-88; M.5867 – Thomas Cook/Öger Tours,
paragraph 16; M.4601 – KarstadtQuelle/MyTravel, paragraph 43; M.4600 – TUI/First Choice,
paragraph 57; M.3770 – Lufthansa/Swiss, paragraph 20.
50
Decision of 27 February 2013, case M.6663 – Ryanair/Aer Lingus III, paragraph 409.
51
See Reply of the Parties to RFI 3 of 23 January 2019, question 5.
52
On routes from Europe (excluding the UK) to North America, because of the TATL Joint Venture,
Virgin Atlantic’s market share equate to the increment brought about by the Transaction. On all other
routes, the increment brought about by the Transaction corresponds to AFKL’s market share given that
pre-Transaction, VAL is co-controlled by Virgin Group and Delta.
53
In the absence of data on the total size of the market for supply of airline seats to tour operators, the
Commission considers that AFKL (or Virgin when relevant) can be considered as only marginally
active on that market when the number of seats sold to tour operators is on average below 5 per day or
11
the market for the supply of airline seats to tour operators cannot be considered
as meaningful for the purpose of the Transaction.
54
(45) Therefore, for the purpose of the Transaction, a competitive assessment of the
effects of the Transaction on the market for the supply of airline seats to tour
operators could be meaningful only on the London – Shanghai route.
55
Nevertheless, the Commission notes that competitive features on the London –
Shanghai route are similar as regards both the supply of scheduled air transport
services to end customers and the supply of airline seats to tour operators.
56
In
particular, the Commission notes that the main competitors of the Parties in the
supply of air transport services to end customers are also active on the supply of
seats to tour operators. For instance, the established carrier China Eastern
operated a daily direct flight on the London – Shanghai route in Summer 2017
and six weekly frequencies in Winter 2017/2018 IATA Season.
57
While the
Parties do not have access to third party data for the market for the supply of
seats to tour operators, they estimate that their market shares
58
and the
increment brought about by the Transaction are moderate under any plausible
market definition, as in the market for supply of air transport services to end
customers.
59
(46) In view of the moderate market shares and increments and the presence of
established carriers offering direct flights on the markets for the supply of airline
seats to (i) tour operators and (ii) end customers, the Commission considers that,
for the purpose of this Decision, it is not necessary to further assess the effects
of the Transaction on the market for the supply of airline seats to tour operators
with regard to the London – Shanghai route.
when the number of seats sold to tour operators represent less than 5% of the number of seats sold by
Virgin Atlantic/Delta (or AFKL/Delta when relevant).
54
Should these markets considered as relevant, the Commission notes that the Transaction would not
raise serious doubts as to its compatibility with the internal market with respect to the supply of airline
seats to tour operators, under any plausible market definition.
55
See Form CO, annex B.01, Wholesale supply of seats data of each of AFKL, Virgin Atlantic, and
Delta; Reply of the Parties to RFI 3 of 23 January 2019.
56
See Reply of the Parties to RFI 3 of 23 January 2019, questions 1 and 4.
57
See Reply of the Parties to RFI 3 of 23 January 2019, question 1. AFKL has a joint venture agreement
on that route with China Eastern which covers Amsterdam – Shanghai and Paris – Shanghai but not
London-Shanghai. China Eastern can therefore also be considered as a competitor of the Parties
operating a direct flight London – Shanghai.
58
The Parties submit that a large part of their wholesale bookings are attributable to Chinese tourists
travelling in organised groups (for instance, [90-100]% of AFKL’s wholesale activities on that route
were point-of-sale China). In 2016, over 260 000 Chinese tourists visited the UK, of which [40-50]%
were part of a tour group. The number of seats sold by the Parties to tour operators represents
[40-50]% of the number of Chinese tourists who visited the UK as part of a tour group (Form CO,
paragraph 212 and Reply of the Parties to RFI 3 of 23 January 2019, question 2).
59
See Section 5.1.4.2 below.
12
(47) In any event, the Transaction is unlikely to raise serious doubts as to its
compatibility with the internal market with respect to the supply of airline seats
to tour operators, under any plausible market definition.
4.1.4. Conclusion on the relevant market in respect of passenger air transport services
(48) In the present case, the target is an active air carrier and the Parties’ slot holding
overlap at London Heathrow and Manchester airports. In its prior decisional
practice, the Commission noted that London Heathrow is an airport where
barriers to entry are high due to the scarcity of slots.
60
Therefore, the relevant
market for scheduled passenger air transport services will be defined under both
the O&D approach and the airport-by-airport approach.
(49) For the purpose of this Decision, the Commission considers that it is not
necessary to further assess the effects of the Transaction on the market for the
supply of airline seats to tour operators.
4.2. Definition of the relevant markets
4.2.1. O&D approach - Air transport services of passengers
4.2.1.1. Distinction between groups of passengers
The Parties’ views
(50) The Parties note that in previous cases the Commission has considered that a
distinction may be drawn between (i) time sensitive (“TS” or premium)
passengers and (ii) non-time sensitive (“NTS” or non-premium) passengers,
while ultimately leaving the market definition open in many instances. The
Parties do not object to this distinction. Consistent with the Commission’s
previous approach, the Parties have considered that (i) restricted economy class
passengers were NTS passengers and (ii) all first class, business class and
premium economy class passengers, as well as economy class passengers with
the most flexible economy tickets were TS passengers.
61
Commission’s assessment
(51) The Commission has in its decisional practice (mostly concerning network
carriers) considered distinguishing, for a given O&D route, between (i) time
sensitive ("TS" or premium) passengers who tend to travel for business
purposes, require significant flexibility for their tickets and are willing to pay
higher prices for this flexibility, and (ii) non-time sensitive ("NTS" or non-
premium) passengers who travel predominantly for leisure purposes, do not
60
See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 188 et seq.; M.6447 – IAG/bmi, paragraphs 174
and 663.
61
Form CO, paragraphs 237-239.
13
require flexibility with their booking and are more price-sensitive than the first
category.
62
(52) In its recent decisional practice relating to long-haul flights, the Commission has
considered that it may be relevant to distinguish between TS and NTS
passengers, although ultimately leaving the question open.
63
(53) The outcome of the market investigation is inconclusive, as to whether the
distinction between TS and NTS passengers is relevant for the purpose of the
Transaction.
64
While some competitors, travel agents and corporate customers
indicated that the distinction was relevant for the assessment of the Transaction,
other respondents to the market investigation considered that the distinction
between TS and NTS passengers has become increasingly blurred, as some
business travellers increasingly travel on economy fares, whereas leisure
travellers might choose a “premium” cabin to secure a seat on a high-demand
flight.
65
Conclusion
(54) In light of the above, the Commission concludes that the question whether it is
necessary to distinguish between TS and NTS passengers can be left open, as
the Transaction would not raise serious doubts as to its compatibility with the
internal market under any plausible market definition. The Commission will
consider the relevance of the distinction between TS and NTS passengers in the
route-by-route analysis where relevant.
4.2.1.2. Distinction between direct and indirect flights
66
The Parties’ views
(55) The Parties submit that on the overlap routes passengers consider indirect flights
as an equivalent alternative to direct flights. In that regard, the Parties’ booking
data show that some passengers do choose one-stop flights, although those
indirect flights are more than 150 minutes longer in duration than non-stop
62
See e.g. Cases M.7333 – Alitalia/Etihad, paragraphs 70 et seq.; M.7270 – Cesky Aeroholding/Travel
Service/Ceske Aerolinie, paragraphs 20 et seq.; M.6663 – Ryanair/Aer Lingus III, recital 382; M.6607
– US Airways/American Airlines, paragraph 8; M.6447 – IAG/bmi, paragraph 36.
63
See e.g. Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraphs 20-23; M.7541 – IAG/Aer
Lingus, paragraphs 28-29; M.7333 – Alitalia/Etihad, paragraphs 70-74; M.6828 – Delta Air
Lines/Virgin Group/Virgin Atlantic Limited, paragraphs 23-28.
64
Replies to eQ1 – Questionnaire 1 for Competitors, questions 8 and 8.1; eQ2 – Questionnaire 2 to
corporate customers and travel agencies, questions 3 and 3.1.
65
Replies to eQ1 – Questionnaire 1 for Competitors, questions 8 and 8.1; eQ2 – Questionnaire 2 to
corporate customers and travel agencies, questions 3 and 3.1.
66
"Non-stop" flights are flights that take off at airport A and land at airport B where they load off
passengers without any stops in between. By contrast, "direct" flights may entail a refuelling stop
and/or a disembarking/re-embarking stop, but are marketed under a single flight code and are flown
with a single aircraft. "One-stop" flights include direct flights that do not qualify as "non-stop", as well
as indirect flights which are journeys that require a change of aircraft or a change of flight code.
14
flights.
67
Therefore, the Parties consider that one-stop flights may impose a
competitive constraint on non-stop flights and that the extent to which one-stop
flights are substitutable for non-stop flights is apparent from the booking data
for a certain route.. The Parties have submitted market shares for all non-
stop/one-stop and one-stop/one-stop overlap routes.
Commission’s assessment
(56) On a given O&D pair, passengers can travel either by way of a direct flight
between the point of origin and the point of destination or by way of an
"indirect" flight on the same O&D pair via an intermediate destination.
68
(57) The level of substitutability of indirect flights to direct flights largely depends
on the duration of the flight. As a general rule, the longer the flight, the higher
the likelihood that indirect flights exert a competitive constraint on direct
flights.
69
(58) The Transaction does not give rise to any short/medium-haul overlap routes,
because Virgin Atlantic does not operate any short/medium-haul services.
70
Therefore, the question of the substitutability of direct and indirect flights is
only needs to be addressed for long-haul services.
(59) In prior decisions, the Commission has considered that with respect to long-haul
routes (more than 6 hours flight duration), indirect flights constitute a
competitive alternative to direct services under certain conditions (for example
if they are marketed as connecting flights on the O&D pair in the computer
reservation systems).
71
(60) A majority of competitors having expressed their views confirmed that one-stop
services could constitute competitive alternatives to non-stop services as
identified above.
72
The majority of travel agencies stated that, on each of the
relevant routes for the purpose of this decision, they sell tickets to both direct
and indirect flights to their customers. The majority of corporate customers
having expressed a view stated that they buy tickets for both direct and indirect
67
Form CO, paragraph 245.
68
Cases M. 8361 – Qatar Airways/Alisarda/Meridiana, paragraph 24; M.7541 – IAG/Aer Lingus,
paragraph 30; M.7333 –Alitalia/Etihad, paragraph 75; M.6663 – Ryanair/Aer Lingus III,
paragraph 373.
69
Cases M.7541 – IAG/Aer Lingus, paragraph 31; M.7333 –Alitalia/Etihad, paragraph 76; M.6447 –
IAG/bmi, paragraph 68; M.5440 – Lufthansa/Austrian Airlines, paragraph 24; M.5335 – Lufthansa/SN
Airholding, paragraph 36.
70
Form CO, paragraph 246.
71
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 26; M.7541 – IAG/Aer Lingus,
paragraph 33; M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 29; M.6447
− IAG/bmi, paragraph 69.
72
Replies to eQ1 – Questionnaire 1 for Competitors, questions 9 and 9.1.
15
flights on the affected direct/indirect overlap routes.
73
Travel agents and
corporate agents having expressed a view specifically mentioned that the
following criteria can lead passengers to choose one-stop flights over non-stop
flights: the price, the total travel duration (including stopover times), the
schedules and the number of frequencies.
74
Conclusion
(61) The Transaction does not give rise to direct/direct overlap routes.
75
If direct and
indirect flights were to be considered as two separate markets, the direct/indirect
overlap routes would not be affected overlap routes as a result of the
Transaction. For the purpose of this Decision, the Commission will consider that
direct and indirect flights are part of the same market and assess the effects of
the Transaction on direct/indirect overlap routes. Nevertheless, the conclusion
on whether or not direct and indirect flights belong to the same market can be
left open as the Transaction would not raise serious doubts as to its compatibility
with the internal market under either of these alternative market definitions.
4.2.1.3. Distinction between charter flights and scheduled flights
The Parties’ views
(62) The Parties submit that they face significant competition from charter
companies selling so-called “dry seats” (seats only without other services) on a
number of routes, especially in respect of sunshine/leisure destinations in the
Caribbean (such as Cuba and Jamaica) served by Virgin Atlantic.
76
(63) In the Parties’ views, charter flights offering “dry seats” and scheduled flights
are substitutable and are therefore part of the same relevant product market.
77
Commission’s assessment
(64) The Commission has previously considered that charter flights, as opposed to
scheduled flights, are usually defined as air transport services that take place
outside normal schedules, normally through a hiring arrangement with a
particular customer (in particular a tour operator). Charter companies often fly
to destinations where no scheduled airline is active and usually operate on a
seasonal basis with a relatively low frequency of flights, in response to the
requirements of tour operators (for example, once a week on Saturday, only
during the summer or only during the ski season).
78
73
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 5 and 6.
74
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, questions 7 and 7.1.
75
Form CO, paragraphs 17 and 18.
76
Form CO, paragraph 251.
77
Form CO, paragraph 251.
78
See case M.6663 – Ryanair/Aer Lingus III, paragraph 388.
16
(65) The Commission has also considered that charter companies do not traditionally
sell tickets directly to passengers. They sell seats on their aircraft to tour
operators, which include the flight in a holiday package. As such, the flight (air
transport) is part of a package holiday, the price of which includes flights,
accommodation and other services. However, charter companies sell to some
extent "dry seats" directly to passengers.
79
(66) The Commission has previously held that most of the services offered by charter
companies (package holiday sales, seat sales to tour operators) are not in the
same market as scheduled point-to-point air passenger transport services.
80
However, as regards charter carriers selling dry seats and scheduled point-to-
point air passenger transport services, the Commission has left open whether
they are part of the same relevant product market and has considered the
relevance of dry seats offered by charter companies in its competitive
assessment.
81
(67) The Parties submit that charter carriers are not represented in the market data
they submitted.
82
The Commission notes that the market data submitted by the
Parties includes on some routes the airlines Thomas Cook/Condor and TUI,
which are integrated into a tour operating company.
Conclusion
(68) In light of the above, the Commission considers that the question of whether dry
seats are part of the same market as scheduled air transport services can be left
open, as the Transaction would not raise serious doubts as to its compatibility
with the internal market under any plausible market definition. The Commission
will consider the relevance of the dry seats sold by charter airlines in the route-
by-route analysis where relevant.
4.2.1.4. Airport substitutability
Analytical framework
(69) When defining the relevant O&D markets for passenger air transport services,
the Commission has previously found that flights to or from airports with
sufficiently overlapping catchment areas can be considered as substitutes in the
eyes of passengers (particularly if the airports serve the same main city). In
order to correctly capture the competitive constraint that flights to or from two
79
See case M.6663 – Ryanair/Aer Lingus III, paragraph 389.
80
Cases M.6663 – Ryanair/Aer Lingus III, paragraph 418; M.4439 – Ryanair/Aer Lingus, paragraph 311.
81
Cases M.6663 – Ryanair/Aer Lingus III, paragraph 419; M.4439 – Ryanair/Aer Lingus, paragraph 311;
M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 71.
82
See Form CO, paragraph 214.
17
different airports exert on each other, a detailed analysis taking into
consideration the specific characteristics of the relevant airports is necessary.
83
(70) The evidence used to characterise airport substitutability includes inter alia a
comparison of actual distances and travelling times to the indicative benchmark
of 100 km/1 hour driving time,
84
the outcome of the market investigation (views
of the competitors and other market participants), and the competitors’ practices
in terms of monitoring of competition.
(71) In the present case, taking account of the relevant routes where the Parties’
activities overlap, the question of airport substitutability arises for the routes to
or from the following cities: Shanghai, Lyon, Paris, Düsseldorf, Milan, London,
Manchester, New York, Orlando and San Francisco.
(72) Nevertheless, for the purpose of this Decision, the question of airport
substitutability is not relevant for Shanghai, Lyon, Düsseldorf, Manchester,
Orlando and San Francisco.
85
Assessment of airport substitutability
a) Paris
(73) Paris has two main airports, namely Charles de Gaulle (CDG) and Orly (ORY).
(74) In its prior decision practice, the Commission has considered ORY and CDG as
substitutable airports, but ultimately left the question open.
86
(75) For the purposes of the O&D assessment of the Transaction, the question of
airport substitutability is relevant for the following routes: Paris – San-Francisco
and Paris – Boston.
83
See e.g. Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 29; M.7333 –Alitalia/Etihad,
paragraph 82; M.6663 – Ryanair/Aer Lingus III, paragraph 65.
84
The 100 km/1 hour driving time is nevertheless used as a first proxy only. It was defined by the
Commission in the specific case of routes served out of Dublin by two airlines with typical attributes
of low-frills point-to-point carriers. This "rule" is thus not necessarily strictly applicable for other cases
(see Case M.6663 – Ryanair/Aer Lingus III, paragraph 82). In this regard, In "Airport Competition:
Myth or Reality? IATA Economics Briefing", November 2017, it is noted that "[w]hile isochrones are
a simple and powerful visual tool, they are of limited use in understanding the choices that passengers
actually make. (…) Moreover, the proximity of an alternative airport can only represent a relevant
choice if the airlines which compete with each other offer a substitutable service, for instance a
comparable itinerary. Isochrone maps do not reflect the availability of services at comparator airports
and are therefore likely to overstate the extent of effective airport competition."
85
Shanghai, Lyon, Düsseldorf, Manchester and San Francisco are cities served by several airports.
Nevertheless, the question of airport substitutability does not arise given that the Parties operate the
affected routes to/from the same airport (namely Shanghai Pudong International, Lyon, Düsseldorf,
Manchester and San Francisco airports) and no competitor operates a direct service to/from the
potential substitutable airport(s). Should the Commission take account of potential substitutable
airports, the outcome of the competitive assessment would remain unchanged.
86
Case M.5830 – Olympic/Aegean Airlines, paragraph 1676: the Commission concluded that CDG and
ORY are substitutable for TS and NTS passengers on the Athens – Paris route.
18
(76) On the Paris – San Francisco route, AFKL/Delta operates direct services and
markets an indirect service to/from CDG. VAL only operates indirect services
to/from CDG while Frenchbee operates a direct service to/from ORY.
87
(77) On the Paris – Boston route, AFKL/Delta operates direct services and markets
an indirect service to/from CDG. VAL only operates indirect services to/from
CDG.
88
(78) The travel distances and times between Charles de Gaulle and Orly airports and
the centre of Paris are summarised below:
Airport
Approximate
distance to city
centre
Approximate travel time to city centre
Road By car/taxi By public transport
Charles de
Gaulle
24 km 29 min
Rail: 30 min
Coach/bus: 45 min
Orly 19 km 43 min
Rail: 30-40 min
Coach/bus: 35 min
Source: Form CO, paragraph 275.
(79) Both competitors and corporate customers and travel agents having expressed a
view gave mixed replies as to whether passengers consider CDG and ORY as
substitutable.
89
The majority of competitors having expressed a view do monitor
air carriers flying on the Paris – San Francisco and Paris - Boston routes to/from
CDG or ORY.
90
The outcome of the market investigation is therefore
inconclusive.
(80) In any case, for the purpose of this Decision, the question of whether the relevant
market consists of Charles de Gaulle, or of Charles de Gaulle and Orly, can be
left open, as the Transaction would not raise serious doubts as to its compatibility
with the internal market under either plausible market definition.
b) Milan
(81) Milan has three airports, namely Malpensa (MXP), Linate (LIN) and Bergamo
(BGY). In light of the fact that mostly domestic and short/medium-haul flights are
operated from Bergamo, the latter will therefore not be included in the airport
substitutability analysis.
87
Form CO, paragraphs 702-704.
88
Form CO, paragraphs 731-732.
89
Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 9.
90
Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
19
(82) In its prior decision practice, the Commission has considered Malpensa and
Linate as substitutable, but the market definition was ultimately left open.
91
(83) For the purposes of the O&D assessment of the Transaction, the question of
airport substitutability is relevant for the routes: Milan – Los Angeles and Milan –
San Francisco.
(84) With respect to both the Milan – Los Angeles and Milan – San Francisco routes,
the Parties operate indirect services to/from MXP and to/from LIN.
92
(85) The travel distances and times between Linate and Malpensa airports and the
centre of Milan are summarised below:
Airport
Approximate
distance to city
centre
Approximate travel time to city centre
Road By car/taxi By public transport
Linate
11 km
25 min
Bus: 20 min
Malpensa
45 km
50 min
Rail: 40 min
Source: Reply of the Parties to RFI 5 of 31 January 2019.
(86) Both competitors and corporate customers and travel agents having expressed a
view gave mixed replies as to whether passengers consider LXP and LIN airports
as substitutable.
93
The majority of competitors having expressed a view do
monitor air carriers flying on the Milan – Los Angeles and Milan – San Francisco
routes to/from MXP or LIN.
94
The outcome of the market investigation is
therefore inconclusive.
(87) In any case, for the purpose of this Decision, the question of whether the relevant
market consists of Malpensa, or of Malpensa and Linate, can be left open, as the
Transaction would not raise serious doubts as to its compatibility with the internal
market under either plausible market definition.
91
Cases M.7333 – Alitalia/Etihad, paragraphs 102-105; M.4439 – Ryanair/Aer Lingus,
paragraphs 263-267; Case M.6663 – Ryanair/Aer Lingus III, paragraphs 245-252.
92
Form CO, paragraphs 978-979 and 1034-1035.
93
Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 9.
94
Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
20
c) London
(88) London has six main airports, namely Heathrow (LHR), Gatwick (LGW), City
(LCY), Stansted (STN), Luton (LTN) and Southend (SEN).
95
(89) In its prior decisional practice relating to long-haul services to/from London, the
Commission examined the effects of the transaction on a market comprising
flights to and from Heathrow only and on a wider market comprising flights to
and from LHR, LGW and LCY, but the market definition was ultimately left
open.
96
(90) The Parties consider that there is no reason to deviate from this practice.
97
(91) For the purposes of the O&D assessment of the Transaction, the question of
airport substitutability is relevant for the following routes: London – Seattle,
London – Atlanta, London – Minneapolis, London – Detroit, London – Portland,
London – Lagos, London – Shanghai, London – Havana and London – Montego
Bay.
(92) On the London – Seattle route, VAL/Delta operates direct and indirect services
to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.
VAL/Delta also operates indirect services to/from LGW while Norwegian
operates direct services to/from LGW.
98
(93) On the London - Atlanta route, VAL/Delta operates direct and indirect services
to/from LHR. AFKL operates indirect service to/from LHR via AMS or CDG.
VAL/Delta also operates an indirect service to/from LGW.
99
(94) On the London – Minneapolis route, VAL/Delta operates direct and indirect
services to/from LHR. AFKL operates indirect services to/from LHR via AMS or
CDG.
100
(95) On the London – Detroit route, VAL/Delta operates direct and indirect services
to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.
101
95
Given that no direct services on any of the relevant routes are operated to/from STN, LTN and SEN
and that a negligible number of passengers booked indirect flights provided by the Parties’ competitors
to/from these airports, these airports are not considered as plausible substitutable airports for the
purpose of the Decision (Form CO, paragraphs 258, 261 and 1140).
96
M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 43.
97
Form CO, paragraphs 256 and 265.
98
Form CO, paragraphs 441-442.
99
Form CO, paragraphs 496-498.
100
Form CO, paragraphs 521-522.
101
Form CO, paragraphs 545-546.
21
(96) On the London – Portland route, VAL/Delta operates direct and indirect services
to/from LHR. AFKL operates indirect services to/from LHR via AMS or CDG.
102
(97) On the London – Lagos route, VAL operates direct and indirect services to/from
LHR. AFKL operates indirect services to/from LHR and to/from LCY.
103
(98) On the London – Shanghai route, VAL operates direct services to/from LHR.
AFKL operates indirect services to/from LHR and to/from LCY.
104
(99) On the London – Havana route, VAL operates direct and indirect services to/from
LGW. AFKL operates indirect services to/from LHR.
105
(100) On the London – Montego Bay route, VAL operates direct services to/from LGW
while AFKL and VAL/Delta operate indirect services to/from LHR.
106
(101) The travel distances and times between Heathrow, Gatwick and City airports and
the centre of London are summarised below:
Airport
Approximate
distance to city
centre
Approximate travel time to city centre
Road
By car/taxi
By public transport
Heathrow 28km 65 min
Rail: 15-30 min
Coach/bus: 65/135 min
Gatwick 46 km 85 min
Rail: 30-45 min
Coach/bus: 90/145 min
City
14 km
20 min
Rail: 22 min
Source: Form CO, paragraph 260 and reply of the Parties to RFI 5 of 31 January 2019.
(102) Both competitors and corporate customers and travel agents having expressed a
view gave mixed replies as to whether the relevant market consists of flights
to/from LHR only, or to/from LHR, LGW and LCY taken together.
107
The
majority of competitors having expressed a view do monitor air carriers flying
102
Form CO, paragraphs 596-597.
103
Form CO, paragraphs 1064-1066.
104
Form CO, paragraphs 1096-1098.
105
Form CO, paragraphs 1127-1129.
106
Form CO, paragraphs 1151-1152.
107
Replies to eQ1 – Questionnaire 1 for Competitors, question 15; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 9.
22
to/from LHR, LGW or LCY on the routes listed in paragraph (91) above.
108
The
outcome of the market investigation is therefore inconclusive.
(103) In any case, for the purpose of this Decision, the question of whether the relevant
market consists of flights to/from Heathrow only, or to/from Heathrow, Gatwick
and City airports, can be left open, as the Transaction would not raise serious
doubts as to its compatibility with the internal market under either plausible
market definition.
d) New-York
(104) The city of New York is served by three primary airports, namely John F.
Kennedy (JFK), Newark Liberty (EWR) and La Guardia (LGA) airports. La
Guardia predominantly serves North American destinations and there are no
direct flights to and from La Guardia relevant for the assessment of the
Transaction.
109
La Guardia will therefore not be included in the airport
substitutability analysis.
(105) In its prior decisional practice relating to transatlantic flights to/from New York,
the Commission examined the effects of the transaction on a market comprising
flights to and from JFK only and a wider market comprising flights to and from
JFK and EWR, but the market definition was ultimately left open.
110
(106) For the purposes of the O&D assessment of the Transaction, the question of
airport substitutability is relevant for the following routes: Manchester – New
York, Edinburgh – New York, Nice – New York, Dublin – New York, Lyon –
New York, Marseille – New York and Hamburg – New York.
(107) On the Manchester – New York route, VAL/Delta operates direct and indirect
services to/from JFK and indirect services to/from EWR. AFKL operates indirect
services to/from JFK while United Airlines, Lufthansa and Air Canada operate
direct services to/from EWR.
111
(108) On the Edinburgh – New York route, VAL/Delta operates direct and indirect
services to/from JFK. AFKL operates indirect services to/from JFK via AMS or
CDG while United Airlines, Lufthansa and Air Canada operate direct services
to/from EWR.
112
108
Replies to eQ1 – Questionnaire 1 for Competitors, question 16.
109
See e.g. Form CO, paragraph 488.
110
Cases M.7333 – Alitalia/Etihad, paragraph 110; M.6828 – Delta Air Lines/Virgin Group/Virgin
Atlantic Limited, paragraph 47. In case M.7541 – IAG/Aer Lingus, paragraph 104, the Commission
considered that JFK and EWR were substitutable for TS and NTS passengers with respect to the
Dublin – New York route.
111
Form CO, paragraphs 471-473.
112
Form CO, paragraphs 568-570.
23
(109) On the Nice – New York route, AFKL/Delta operates direct and indirect services
to/from JFK while VAL operates indirect services to/from JFK. The Parties also
operate limited indirect services to/from EWR.
113
(110) On the Dublin – New York route, AFKL/Delta operates direct and indirect
services to/from JFK. VAL operates indirect services to/from JFK and to/from
EWR while United Airlines, Lufthansa, Air Canada and Aer Lingus operate direct
services to/from EWR.
114
(111) On the Lyon – New York route, the Parties operate indirect services to/from JFK
and to/from EWR.
115
(112) On the Marseille – New York route, the Parties operate indirect services to/from
JFK and to/from EWR.
116
(113) On the Hamburg – New York route, the Parties operate indirect services to/from
JFK and to/from EWR while United Airlines operates a direct service to/from
EWR in summer only.
117
(114) The Parties consider JFK and EWR as substitutable.
118
(115) The travel distances and times between these airports and the centre of New York
are summarised below:
Airport
Approximate
distance to city
centre
Approximate travel time to city centre
Road
By car/taxi
By public transport
John F.
Kennedy
31 km 30 min
By train: 75 min
By bus: 52 min
Newark 21 km 22 min By train: 24 min
Source: Form CO, paragraph 272.
(116) The outcome of the market investigation is inconclusive. While a majority of
competitors having expressed a view consider that JFK and EWR airports are
substitutable and monitor air carriers flying on the routes listed in paragraph (106)
above to/from JFK or EWR,
119
the corporate customers and travel agents gave
113
Form CO, paragraphs 756-758.
114
Form CO, paragraphs 789-791.
115
Form CO, paragraphs 899-900.
116
Form CO, paragraphs 922-923.
117
Form CO, paragraphs 959-960.
118
Form CO, paragraph 270.
119
Replies to eQ1 – Questionnaire 1 for Competitors, questions 15 and 16.
24
mixed replies as to whether passengers consider JFK and EWR as substitutable
airports.
120
(117) In any case, for the purpose of this Decision, the question of whether John F.
Kennedy and Newark airports are substitutable can be left open, as the
Transaction would not raise serious doubts as to its compatibility with the internal
market under either plausible market definition.
e) Orlando
(118) Orlando is served by two airports, namely Orlando International (MCO) and
Orlando Sanford International (SFB).
(119) In its prior decisional practice, the Commission found that MCO and SFB can be
considered as substitutable from the point of view of passengers, at least with
regards to NTS passengers, with regard to the routes London – Orlando and
Manchester - Orlando.
121
(120) For the purpose of the O&D assessment of the Transaction, the question of
substitutability of MCO and SFB is relevant for the following routes: Dublin –
Orlando and Amsterdam – Orlando.
(121) On the Dublin – Orlando route, the Parties operate indirect services to/from
MCO, while Aer Lingus operates direct flights from MCO.
122
With respect to the
Amsterdam – Orlando route, the Parties operate from MCO while TUI operated a
direct service to/from SFB.
123
(122) The travel times and distances between these airports and the city centre of
Orlando are summarised below:
Airport
Approximate
distance to city
centre
Approximate travel time to city centre
Road By car/taxi By public transport
Orlando
(MCO)
21 km 20 min By train: 36 min
Sanford
(SFB)
37 km 30 min
Approximately 3
hours
Source: Form CO, paragraph 280.
120
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 9.
121
M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, paragraph 52.
122
Form CO, paragraphs 278 and 845.
123
Form CO, paragraphs 862-863.
25
(123) The outcome of the market investigation is inconclusive. While a majority of
competitors having expressed a view consider that Orlando and Sanford airports
are substitutable and monitor competitors on the route Amsterdam – Orlando
flying to/from MCO or SFB,
124
the corporate customers and travel agents gave
mixed replies as to whether passengers consider Orlando and Sanford as
substitutable.
125
(124) In any case, for the purpose of this Decision, the question of whether Orlando and
Sanford airports are substitutable can be left open, as the Transaction would not
raise serious doubts as to its compatibility with the internal market under either
plausible market definition.
Conclusion
(125) For the purpose of this Decision, it is not necessary to decide whether (i) Paris-
Charles de Gaulle and Paris Orly airports, (ii) Milan Malpensa and Milan Linate
airports, (iii) London Heathrow, Gatwick and City, (iv) John F. Kennedy and
Newark, (v) Orlando and Sanford airports are substitutable as the Transaction
would not raise serious doubts as to its compatibility with the internal market
under any plausible market definition.
4.2.2. Airport-by-airport approach – Air transport of passengers
(126) As explained in paragraph (40) above, the Commission considers it appropriate to
apply the airport-by-airport approach for the purpose of this Decision. The
Commission will assess the effect of the Transaction on the Parties’ slot holding
in both IATA Seasons at London Heathrow and Manchester airports in relation to
the markets for air transport services of passengers to or from the relevant airports
and the market for airport infrastructure services provided at the relevant airports.
(127) The Commission will consider below the various possible delineations of these
two relevant markets under the airport-by-airport approach.
4.2.2.1. Air transport services of passengers to or from the relevant airports
Relevant product market
(128) In prior decisions, the Commission has not deemed it necessary to consider under
the airport-by-airport approach, when all O&Ds to or from an airport are
aggregated, the same distinctions as those considered when each O&D market is
examined separately (e.g. time sensitive vs. non-time sensitive passengers, direct
vs. indirect flights, charter flights vs. scheduled flights, wholesale vs. retail supply
of airline seats).
126
On the basis of the information in the file, the Commission
124
Replies to eQ1 – Questionnaire 1 for Competitors, questions 15 and 16. The question of whether air
carriers monitors competitors flying between Dublin and Sanford airports is irrelevant as no air carrier
provides direct services on that airport pair.
125
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 9.
126
See Cases M.8869 – Ryanair/LaudaMotion, paragraph 222; M.8672 – easyJet/Certain Air Berlin
assets, paragraph 52; M.8633 – Lufthansa/Certain Air Berlin assets, paragraph 58; M.6447 − IAG/bmi,
paragraphs 492-506.
26
considers that there are no grounds for it to deviate from this past practice for the
purposes of this Decision.
Relevant geographic market
(129) In prior decisions, the Commission has considered whether the relevant airports
were substitutable with other airports in view of their overlapping catchment
areas.
127
(130) In the present case, the substitutability from the point of view of passengers of
(i) London Heathrow, Gatwick, City, Stansted, Luton and Southend airports and
(ii) Manchester, Liverpool and Leeds airports has been considered in
section 4.2.1.4. above.
128
Conclusion
(131) For the purpose of its airport-by-airport assessment of the Transaction in this
Decision, the Commission will assess the competitive effects of the Transaction
on the markets for the provision of passenger air transport services, encompassing
all routes to or from an airport, or to or from substitutable airports.
(132) For the purpose of its airport-by-airport assessment of the Transaction in this
Decision, the question of whether the relevant geographic market consists of
(i) flights to/from London Heathrow only or Heathrow, Gatwick and City airports
and (ii) flights to/from Manchester only or Manchester, Liverpool and Leeds can
be left open, as the Transaction would not raise serious doubts as to its
compatibility with the internal market under either plausible market definition
(see section 5.2. below).
4.2.2.2. Airport infrastructure services
(133) For the purpose of providing passenger air transport services at congested
airports, airlines have to source infrastructure services at those airports. As
indicated in paragraph (27) above, at congested airports, infrastructure capacity is
managed through the allocation of slots, which enable air carriers to fly to and
from the airports. Slots are therefore defined, from the point of view of airports,
as "a planning tool for rationing capacity at airports where demand for air travel
exceeds the available runway and terminal capacity."
129
From the point of view
of airlines, the granting of a slot at an airport means that the airline may use the
entire range of infrastructure necessary for the operation of a flight at a given time
(runway, taxiway, stands and, for passenger flights, terminal infrastructure). This
in turn enables the airlines to provide passenger air transport services to and from
that airport.
127
See Cases M.8869 – Ryanair/LaudaMotion, paragraphs 223-226 ; M.8672 – easyJet/Certain Air Berlin
assets, paragraphs 53 et seq.; M.8633 – Lufthansa/Certain Air Berlin assets, paragraphs 59 et seq.
128
See in particular paragraphs (72) and (89) above.
129
Press release of 1 December 2011 accompanying the Airport Package (http://europa.eu/rapid/press-
release MEMO-11-857 en.htm).
27
(134) As a consequence, through the Transaction and the combination of slot portfolios,
the Parties together obtain a right of access to a higher share of airport
infrastructure capacity. The Transaction therefore has an impact on (the demand-
side of) the markets for airport infrastructure services at the relevant airports and
also on the markets for passenger air transport to and from those airports.
Relevant product market
(135) The Commission has, in its prior decisional practice, delineated a product market
for the provision of airport infrastructure services to airlines, which includes the
development, maintenance, use and provision of the runway facilities, taxiways
and other airport infrastructure.
130
(136) The Commission has considered sub-dividing the market for airport infrastructure
services on the basis of airline customers (i.e. charter operators, scheduled full
service carriers and scheduled low cost carriers) and on the basis of the type of
flights (i.e. short-haul and long-haul).
131
(137) However, in prior decisions relating to the transfer of slots at airports, the
Commission has not considered it appropriate to further distinguish within the
market for airport infrastructure services, considering that slot portfolios give
access to all infrastructure services necessary to operate at the airport.
(138) The Commission considers that there is no element in the file that would require
deviating from the Commission's past practice for the purposes of this Decision.
Relevant geographic market
(139) In its prior decisional practice, the Commission has, defined the geographic scope
of the market for airport infrastructure services as the catchment area of
individual airports.
(140) The Commission has also considered additional criteria relevant for assessing
airport substitutability in relation to the market for airport infrastructure services,
while acknowledging that the airlines' choice of airports ultimately depends on
passengers' demand. In addition to the catchment area of a particular airport, the
Commission has notably analysed the capacity constraints for slots and facilities,
passenger volumes or the positioning of the airport (e.g. a niche airport serving
high yield time-sensitive passengers or an airport serving mainly leisure, less
time-sensitive passengers).
132
130
See e.g. Cases M.7270 − Český Aeroholding/Travel Service/České aerolinie, paragraph 50; M.7008 –
Aena International/Axa PE/LLAGL, paragraph 12.
131
See e.g. Case M.7398 − MIRAEL/ Ferrovial/NDH1, paragraph 19.
132
See e.g. Cases M.5652 – GIP/Gatwick Airport, paragraph 14; M.4164 – Ferrovial/Quebec/GIC/BAA,
paragraphs 15-17; M.3823 – MAG/Ferrovial Aeropuertos/Exeter Airport, paragraphs 16-19.
28
(141) The Commission has taken account of all the above-mentioned criteria when
assessing the geographic scope of the airport infrastructure services markets
relevant for the assessment of the effects of transfer of slots.
133
Substitutability of London Heathrow, Gatwick, City, Stansted, Luton and Southend
airports
(142) VAL, AFKL and Delta each hold slots at Heathrow airport. Virgin Atlantic/Delta
hold slot at Gatwick, while AFKL holds slot at City.
134
The Transaction therefore
gives rise to an overlap between AFKL and Virgin Atlantic/Delta at Heathrow,
and on a broader geographic scope comprising at least (i) LHR and (ii) LCY
and/or LGW.
(143) The question of the catchment area of London airports is addressed in
section 4.2.1.4. above. From the point of view of passengers, the relevant markets
consists of flights to/from London Heathrow only or to/from Heathrow, Gatwick
and City airports.
(144) As regards capacity constraints, these three airports are coordinated (Level 3)
airports.
(145) In 2018, 78 million passengers used Heathrow airport,
135
46.1 million passengers
travelled to/from Gatwick
136
and 4.8 million passengers used City airport.
137
(146) As regards positioning, Heathrow is the “world’s busiest international airport”
and a major international hub for air transport, with more than 81 airlines
operating 204 destinations.
138
Gatwick is used by 50 airlines, which provide “a
combination of full service, low-cost and charter services” and fly to
230 destinations.
139
While 56% of City airport’s passengers travel for business
purpose, 44% are leisure passengers. In that regard, City airport “has developed
133
See Cases M.8869 – Ryanair/LaudaMotion, paragraphs 238 et seq., M.8672 – easyJet/Certain Air
Berlin assets, paragraphs 73 et seq.; M.8633 – Lufthansa/Certain Air Berlin assets, paragraphs 117
et seq.
134
Form CO, paragraph 300. In addition, none of the Parties holds slots at the other plausible airports.
Taking account of these airports would therefore dilute the Parties’ slot holdings.
135
Heathrow airport’s “Facts and figures”: https://www.heathrow.com/company/company-news-and-
information/company-information/facts-and-figures .
136
Gatwick Key Facts https://www.gatwickairport.com/business-community/about-gatwick/company-
information/gatwick-by-numbers/ .
137
London City Airport’s website https://www.londoncityairport.com/media-centre/passengers-up-by-6-
4-in-2018-to-4-8m .
138
Heathrow airport’s “Facts and figures”: https://www.heathrow.com/company/company-news-and-
information/company-information/facts-and-figures and “History”
https://www heathrow.com/company/company-news-and-information/company-information/our-
history .
139
Gatwick Key Facts https://www.gatwickairport.com/business-community/about-gatwick/company-
information/gatwick-key-facts/ .
29
an attractive mix of airlines and destinations with 11 airline customers […]
serving 43 different destinations (11 UK, 34 European and 1 US destination)”.
140
(147) Considering that Heathrow, City and Gatwick have different positioning and
strategy, the Commission concludes that, for the purpose of this Decision, the
geographic scope of the market for the provision of airport infrastructure services
to airlines is limited to Heathrow airport.
141
Substitutability of Manchester, Liverpool and Leeds-Bradford airports
(148) Virgin Atlantic/Delta and AFKL hold slots at Manchester airport. The
Transaction therefore gives rise to an overlap between Virgin Atlantic/Delta and
AFKL’s slot portfolios. […].
142
(149) As regards catchment area, Manchester, Liverpool and Leeds airports are each all
located within 100 km/1 hour driving time from Manchester city centre.
(150) In previous decisions, the Commission considered that Manchester and Liverpool
or Manchester, Liverpool and Leeds airports could belong to the same market in
respect of certain short-haul routes.
143
(151) As regards capacity constraints, Manchester airport is a coordinated (Level 3)
airport during both IATA Seasons, while Liverpool and Leeds airports are both
schedules facilitated airports
144
(Level 2)
145
during both IATA Seasons.
(152) As regards positioning and passenger volumes, Manchester serves in particular
full service carriers. It is used by 70 airlines serving 220 destinations. The number
of passengers at Manchester airport reached 59 million in 2018. Leeds and
Liverpool are mainly used by low-cost carriers such as Ryanair and easyJet (at
140
2018 LCY Customer Profile:
https://assets.ctfassets net/ggj4kbqgcch2/7KiRJ9oud2wEsKyAcSie60/66c269783be6dcbc5d604a512af
57364/2018 LCY Customer Profile.pdf .
141
For the sake of completeness, the Parties have provided their slot holding for all plausible airport
combination and submit that the competitive assessment concerning their slot holding at LHR is valid
under any plausible market definition (Form CO, paragraph 300).
142
[…].
143
See e.g. Case M.6663 – Ryanair/Aer Lingus III, paragraph 238.
144
Under the Slot Regulation, a schedules facilitated airport is "an airport where there is potential for
congestion at some periods of the day, week or year which is amenable to resolution by voluntary
cooperation between air carriers and where a schedules facilitator has been appointed to facilitate the
operations of air carriers operating services or intending to operate services at that airport."
145
Under the 8th Edition of Worldwide Slot Guidelines issued by IATA (effective 1 January 2017), a
Level 2 airport "is one where there is potential for congestion during some periods of the day, week or
season, which can be resolved by schedule adjustments mutually agreed between the airlines and
facilitator." A Level 2 airport under the IATA Worldwide Slot Guidelines corresponds to a schedules
facilitated airport under the Slot Regulation.
30
Liverpool only).
146
3.6 million passengers travelled to/from Leeds airport,
147
compared to 5.1 million to/from Liverpool airport.
148
(153) Considering that (i) only Manchester airport is a coordinated airport, and
(ii) Manchester airport has a different positioning and market strategy, the
Commission concludes that, for the purpose of this Decision, the geographic
scope of the market for the provision of airport infrastructure services to airlines
is limited to Manchester airport.
Conclusion
(154) For the purpose of this Decision, the Commission will assess the effects of the
Transaction on the market for the provision of airport infrastructure services to
airlines.
(155) For the purpose of this Decision, the Commission considers that the geographic
scope of the market for airport infrastructures services in London is London
Heathrow airport and the geographic scope of airport infrastructure services in
Manchester is limited to Manchester airport.
4.2.3. Air transport services of cargo
4.2.3.1. Relevant product market
(156) In prior decisions, the Commission considered a market for air transport of cargo
including all kinds of transported goods provided by all types of air cargo
carriers,
149
without any further subdivision to be made according to the nature of
the goods transported (for example, dangerous or perishable goods) or the type of
air cargo carrier.
150
(157) In fact, the Commission has concluded that four types of air cargo carriers,
namely (i) cargo airlines with dedicated freighter planes; (ii) airlines with only
belly space cargo capacity on passenger flights; (iii) combination airlines
(i.e. airlines with both dedicated freighter airplanes and belly space cargo
146
Leeds airport website: https://www.leedsbradfordairport.co.uk/our-destinations/airlines.
147
Leeds airport’s Strategic Development Plan, available
https://www.leedsbradfordairport.co.uk/media/2522/masterplan-2017-update.pdf .
148
https://www.liverpoolairport.com/news/2019/01/double-celebration-for-ljla-with-growing-passenger-
numbers-and-the-uk-s-best-on-time-performance .
149
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 37; M. 6828 – Delta Airlines/ Virgin
Group / Virgin Atlantic Limited, paragraph 76; M.6447 – IAG/bmi, paragraph 92; M.5747 -
Iberia/British Airways, paragraph 40.
150
M. 6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraphs 73-74; M.6447 –
IAG/bmi, paragraphs 91-92; M.5747 – Iberia/British Airways, paragraph 40.
31
capacity); and (iv) integrators, compete with each other for business with the
same kinds of customers.
151
(158) Based on the Commission’s prior decisions, the O&D approach to market
definition is not appropriate for air cargo transport services because cargo is (i) in
principle less time-sensitive than passengers, and (ii) usually transported “behind”
and “beyond” the points of origin and destination by trans-modal transport
methods and thus can be routed via a higher number of stops than passengers.
152
Consequently, the Commission considers that a wider market for air transport of
cargo exists as, unlike passengers, cargo can be transported with a higher number
of stopovers and therefore any one-stop route is a substitute for any non-stop
route.
153
(159) In addition, according to the Commission's precedents, cargo transport markets
should be assessed on a unidirectional basis, due to differences in demand at each
end of the route.
154
(160) The Parties agree with the Commission's decision-making practice.
155
(161) Therefore, in line with its prior decisional practice, the Commission will assess
the effects of the Transaction on a broader market for air transport of cargo
encompassing all types of air cargo carriers and including all kinds of transported
goods on a unidirectional basis.
4.2.3.2. Relevant geographic market
(162) In prior decisions, the Commission defined the market in intra-European routes of
air cargo transport as European-wide.
156
As regards intercontinental routes, the
Commission established that catchment areas at each end of the route broadly
correspond to continents where local infrastructure is adequate to allow for
onward connections (for example, by road, train, or inland waterways, etc.), such
as Europe and North America. As regards continents where local infrastructure is
151
M. 6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraph 75; M.6447 – IAG/bmi,
paragraph 89; M.5747 – Iberia/British Airways, paragraph 38.
152
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 38; M.6828 – Delta Airlines/ Virgin
Group / Virgin Atlantic Limited, paragraph 72; M.6447 – IAG/bmi, paragraph 87; M.5747 –
Iberia/British Airways, paragraph 36.
153
Cases M.6828 – Delta Airlines/ Virgin Group / Virgin Atlantic Limited, paragraph 73; M.6447 –
IAG/bmi, paragraph 88; M.5747 – Iberia/British Airways, paragraph 37.
154
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6828 – Delta Airlines/ Virgin
Group / Virgin Atlantic Limited, paragraph 77; M.6447 – IAG/bmi, paragraph 90; M.5747 –
Iberia/British Airways, paragraph 39.
155
Form CO, paragraphs 1418 and 1420.
156
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6447 – IAG/bmi, paragraph 93;
M.5747 – Iberia/British Airways, paragraph 41.
32
less developed, the relevant catchment area has been considered the country of
destination.
157
(163) The Parties agree with the Commission's previously established geographic
definition.
(164) Therefore, in line with its prior decisional practice, the Commission will assess
the effects of the Transaction on a continent-to-continent and continent-to-country
basis as the case may be. The Transaction gives rise to the following affected
cargo flows: EEA - North America (USA & Canada), North America (USA &
Canada) - EEA, Mexico - EEA, UK - North America (USA & Canada), North
America (USA & Canada) - UK, Mexico - UK, UK - Mexico, EEA - Caribbean,
Caribbean - EEA, EEA - Cuba, Cuba - EEA, EEA - South Africa, South Africa -
EEA, EEA - Nigeria, Nigeria - EEA.
4.2.4. Maintenance, repair and overhaul (“MRO”) services
4.2.4.1. Relevant product market
(165) In prior decisions, the Commission distinguished four separate segments within
the MRO market based on the part of the aircraft to be serviced and the level of
service required, namely (i) line maintenance (minor checks carried out on
aircraft and performed at the different airports), (ii) heavy maintenance
(comprehensive inspection and overhaul of the aircraft, for which the aircraft is
taken out of service), (iii) engine maintenance, and (iv) components maintenance
(inspection, repair and overhaul of specific aircraft components).
158
The
Commission also considered but ultimately left the question open, whether a
distinction between commercial and business aviation is appropriate.
159
It
moreover noted that line maintenance and heavy maintenance can be further
subdivided according to nature and frequency of the checks involved (A, B, C and
D-checks).
160
157
Cases M.8361 – Qatar Airways/Alisarda/Meridiana, paragraph 39; M.6828 – Delta Airlines/ Virgin
Group / Virgin Atlantic Limited, paragraph 79; M.6447 – IAG/bmi, paragraph 94 ; M.5747 –
Iberia/British Airways, paragraph 42.
158
Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289; M.6447 – IAG/bmi, paragraph 105; M.6554
– EADS/STA/Elbe Flugzeugwerke JV, paragraph 25; M.6410 – UTC/Goodrich, paragraph 174; M.5747
– Iberia/British Airways, paragraph 48; M.3374 – SR Technics/FLS Aerospace, paragraph 9; M.3280 –
Air France/KLM, paragraph 39.
159
Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289.
160
Cases M.8425 – Safran/Zodiac Aerospace, paragraph 289; M.6554 – EADS/STA/Elbe Flugzeugwerke
JV, paragraph 25; M.6410 – UTC/Goodrich, paragraph 174; M.3280 – Air France/KLM, paragraph 39.
An A-check is performed approximately every 800 flight hours and requires around 200-300 man-
hours to complete. Bchecks are performed approximately every 4-6 months and are usually performed
within 3 days at an airport hangar. C-checks are performed approximately every 18 to 24 months or
after a specific amount of actual Flight Hours as defined by the manufacturer. D-checks/structural
checks are the most comprehensive and demanding checks, since the entire aircraft structure is taken
apart for inspection and overhaul. Intermediate structural checks occur after 5-6 years and heavy
structural checks occur after 10- 12 years. Such checks will usually demand around 15,000 to 20,000
man-hours and around 1 month to complete at suitably equipped maintenance bases.
33
(166) The Parties submit that the precise scope of the product market definition for
MRO can be left open as no serious doubts would arise under any plausible
market definition. However, in line with the Commission’s decisional practice,
they provided data for each MRO segment and notably for line maintenance
services where the Parties’ activities overlap.
(167) In light of the above, the Commission concludes that the precise scope of the
product market definition for MRO services can be left open since the
Transaction does not raise serious doubts as to its compatibility with the internal
market under any plausible product market definition.
4.2.4.2. Relevant geographic market
(168) In prior decisions, the Commission considered that the geographic scope of the
market for heavy maintenance services might be at least EEA-wide, whereas line
maintenance services could be local in scope and even limited to the airport
where services are provided.
161
Indeed, line maintenance services are usually
carried out at the airport of origin or destination, or at the aircraft’s operational
base.
162
As regards to engine maintenance services and components maintenance
services, the Commission has considered these services to be worldwide in
scope.
163
(169) The Parties submit that the precise scope of the geographic market definition for
all MRO segments can be left open.
(170) For the assessment of the Transaction, the Commission concludes that the precise
geographic market definition for MRO services can be left open since the
Transaction does not raise serious doubts as to its compatibility with the internal
market under any plausible geographic market definition.
4.2.4.3. Conclusion
(171) Given that the Transaction does not raise serious doubts as to its compatibility
with the internal market in respect of MRO services under any plausible market
definition, the Commission concludes that the precise product and geographic
market definitions can be left open.
161
Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
paragraph 26; M.6447 – IAG/bmi, paragraph 108; M.3374 – SR Technics/FLS Aerospace,
paragraph 12.
162
Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
paragraph 26; M.3374 – SR Technics/FLS Aerospace, paragraph 12; M.3280 – Air France/KLM,
paragraph 40.
163
Cases M.7545 – IAG/Aer Lingus, paragraph 121; M.6554 – EADS/STA/Elbe Flugzeugwerke JV,
paragraph 26; M.6447 – IAG/bmi, paragraph 108.
34
5. COMPETITIVE ASSESSMENT
5.1. Passenger air transport services under the O&D approach
5.1.1. Analytical framework
5.1.1.1. Alliances and profit-sharing joint ventures
(172) Air France and Delta were founding members of the SkyTeam alliance in 2001.
Since 2004, shortly after the merger of Air France and KLM, KLM has also been
a full member of the SkyTeam alliance.
164
Consistent with the Commission’s
practice, alliance partners are generally not considered as forming a single
economic entity for the purpose of determining affected markets.
165
(173) Delta, Air France-KLM and Alitalia are parties to a revenue-sharing joint venture
(or “metal neutral joint venture”), covering routes between Europe
166
and North
America (the “TATL” Joint Venture”).
167
(174) Delta and Virgin Atlantic are parties to a metal neutral joint venture covering
direct routes between the United Kingdom and North America (the “DL-VS Joint
Venture”).
168
(175) Delta, AFKL, Alitalia and Virgin Atlantic are also parties to a Coordination
Agreement, covering routes between the United Kingdom and North America.
169
By final order issued on 23 September 2013, the American Department of
Transportation granted antitrust immunity with respect to the activities
contemplated under the DL-VS Joint Venture and the Coordination
Agreement.
170
(176) Metal neutral joint ventures involve extensive cooperation such as revenue-
sharing and joint management of schedules, pricing and capacity.
171
(177) There are two other metal neutral joint ventures on transatlantic routes, namely
(i) the oneworld Transatlantic Joint Business Agreement entered into by
American Airlines, British Airways (BA) and Iberia (IB) and Finnair (AY)
164
Form CO, paragraph 11.
165
See e.g. Case M.7541 – IAG/Aer Lingus, paragraph 145.
166
For the purpose of this Decision, it is understood that routes to/from the United Kingdom are not
covered by the TATL Joint Venture.
167
Form CO, paragraph 402.
168
Form CO, paragraph 403.
169
Form CO, paragraphs 13 and 402.
170
Form CO, paragraph 13.
171
See e.g. Case M. 7541 – IAG/Aer Lingus, paragraph 146.
35
(“oneworld”) and (ii) the Star Alliance A++ Joint Venture of United (UA),
Lufthansa (LH) and Air Canada (AC) (“Star Alliance”).
(178) Consistent with the Commission’s approach, each of the metal neutral joint
ventures are treated as a single entity for the purposes of assessing market shares
on all relevant routes.
172
5.1.1.2. Methodology used to calculate market shares
(179) The Commission has previously used Marketing Information Data Tapes
(“MIDT”) data
173
and PaxIS PLUS data
174
as appropriate proxies to estimate
market shares for air transport of passengers.
(180) The Parties have first submitted data on market size and market shares for each
relevant O&D on the basis of MIDT while recognising that MIDT has certain
limitations: MIDT data is based on bookings made through the Global
Distribution Systems (GDS) and does not capture the direct sales made direct by
airline to their customers.
175
(181) To take account of the increasing number of direct sales, the Commission has
asked the Parties in the pre-notification phase to use a data source that captures
direct sales by the Parties and their competitors.
(182) The Parties submitted that none of the Parties subscribes to PaxIS PLUS and
proposed not to use PaxIS PLUS since PaxIS PLUS [details about usability of
PaxIS PLUS in the context of the case at hand].
176
(183) Instead of PaxIS Plus, the Parties proposed to use Direct Data Solutions (“DDS”)
data, another database developed by IATA.
177
The Parties explained that DDS
includes actual bookings data from GDS and ACR data (US country of sale
agency settlement data) as well as contributed data from the carriers subscribing
to it. IATA would apply an algorithm to estimate volumes for carriers that do not
contribute data or do not allow for their contributed data to be published.
According to the Parties, DDS is intended to capture all passenger bookings.
178
172
See e.g. Cases M. 7541 – IAG/Aer Lingus, paragraph 147, M.6828 – Delta Air Lines/Virgin
Group/Virgin Atlantic Limited, paragraph 87.
173
See e.g. Cases M.6447 – IAG/bmi; M.5889 – United Airlines/Continental Airlines; M.5747 –
Iberia/British Airways.
174
See e.g. Cases M.7333 – Alitalia/Etihad, paragraphs 135 et seq.; M.7541 – IAG/Aer Lingus,
paragraphs 135 et seq.
175
Form CO, paragraph 410 et seq.
176
Form CO, paragraph 417.
177
Form CO, paragraph 418.
178
See email of Parties to EC case team of 29 November 2018.
36
The Parties submitted data on market size and market shares for each relevant
O&D on the basis of DDS for the last two IATA Seasons.
179
(184) The Parties have also submitted their actual bookings data for the last two IATA
Seasons and submit that the DDS data is often similar to the actual sales data in
terms of number of bookings.
180
(185) The Commission is of the view that DDS data are the best proxy to estimate the
market shares and are appropriate for the assessment of the affected routes in this
case.
5.1.1.3. “Filters”
(186) Consistent with previous Commission practice,
181
the Parties have applied the
following filters to exclude likely unproblematic routes from the scope of its
investigation (all criteria must have been met in the four last completed IATA
Seasons and for all passenger segments for a route to be excluded under the
filters):
182
(a) For direct/indirect overlaps:
(i) the Parties’ combined market share was below 25%; or
(ii) one of the Parties had a market share below 2%;
183
or
(iii) short-haul routes where the total share of indirect operations in the
relevant market was below 10%; or
(iv) at least one end of the city pair is outside the EU and the total
annual traffic was below 30 000 passengers; or
179
Form CO, paragraph 420.
180
Form CO, paragraph 423.
181
See e.g. Cases M.7541 – IAG/Aer Lingus, paragraphs 151 et seq.; M.7333 – Alitalia/Etihad,
paragraphs 171 et seq.; M.6828 – Delta Air Lines/Virgin Group/Virgin Atlantic Limited, footnote 76;
M.6607 – US Airways/American Airlines, paragraph 32.
182
The Parties have applied the filters to the MIDT data and filtered out around 700 routes. Considering
that the Commission used MIDT data as an appropriate data source in several previous cases and
considering the Parties submission that a comparison of the MIDT and the DDS shows that the DDS
data is often similar to the MIDT data in terms of the Parties’ combined market shares and the market
increment, the Commission has accepted the routes filtered out based on MIDT data.
183
The Parties have treated the parties to each of the TATL Joint venture and the DL-VS Joint Venture as
a single entity: for the routes between the UK and North America, Delta and Virgin Atlantic were
treated as a single entity and for routes between Europe (excluding the UK) and North America, Delta
and AFKL were treated as a single entity. For the other O&Ds, each of AFKL, DL and VAL’s market
share was analysed separately (see Form CO, paragraph 16 and footnote 18). Therefore, for the
purpose of applying this filter (“one of the Parties had a market share below 2%”), the market share of
either each of the Parties, or of the TATL Joint Venture, or the DL-VS Joint Venture has been taken
into account, depending on the route (see Annex B.06).
37
(v) the route was below the HHI thresholds of paragraph 20 of the
Horizontal Merger Guidelines.
184
(b) For indirect/indirect overlaps:
(i) the Parties’ combined market share was below 25%; or
(ii) one of the Parties had a market share below 2%;
185
or
(iii) as regards short-haul routes where the total annual traffic was
below 15 000 passengers or as regards long-haul routes where the
total annual traffic was below 30 000 passengers; or
(iv) the route was below the HHI thresholds of paragraph 20 of the
Horizontal Merger Guidelines.
(187) As a result of the above criteria, the Parties submitted that 32 routes
(direct/indirect overlaps and indirect/indirect overlaps) would be affected by the
Transaction.
5.1.1.4. Closeness of competition
(188) The Transaction gives rise to 19 affected horizontal direct/indirect overlaps. On
eight affected routes from the United Kingdom to North America, Virgin
Atlantic/Delta operates a direct service, while AFKL operates an indirect service.
These routes are: London-Seattle, Manchester-New York, London-Atlanta,
London-Minneapolis, London-Detroit, Edinburgh-New York, London-Portland,
Manchester-San Francisco. On seven affected routes from Continental
Europe/Ireland to North America, AFKL/Delta operates a direct service, while
Virgin Atlantic operates an indirect service. These routes are: Amsterdam-Los
Angeles, Amsterdam-Miami, Amsterdam-San Francisco, Paris-San Francisco,
Paris-Boston, Nice-New York and Dublin-New York. On three affected routes
(London-Lagos, London-Shanghai, London-Havana), Virgin Atlantic operates a
direct service, while AFKL operates an indirect service and on one affected route,
Virgin Atlantic operates a direct service, while AFKL and Delta operate an
indirect service (London-Montego Bay).
(189) The Commission will first assess the closeness of competition in general between
the Parties on the 19 horizontal direct/indirect overlap routes, before assessing the
effects of the Transaction on these routes.
(190) For the reasons explained below, the affected direct/indirect overlap routes will
not give rise to competition concerns. If direct and indirect flights were to be
184
Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
concentrations between undertakings, OJ C31, 5.2.2004, p.5.
185
The Parties have treated the parties to each of the TATL Joint venture and the DL-VS Joint Venture as
a single entity: for the routes between the UK and North America, Delta and Virgin Atlantic were
treated as a single entity and for routes between Europe (excluding the UK) and North America, Delta
and AFKL were treated as a single entity. For the other O&Ds, the Parties’ market share was analysed
separately, see Form CO, paragraph 16 and footnote 18.
38
considered as two separate markets, there would be no affected overlap routes as
a result of the Transaction. Therefore, it is not necessary to reach a conclusion on
whether direct and indirect passenger air transport services constitute part of the
same market, as it would not change the conclusion of the competitive assessment
as already stated in section 4.2.1.2 above.
(191) The Commission has in previous airline cases analysed the closeness of
competition between the parties to the concentration.
186
The concept of
“closeness of competition” may play an important role in better understanding the
competitive constraint exerted by different competitors on each other in
differentiated markets such as airline markets.
187
It is therefore relevant to assess
whether a) Virgin Atlantic/Delta’s direct service and AFKL’s indirect service on
the routes from the United Kingdom to North America, b) AFKL/Delta’s direct
service and Virgin Atlantic’s indirect service on the routes from Continental
Europe/Ireland to North America and c) Virgin Atlantic’s direct services and
AFKL’s and Delta’s indirect services on the routes from London to certain rest of
the world-destinations would be considered as close substitutes.
(192) As explained above, the market investigation gave mixed results concerning the
question if of whether passengers consider direct flights as an alternative to
indirect flights: while the majority of competitors (airlines) considered this to be
the case, the views of the responding customers (travel agencies and corporate
customers) were mixed.
188
(193) The majority of customers (travel agencies and corporate customers) stated that
they sell tickets to both direct and indirect flights to their customers and that they
buy tickets for both direct and indirect flights on the affected direct/indirect
overlap routes.
189
However, around 1/3 of the corporate customers responding to
the market investigation explained that they generally only buy tickets to direct
flights.
190
When asked which criteria would make customers choose an indirect
flight over a direct flight, respondents to the Commission’s market investigation
identified most frequently the price difference, followed by the schedule of the
respective flight and the total travel duration.
191
(194) The majority of respondents to the market investigation (competitors, travel
agents, corporate customers) indicated that none of the Parties are each other’s
186
See e.g. Cases M.7541 - IAG/Aer Lingus, paragraphs155 et seq.; M.6828 - Delta Air Lines/Virgin
Group/Virgin Atlantic Limited, paragraphs 168 et seq.
187
See paragraphs 28-30 of the Horizontal Merger Guidelines.
188
Replies to eQ1 – Questionnaire 1 to competitors, question 9; eQ2 – Questionnaire to corporate
customers and travel agencies, question 4.
189
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 5 and 6.
190
Replies to eQ2 – Questionnaire 2 to corporate customers and travel agencies, question 6.
191
Replies to eQ1 – Questionnaire 1 to competitors, question 3; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 7.
39
closest competitor on any of the 19 affected direct/indirect overlap routes.
192
In
the majority of cases, British Airways, American Airlines, United Airlines or
Lufthansa was identified as either Virgin Atlantic’s, AFKL’s or Delta’s closest
competitor.
(195) In the light of the above, the Commission considers that none of the Parties are
each other’s close competitor on the 19 direct/indirect overlap routes.
5.1.1.5. Significant competitive pressure from other airlines
(196) The market investigation in previous cases has shown that indirect routes are
often modified from one IATA Season to the next and that price increases or
reductions of capacity could be countered by competitors who could start
operating on these routes more easily than on direct/direct overlap routes which
require the deployment of aircraft dedicated to the O&D route.
193
Therefore, in
general, any attempt by the Parties to raise prices on routes, where the overlap is
between direct/indirect services, would likely be short-lived and ineffective. This
was also confirmed by the market investigation. The majority of respondents
having expressed a view consider that there will be sufficient competition to
prevent the Parties from raising prices on all affected direct/indirect overlap
routes. The Commission thus considers that other carriers like the members of the
Star Alliance or oneworld would exert significant competitive pressure on the
Parties post-Transaction on the affected direct/indirect overlap routes.
5.1.1.6. De minimis increment
(197) In previous cases, the Commission has considered increments up to 5% as low
increments on direct/indirect overlap routes.
194
In line with its prior decisional
practice, the Commission considers that, also taking into account that other
airlines would exert competitive pressure on the Parties post-Transaction, an
increment of up to 5% on an affected direct/indirect overlap is de minimis.
5.1.2. Direct/Indirect affected markets between the United Kingdom and North America
(198) As explained in paragraph (178) above, the Commission treats each of the metal
neutral joint ventures as a single entity for the purpose of assessing the market
shares on all relevant routes. Consistent with the approach, Delta and Virgin
Atlantic are treated as a single entity on every route between the United Kingdom
and North America.
5.1.2.1. London – Seattle
(199) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
London Heathrow and Seattle airports and [100.000-200.000] passengers flew
192
Replies to eQ1 – Questionnaire 1 for Competitors, question 17; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 11.
193
See case M.7333 – Alitalia/Etihad, paragraph 279.
194
See e.g. case M.7541 – IAG/Aer Lingus, paragraphs 412 et seq.
40
between London Heathrow, Gatwick and City and Seattle airports.
195
In Winter
2017/2018 IATA Season, [60.000-80.000] passengers travelled between London
Heathrow and Seattle and [80.000-100.000] passengers flew between London
Heathrow, Gatwick and City and Seattle airports.
196
(200) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
operated direct services on the LHR-SEA airport pair, while AFKL offered only
indirect services on this airport pair via Paris-Charles de Gaulle or Amsterdam
airports.
(201) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-SEA and LHR/LGW/LCY-
SEA.
(202) The table below provides the market shares of the Parties on the LHR-SEA
airport pair.
Table 1 - Market shares of the Parties on LHR-SEA
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL DL VS Combined
TS
[0-5]% [10-20]% [10-20]% [30-40]% [0-5]% [10-20]% [20-30]% [30-40]%
NTS
[0-5]% [10-20]% [30-40]% [50-60]% [0-5]% [10-20]% [30-40]% [50-60]%
All passengers
[0-5]% [10-20]% [20-30]% [40-50]% [0-5]% [10-20]% [30-40]% [50-60]%
Source: Form CO, paragraph 460.
(203) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
197
(204) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-SEA airport pair.
195
Seattle-Tacoma Airport (SEA).
196
Form CO, paragraphs 449 and 460.
197
The Commission has applied the filters described in section 5.1.1.3 above on the basis of the MIDT
data that were provided for the four last IATA Seasons rather than DDS data available only for the
past two IATA Seasons. Therefore, the London – Seattle route is considered as “affected” although it
might have been considered as “unproblematic”, should AFKL’s market shares have been below 2% in
the past four IATA Seasons.
41
Table 2 - Market shares of the Parties on LHR/LGW/LCY-SEA
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[10-20]%
[30-40]%
[0-5]%
[10-20]%
[20-30]%
[30-40]%
NTS
[0-5]%
[10-20]%
[20-30]%
[40-50]%
[0-5]%
[10-20]%
[20-30]%
[30-40]%
All
passengers
[0-5]% [10-20]% [20-30]% [40-50]%
[0-5]% [10-20]% [20-30]% [30-40]%
Source: Form CO, paragraph 449.
(205) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(206) In addition, the Parties will remain constrained by the competition of the year-
round direct service of oneworld as well as the daily all-year round indirect
service operated by oneworld, Star Alliance and Icelandair on LHR-SEA.
198
In
addition, Norwegian operated a direct service on the LGW-SEA airport pair in
Summer 2017 IATA Season.
199
(207) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
200
(208) In light of the above and of all available evidence, the Commission considers that
the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Seattle route under any plausible
market definition.
5.1.2.2. Manchester – New York
(209) In Summer 2017 IATA Season, [200.000-300.000] passengers travelled between
Manchester and John F. Kennedy airports and [20.000-40.000] passengers flew
between Manchester and Newark airports.
201
In Winter 2017/2018 IATA Season,
[100.000-200.000] passengers travelled between Manchester and
John F. Kennedy airports while [40.000-60.000] passengers travelled between
Manchester and Newark airports.
202
198
Form CO, paragraph 441.
199
Form CO, paragraph 442.
200
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
201
Manchester Airport (MAN).
202
Form CO, paragraphs 480 and 486.
42
(210) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
operated direct services on the MAN-JFK airport pair, while AFKL offered only
indirect services on this airport pair via Paris-Charles de Gaulle or Amsterdam
airports.
(211) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: MAN-JFK/EWR and
MAN-JFK.
203
(212) The table below provides the market shares of the Parties on the MAN-JFK/EWR
airport pair.
Table 3 - Market shares of the Parties on MAN-JFK/EWR
204
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[30-40]%
[50-60]%
[0-5]%
[5-10]%
[30-40]%
[40-50]%
NTS
[0-5]%
[5-10]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[10-20]%
[20-30]%
All passengers
[0-5]%
[5-10]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[10-20]%
[20-30]%
Source: Form CO, paragraph 480.
(213) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer 2017 IATA
Season and [0-5]% in Winter 2017/2018 IATA Season.
(214) The table below provides the market shares of the Parties on the MAN-JFK
airport pair.
203
The Parties note that they have a small number of indirect bookings on the MAN-EWR airport pair in
both Summer 2017 and Winter 2017/2018 IATA Seasons (Form CO, footnote 26). The effect of the
Transaction on the MAN-EWR airport (indirect/indirect overlap) pair will not be further assessed as
the Transaction is unlikely to give rise to competition concerns given that the Parties’ combined
market shares will be below [5-10]% under any plausible market definition (Form CO, paragraph 488).
204
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 480).
43
Table 4 - Market shares of the Parties on MAN-JFK
205
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[40-50]%
[50-60]%
[0-5]%
[10-20]%
[40-50]%
[50-60]%
NTS
[0-5]%
[5-10]%
[20-30]%
[30-40]%
[0-5]%
[5-10]%
[20-30]%
[30-40%
All passengers
[0-5]%
[5-10]%
[20-30]%
[30-40]%
[0-5]%
[5-10]%
[20-30]%
[30-40]%
Source: Form CO, paragraph 486.
(215) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer 2017 IATA
Season and [0-5]% in Winter 2017/2018 IATA Season.
(216) In addition, the Parties will remain constrained by the competition of the daily all-
year round direct service operated by Star Alliance on the MAN-EWR airport
pair.
206
With respect to indirect flights, oneworld and Star Alliance, Aer Lingus
and Icelandair operate on the MAN-JFK and MAN-EWR airport pairs all-year
round.
207
(217) Thomas Cook/Condor also provides three to four weekly direct services all-year
round on the MAN-JFK airport pair.
208
The Parties consider that Thomas
Cook/Condor exert a meaningful competitive constraint on the Parties post-
Transaction, particularly in the non-time-sensitive segment of the market.
209
(218) Irrespective of whether seats sold by Thomas Cook/Condor are included or not, in
both IATA Seasons, under any plausible market definition, the increment brought
about by the Transaction is de minimis. Finally, the majority of respondents to the
market investigation having expressed a view considers that there will be
sufficient competition on the route to prevent the Parties’ from raising prices on
the route post-Transaction.
210
(219) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
205
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 486).
206
Form CO, paragraph 479.
207
Form CO, paragraphs 472-473.
208
Form CO, paragraph 471.
209
Form CO, paragraph 477.
210
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
44
internal market with respect to the Manchester – New York route under any
plausible market definition.
5.1.2.3. London – Atlanta
(220) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
London Heathrow and Atlanta airports
211
and [100.000-200.000] passengers flew
between London Heathrow, Gatwick and City and Atlanta airports. In Winter
2017/2018 IATA Season, [80.000-100.000] passengers travelled between London
Heathrow and Atlanta airports and [80.000-100.000] passengers flew between
London Heathrow, Gatwick and City and Atlanta airports.
212
(221) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
operated direct services as well as indirect services on the LHR-ATL airport pair,
while AFKL offered only indirect services on this airport pair as well as the
LGW-ATL airport pair via Paris-Charles de Gaulle or Amsterdam airports.
(222) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-ATL and LHR/LGW/LCY-
ATL.
(223) The table below provides the market shares of the Parties on the LHR-ATL
airport pair.
Table 5 - Market shares of the Parties on LHR-ATL
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[40-50]%
[20-30]%
[60-70]%
[0-5]%
[40-50]%
[10-20]%
[50-60]%
NTS
[0-5]%
[40-50]%
[20-30]%
[60-70]%
[0-5]%
[40-50]%
[20-30]%
[70-80]%
All
passengers
[0-5]% [40-50]% [20-30]% [60-70]% [0-5]% [40-50]% [10-20]% [60-70]%
Source: Form CO, paragraph 509.
(224) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer 2017
IATA Season and [0-5]% in Winter 2017/2018 IATA Season. With regard to
NTS passengers, the increment attributable to the Transaction would be [0-5]% in
Summer 2017 IATA Season and [0-5]% in Winter 2017/2018 IATA Season.
(225) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-ATL airport pair.
211
Hartsfield-Jackson Atlanta Airport (ATL).
212
Form CO, paragraphs 503 and 509.
45
Table 6 - Market shares of the Parties on LHR/LGW/LCY-ATL
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[40-50]%
[20-30]%
[60-70]%
[0-5]%
[40-50]%
[10-20]%
[60-70]%
NTS
[0-5]%
[30-40]%
[20-30]%
[60-70]%
[0-5]%
[40-50]%
[20-30]%
[70-80]%
All
passengers
[0-5]% [30-40]% [20-30]% [60-70]% [0-5]% [40-50]% [10-20]% [60-70]%
Source: Form CO, paragraph 503.
(226) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction was [0-5]% in Summer 2017 IATA
Season and [0-5]% in Winter 2017/2018 IATA Season. With regard to NTS
passengers, the increment attributable to the Transaction was [0-5]% in Summer
2017 IATA Season and [0-5]% in Winter 2017/2018 IATA Season.
(227) In addition, the Parties will remain constrained by the competition of the daily all-
year round direct service operated by oneworld on the LHR-ATL airport pair.
213
In addition, oneworld operates an indirect service on the LHR-ATL airport
pair.
214
(228) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
215
(229) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Atlanta route under any plausible
market definition.
5.1.2.4. London – Minneapolis
(230) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
London Heathrow and Minneapolis airports and [60.000-80.000] passengers flew
between London Heathrow, Gatwick and City and Minneapolis airports.
216
In
Winter 2017/2018 IATA Season, [20.000-40.000] passengers travelled between
London Heathrow and Minneapolis airports and [20.000-40.000] passengers flew
between London Heathrow, Gatwick and City and Minneapolis airports.
217
213
Form CO, paragraph 496.
214
Form CO, paragraph 497.
215
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
216
Minneapolis-Saint Paul Airport (MSP).
217
Form CO, paragraphs 528 and 534.
46
(231) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
operated direct services as well as indirect services on the LHR-MSP airport pair,
while AFKL offered only indirect services on this airport pair via Paris-Charles
de Gaulle or Amsterdam airports.
(232) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-MSP and LHR/LGW/LCY-
MSP.
(233) The table below provides the market shares of the Parties on the LHR-MSP
airport pair.
Table 7 - Market shares of the Parties on LHR-MSP
218
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]% [70-80]% [5-10]% [80-90]%
[0-5]% [70-80]% [5-10]% [80-90]%
NTS
[5-10]% [50-60]% [10-20]% [70-80]%
[5-10]% [50-60]% [10-20]% [80-90]%
All
passengers
[5-10]% [50-60]% [10-20]% [70-80]%
[5-10]% [60-70]% [10-20]% [80-90]%
Source: Form CO, paragraph 534.
(234) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-MSP airport pair.
Table 8 - Market shares of the Parties on LHR/LGW/LCY-MSP
219
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[70-80]%
[5-10]%
[70-80]%
[0-5]%
[70-80]%
[5-10]%
[80-90]%
NTS
[5-10]%
[40-50]%
[10-20]%
[60-70]%
[5-10]%
[50-60]%
[10-20]%
[70-80]%
All
passengers
[5-10]% [50-60]% [10-20]% [70-80]%
[5-10]% [60-70]% [10-20]% [70-80]%
Source: Form CO, paragraph 528.
(235) In both IATA Seasons and on both airport pairs, the increment brought about by
the Transaction is rather limited and does not exceed [5-10]%.
220
In the TS
segment the increment is de minimis (below [0-5]%).
218
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 534), in particular, the analysis is valid irrespective of whether these seats are included or
not.
219
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 528), in particular, the analysis is valid irrespective of whether these seats are included or
not.
47
(236) On both airport pairs, the Parties will remain constrained by the competition of
other carriers. In particular, Star Alliance, oneworld and Icelandair provide a
year-round indirect service on the LHR-MSP airport pair; in addition, Icelandair
provides a year-round indirect service on the LGW-MSP airport pair.
(237) The market shares of the Parties’ competitors are as follows:
Table 9 - Market shares of competitors on LHR -MSP
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
oneworld Star Alliance Icelandair oneworld
Star Alliance
Icelandair
TS
[10-20]%
[0-5]%
[0-5]%
[10-20]%
[0-5]%
[0-5]%
NTS
[5-10]%
[5-10]%
[10-20]%
[5-10]%
[5-10]%
[5-10]%
All passengers
[10-20]%
[5-10]%
[5-10]%
[5-10]%
[5-10]%
[0-5]%
Source: Form CO, paragraph 534.
Table 10 - Market shares of competitors on LHR/LGW/LCY-MSP
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
oneworld
Star Alliance
Icelandair
oneworld
Star Alliance
Icelandair
TS
[10-20]%
[0-5]%
[5-10]%
[10-20]%
[0-5]%
[0-5]%
NTS
[5-10]%
[5-10]%
[10-20]%
[5-10]%
[5-10]%
[5-10]%
All passengers
[5-10]%
[5-10]%
[10-20]%
[5-10]%
[5-10]%
[5-10]%
Source: Form CO, paragraph 528.
(238) The increment brought about by the Transaction is lower than the market shares
of the Parties’ biggest competitor post-Transaction (with the exception of the
NTS market segmentation in Winter 2017/2018 IATA Season on both airport
pairs, on which the increment is around 1 percentage point higher than the market
share of the biggest competitor).
(239) As already stated above (Section 5.1.1.5), the Commission considers that other
carriers like the members of the Star Alliance or oneworld exert significant
competitive pressure on the Parties post-Transaction on the affected
direct/indirect overlap routes. Besides, the Parties submit that the market shares
of Virgin might be overstated as, over the last two seasons, between 40% and
50% of passengers were connecting at Minneapolis to or from other
destinations.
221
220
When excluding Thomas Cook/Condor’s seats, AFKL’s market shares are slightly higher but below
[5-10]% in any market definition.
221
Form CO, paragraph 521.
48
(240) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
(241) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London - Minneapolis route under any
plausible market definition.
5.1.2.5. London – Detroit
(242) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
London Heathrow and Detroit airports
222
; [40.000-60.000] passengers travelled
between London Heathrow, Gatwick and City and Detroit airports. In Winter
2017/2018 IATA Season, [20.000-40.000] passengers travelled between London
Heathrow and Detroit airports; [20.000-40.000] travelled between London
Heathrow, Gatwick and City and Detroit airports.
223
(243) In both Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin
Atlantic/Delta operated direct services on the LHR-DTW airport pair, as well as
indirect services on this airport pair. AFKL serves LHR-DTW on an indirect
basis, via Amsterdam or Paris Charles-de-Gaulle airports.
224
(244) Given that the Parties’ market shares are similar on both LHR-DTW and
LHR/LGW/LCY airports pairs,
225
the Commission will assess the effect of the
Transaction on the LHR/LGW/LCY-DTW airport pair.
(245) As explained in section 4.2.1.4 above, The Commission will assess the effects of
the Transaction on the following airport pairs: LHR-DTW and LHR/LGW/LCY-
DTW.
(246) The table below provides the market shares of the Parties on the LHR/
LGW/LCY-DTW airport pair.
222
Detroit Metropolitan Wayne County Airport (DTW).
223
Form CO, paragraphs 552 and 557 and Form CO, Annex B.04, DDS Data.
224
For the sake of completeness, the Parties note that they do not overlap on LGW-DTW and that they
have a small number of indirect bookings on the LCY-DTW, the latter being a thin route with less than
30 000 passengers per year (Form CO, paragraph 559).
225
Form CO, paragraphs 552 and 557. The difference is negligible as the market shares on LHR-DTW
are 0.1% higher than on LHR/LGW/LCY-DTW.
49
Table 11 - Market shares of the Parties on LHR/LCY/LGW-DTW
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[70-80]%
[5-10]%
[80-90]%
[0-5]%
[70-80]%
[5-10]%
[80-90]%
NTS
[5-10]% [60-70]% [10-20]% [80-90]% [5-10]% [60-70]% [10-20]% [80-90]%
All
passengers
[5-10]% [60-70]% [10-20]% [80-90]% [5-10]% [60-70]% [10-20]% [80-90]%
Source: Form CO, paragraph 552.
(247) In both IATA Seasons and on both airport pairs, the increment brought about by
the Transaction is limited and does not exceed [5-10]%. In the TS segment the
increment is de minimis (below [0-5]%).
(248) On both airport pairs, the Parties will remain constrained by the competition of
other carriers’ services. In particular, oneworld and Star Alliance also provide a
year-round indirect service on the LHR-DTW airport pair.
226
(249) The market shares of the Parties’ competitors are as follows:
Table 12 - Market shares of competitors on LHR/LGW/LCY -DTW
Summer 2017 IATA Season Winter 2017/2018 IATA Season
Star Alliance oneworld Star Alliance
oneworld
TS
[0-5]%
[5-10]%
[0-5]%
[5-10]%
NTS
[5-10]%
[5-10]%
[5-10]%
[5-10]%
All
passengers
[5-10]% [5-10]% [5-10]% [5-10]%
Source: Form CO, paragraph 552.
(250) It is noteworthy that the increment attributable to the Transaction (overall and in
respect of the TS and NTS segments) is lower than the market shares of the
Parties’ biggest competitor post-Transaction in both Summer 2017 and Winter
2017/2018 IATA Seasons.
(251) As already stated above (Section 5.1.1.5), the Commission considers that other
carriers like the members of the Star Alliance or oneworld exert significant
competitive pressure on the Parties post-Transaction on the affected
direct/indirect overlap routes.
226
Form CO, paragraph 546.
50
(252) Besides, the Parties submit that the market share attributable to Virgin
Atlantic/Delta is likely to overstate its position on that route as more than 60% of
passengers on the London – Detroit route are connecting to another service.
227
(253) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
228
(254) In light of the above and of all available evidence available to it, the Commission
considers that the Transaction does not raise serious doubts as to its compatibility
with the internal market with respect to the London - Detroit route under any
plausible market definition.
5.1.2.6. Edinburgh – New York
(255) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
Edinburgh and John F. Kennedy airports
229
and [40.000-60.000] passengers flew
between Edinburgh and Newark airports. In Winter 2017/2018 IATA Season,
[20.000-40.000] passengers travelled between Edinburgh and John F. Kennedy
airports while [20.000-40.000] passengers travelled between Edinburgh and
Newark airports.
230
(256) In Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin Atlantic/Delta
operated both direct and indirect services on the EDI-JFK airport pair, while
AFKL offered only indirect services on the EDI-JFK airport pair via Paris-
Charles de Gaulle or Amsterdam airports.
231
(257) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: EDI-JFK/EWR and EDI-JFK.
232
(258) The table below provides the market shares of the Parties on the EDI-JFK/EWR
airport pair.
227
Form CO, paragraph 545.
228
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
229
Edinburgh airport (EDI).
230
Form CO, paragraphs 577 and 583.
231
Form CO, paragraphs 568 et seq.
232
The effects of the Transaction on the EDI-EWR airport pair (indirect/indirect overlap) will not be
further assessed as the Transaction is unlikely to give rise to competition concerns given that the
Parties’ combined market shares will be below [0-5]% under any plausible market definition.
51
Table 13 - Market shares of the Parties on EDI-JFK/EWR
233
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[0-5]%
[10-20]%
[0-5]%
[10-20]%
[5-10]%
[10-20]%
NTS
[0-5]%
[10-20]%
[5-10]%
[20-30]%
[0-5]%
[10-20]%
[10-20]%
[20-30]%
All
passengers
[0-5]% [10-20]% [5-10]% [20-30]%
[0-5]% [10-20]% [10-20]% [20-30]%
Source: Form CO, paragraph 577.
(259) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season.
(260) The table below provides the market shares of the Parties on the EDI-JFK airport
pair.
Table 14 - Market shares of the Parties on EDI-JFK
234
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[20-30]%
[0-5]%
[30-40]%
[0-5]%
[20-30]%
[5-10]%
[30-40]%
NTS
[0-5]%
[20-30]%
[10-20]%
[40-50]%
[0-5]%
[20-30]%
[30-40]%
[50-60]%
All
passengers
[0-5]% [20-30]% [10-20]% [40-50]%
[0-5]% [20-30]% [20-30]% [50-60]%
Source: Form CO, paragraph 583.
(261) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter 2017/2018 IATA Season. With
regard to NTS passengers, the increment attributable to the Transaction would be
[0-5]% in Summer IATA Season and [0-5]% in Winter IATA Season.
(262) While oneworld operated a direct service on the EDI-JFK airport pair in the
Summer 2018 IATA Season, it ceased operating this route and will operate the
EDI-PHL airport pair instead. However, the Parties will remain constrained by
the direct service of Star Alliance on EDI-EWR as well as the indirect services of
233
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 577), in particular, the analysis is valid irrespective of whether these seats are included or
not.
234
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (Form CO,
paragraph 583), in particular, the analysis is valid irrespective of whether these seats are included or
not.
52
oneworld, Star Alliance and Aer Lingus on the EDI-JFK and EDI-EWR airport
pairs.
235
(263) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
236
(264) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Edinburgh – New York route under any
plausible market definition.
5.1.2.7. London – Portland
(265) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
London Heathrow and Portland airports
237
and [40.000-60.000] passengers flew
between London Heathrow, Gatwick and City and Portland airports. In Winter
2017/2018 IATA Season, [0-20.000] passengers travelled between London
Heathrow and Portland and [0-20.000] passengers flew between London
Heathrow, Gatwick and City and Portland.
238
(266) In Summer 2017 IATA Season, Virgin Atlantic/Delta operated direct services as
well as indirect services on the LHR-PDX airport pair, while Virgin
Atlantic/Delta operated only indirect services on the LHR-PDX airport pair in
Winter 2017/2018 IATA Season. AFKL offered only indirect services on this
airport pair via Paris-Charles de Gaulle or Amsterdam airports.
(267) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-PDX and LHR/LGW/LCY-
PDX.
(268) The table below provides the market shares of the Parties on the LHR-PDX
airport pair.
235
Form CO, paragraphs 568 et seq.
236
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
237
Portland International Airport (PDX).
238
Form CO, paragraphs 503 and 509.
53
Table 15 - Market shares of the Parties on LHR-PDX
239
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[50-60]%
[10-20]%
[60-70]%
[0-5]%
[30-40]%
[10-20]%
[40-50]%
NTS
[0-5]%
[40-50]%
[10-20]%
[60-70]%
[0-5]%
[10-20]%
[10-20]%
[40-50]%
All
passengers
[0-5]% [40-50]% [10-20]% [60-70]%
[0-5]% [20-30]% [10-20]% [40-50]%
Source: Form CO, paragraph 614.
(269) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season.
(270) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-PDX airport pair.
Table 16 - Market shares of the Parties on LHR/LGW/LCY-PDX
240
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[50-60]%
[10-20]%
[60-70]%
[0-5]%
[30-40]%
[10-20]%
[40-50]%
NTS
[0-5]%
[30-40]%
[10-20]%
[50-60]%
[0-5]%
[10-20]%
[10-20]%
[30-40]%
All
passengers
[0-5]% [30-40]% [10-20]% [50-60]%
[0-5]% [20-30]% [10-20]% [40-50]%
Source: Form CO, paragraph 608.
(271) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season.
(272) In addition, the Parties will remain constrained by the competition of other
airlines operating an indirect service on the LHR-PDX airport pair, for example
oneworld and Star Alliance.
241
239
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
paragraph 614), in particular, the analysis is valid irrespective of whether these seats are included or
not.
240
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
paragraph 608),
in particular, the analysis is valid irrespective of whether these seats are included or
not.
241
Form CO, paragraph 597.
54
(273) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
242
(274) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Portland route under any plausible
market definition.
5.1.2.8. Manchester – San Francisco
(275) In Summer 2017 IATA Season, [60.0000-80.000] passengers travelled between
Manchester and San Francisco airports.
243
In Winter 2017/2018 IATA Season,
[0-20.000] passengers travelled between Manchester and San Francisco
airports.
244
The only plausible airport pair is MAN-SFO.
245
(276) In both Summer 2017 and Winter 2017/2018 IATA Seasons, Virgin
Atlantic/Delta operated direct services on the MAN-SFO airport pair, while
AFKL offered indirect services on this route via Paris Charles-de-Gaulle or
Amsterdam airports.
246
(277) The table below provides the market shares of the Parties on the MAN-SFO
airport pair.
Table 17 - Market shares of the Parties on MAN-SFO
247
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[40-50]%
[60-70]%
[0-5]%
[0-5]%
[10-20]%
[20-30]%
NTS
[0-5]%
[0-5]%
[30-40]%
[40-50]%
[0-5]%
[0-5]%
[10-20]%
[10-20]%
All
passengers
[0-5]% [5-10]% [30-40]% [40-50]% [0-5]% [0-5]% [10-20]% [10-20]%
Source: Form CO, paragraph 636.
(278) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
242
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
243
San Francisco International Airport (SFO).
244
Form CO, paragraph 636.
245
See section 4.2.1.4 above and Form CO, paragraph 626.
246
Form CO, paragraphs 626 et seq.
247
Market shares excluding seats sold by Thomas Cook/Condor do not significantly differ (see Form CO,
paragraph 614), in particular, the analysis is valid irrespective of whether these seats are included or
not.
55
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(279) In addition, the Parties will remain constraint by the competition of other airlines
operating this route. Oneworld and Star Alliance offer indirect services on this
route year-round.
248
(280) Non-stop services were provided by Thomas Cook/Condor in Summer 2017
IATA Season.
249
Irrespective of whether seats sold by Thomas Cook/Condor are
included or not, in both IATA Seasons, under any plausible market definition, the
increment brought about by the Transaction is de minimis.
(281) The majority of respondents to the market investigation having expressed a view
considers that there will be sufficient competition on the route to prevent the
Parties’ from raising prices on the route post-Transaction.
250
(282) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Manchester – San Francisco route under any
plausible market definition.
5.1.3. Direct/Indirect affected markets between Continental Europe/Ireland and North
America
(283) As explained in paragraph (178) above, the Commission treats each of the metal
neutral joint ventures as a single entity for the purpose of assessing the market
shares on all relevant routes. Consistent with the approach, Delta and AFKL are
treated as a single entity on every route between the Continental Europe/ Ireland
and North America.
5.1.3.1. Amsterdam – Los Angeles
(284) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
Amsterdam and Los Angeles airports.
251
In Winter 2017/2018 IATA Season,
[40.000-60.000] passengers travelled between Amsterdam and Los Angeles
airports.
252
The only plausible airport pair is AMS-LAX.
253
248
Form CO, paragraph 633.
249
Form CO, paragraph 626. There were no regular direct services on this route in Winter 2017/2018.
250
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
251
Amsterdam Airport Schipol (AMS) and Los Angeles International Airport (LAX).
252
Form CO, paragraph 668.
253
See section 4.2.1.4 above and Form CO, paragraph 662.
56
(285) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
operated direct services on the Amsterdam – Los Angeles route, while Virgin
Atlantic offered indirect services on this route via London.
254
(286) The table below provides the market shares of the Parties on the AMS-LAX
airport pair.
Table 18 - Market shares of the Parties on AMS-LAX
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[50-60]%
[10-20]%
[0-5]%
[60-70]%
[50-60]%
[10-20]%
[0-5]%
[60-70]%
NTS
[40-50]%
[5-10]%
[0-5]%
[50-60]%
[30-40]%
[5-10]%
[0-5]%
[40-50]%
All
passengers
[40-50]% [5-10]% [0-5]% [50-60]%
[40-50]% [5-10]% [0-5]% [50-60]%
Source: Form CO, paragraph 668.
(287) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(288) In addition, both oneworld and Star Alliance offer indirect services on this route
all year long.
255
(289) The majority of respondents to the market investigation having expressed a view
considers that there will be sufficient competition on the route to prevent the
Parties’ from raising prices on the route post-Transaction.
256
(290) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Amsterdam – Los Angeles route under any
plausible market definition.
5.1.3.2. Amsterdam – Miami
(291) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
Amsterdam and Miami airports.
257
In Winter 2017/2018 IATA Season,
254
Form CO, paragraphs 662 et seq.
255
Form CO, paragraphs 663 and 668.
256
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
257
Miami International Airport (MIA).
57
[40.000-60.000] passengers travelled on this route.
258
The only plausible airport
pair is AMS-MIA.
259
(292) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
operated direct services on the AMS-MIA airport pair, while Virgin Atlantic
offered indirect services on this airport pair via London.
260
(293) The table below provides the market shares of the Parties on the AMS-MIA
airport pair.
Table 19 - Market shares of the Parties on AMS-MIA
261
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[30-40]%
[10-20]%
[0-5]%
[40-50]%
[50-60]%
[10-20]%
[0-5]%
[60-70]%
NTS
[10-20]%
[10-20]%
[0-5]%
[30-40]%
[20-30]%
[5-10]%
[0-5]%
[30-40]%
All
passengers
[20-30]% [10-20]% [0-5]% [30-40]%
[30-40]% [5-10]% [0-5]% [40-50]%
Source: Form CO, paragraph 682.
(294) The increment brought about by the Transaction is de minimis. With regard to TS
passengers, the increment attributable to the Transaction would be [0-5]% in
Summer IATA Season and [0-5]% in Winter IATA Season. With regard to NTS
passengers, the increment to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(295) In addition, the Parties will remain constrained by other airlines operating this
route. Oneworld, Star Alliance, TAP Portugal and Air Europa offer indirect
services on this airport pair all year long.
262
(296) Non-stop services were provided by TUI in both Summer 2017 and Winter
2017/2018 IATA Season. Irrespective of whether seats sold by TUI are included
or not, in both IATA Seasons, under any plausible market definition, the
increment brought about by the Transaction is de minimis.
(297) The majority of respondents to the market investigation having expressed a view
considers that there will be sufficient competition on the route to prevent the
Parties’ from raising prices on the route post-Transaction.
263
258
Form CO, paragraph 682.
259
See section 4.2.1.4 above and Form CO, paragraph 674.
260
Form CO, paragraphs 674 et seq.
261
Market shares excluding seats sold by TUI do not significantly differ (see Form CO, paragraph 614),
in particular, the analysis is valid irrespective of whether these seats are included or not.
262
Form CO, paragraphs 674 et seq. and 682.
58
(298) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Amsterdam – Miami route under any plausible
market definition.
5.1.3.3. Amsterdam – San Francisco
(299) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
Amsterdam and San Francisco airports. In Winter 2017/2018 IATA Season,
[40.000-60.000] passengers travelled between Amsterdam and San Francisco
airports.
264
The only plausible airport pair is AMS-SFO.
265
(300) In both Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta
operated direct services on the AMS-SFO airport pair, while Virgin Atlantic
offered indirect services on this airport pair via London.
266
(301) The table below provides the market shares of the Parties on the AMS-SFO
airport pair.
Table 20 - Market shares of the Parties on AMS-SFO
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[50-60]%
[10-20]%
[0-5]%
[60-70]%
[50-60]%
[10-20]%
[0-5]%
[60-70]%
NTS
[40-50]%
[5-10]%
[0-5]%
[50-60]%
[40-50]%
[5-10]%
[0-5]%
[60-70]%
All
passengers
[40-50]% [5-10]% [0-5]% [50-60]%
[40-50]% [5-10]% [0-5]% [60-70]%
Source: Form CO, paragraph 694.
(302) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment to the Transaction would be [0-5]% in Summer IATA Season and
[0-5]% in Winter IATA Season.
(303) In addition, the Parties will remain constrained by other airlines operating this
route. oneworld and Star Alliance offer indirect services on this route all year
long.
267
263
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
264
Form CO, paragraph 694.
265
See section 4.2.1.4 above and Form CO, paragraph 688.
266
Form CO, paragraphs 688 et seq.
267
Form CO, paragraphs 689 and 694.
59
(304) The majority of respondents to the market investigation having expressed a view
considers that there will be sufficient competition on the route to prevent the
Parties’ from raising prices on the route post-Transaction.
268
(305) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Amsterdam – San Francisco route under any
plausible market definition.
5.1.3.4. Paris – San Francisco
(306) In Summer 2017 IATA Season, [200.000-300.000] passengers travelled between
Paris-Charles de Gaulle and San Francisco airports and [200.000-300.000]
passengers flew between Paris-Charles de Gaulle, Orly and San Francisco
airports. In Winter 2017/2018 IATA Season, [80.000-100.000] passengers
travelled between Paris-Charles de Gaulle and San Francisco airports and
[80.000-100.000] passengers flew between Paris-Charles de Gaulle, Orly and San
Francisco airports.
269
(307) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
direct services on the CDG-SFO airport pair, while Virgin Atlantic offered only
indirect services on this airport pair.
(308) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: CDG-SFO and CDG/ORY-SFO.
270
(309) The table below provides the market shares of the Parties on the CDG-SFO
airport pair.
Table 21 - Market shares of the Parties on CDG-SFO
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[60-70]%
[5-10]%
[0-5]%
[70-80]%
[60-70]%
[5-10]%
[0-5]%
[60-70]%
NTS
[30-40]%
[5-10]%
[0-5]%
[40-50]%
[30-40]%
[5-10]%
[0-5]%
[40-50]%
All
passengers
[30-40]% [5-10]% [0-5]% [40-50]% [40-50]% [5-10]% [0-5]% [40-50]%
Source: Form CO, paragraph 720.
(310) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
268
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
269
Form CO, paragraphs 712 and 720.
270
The Parties’ activities do not overlap on ORY-SFO. Indeed, Virgin had a negligible number of
booking in Summer 2017 IATA Season but discontinued this indirect service from Winter 2017/2018
IATA Season. The impact of the Transaction on this airport pair will therefore not be further assessed.
60
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(311) he table below provides the market shares of the Parties on the CDG/ORY-SFO
airport pair.
Table 22 - Market shares of the Parties on CDG/ORY-SFO
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[60-70]%
[5-10]%
[0-5]%
[70-80]%
[60-70]%
[5-10]%
[0-5]%
[60-70]%
NTS
[30-40]%
[5-10]%
[0-5]%
[40-50]%
[30-40]%
[5-10]%
[0-5]%
[40-50]%
All
passengers
[30-40]% [5-10]% [0-5]% [40-50]% [40-50]% [5-10]% [0-5]% [40-50]%
Source: Form CO, paragraph 712.
(312) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(313) In addition, the Parties will remain constrained by the competition of the daily all-
year round direct service operated by Star Alliance on the CDG-SFO airport
pair.
271
XL Airways also operated a weekly non-stop service in Summer 2017
IATA Season.
272
In addition, oneworld and Star Alliance operate an indirect
service on the CDG-SFO airport pair.
273
On the ORY-SFO airport pair,
Frenchbee commenced to operate a weekly non-stop service and Star Alliance
operate an indirect service.
274
(314) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
275
(315) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Paris – San Francisco route under any
plausible market definition.
271
Form CO, paragraph 702.
272
Form CO, paragraph 702.
273
Form CO, paragraph 703.
274
Form CO, paragraph 704.
275
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
61
5.1.3.5. Paris – Boston
(316) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
Paris Charles de Gaulle and Boston airports and [100.000-200.000] passengers
flew between Paris Charles de Gaulle, Orly and Boston airports.
276
In Winter
2017/2018 IATA Season, [40.000-60.000] passengers travelled between Paris
Charles de Gaulle and Boston airports and [60.000-80.000] passengers flew
between Paris Charles de Gaulle, Orly and Boston airports.
277
(317) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
direct services on the CDG-BOS airport pair, while Virgin Atlantic offered only
indirect services on this airport pair.
(318) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: CDG-BOS and CDG/ORY-BOS.
(319) The table below provides the market shares of the Parties on the CDG-BOS
airport pair.
Table 23 - Market shares of the Parties on CDG-BOS
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[60-70]%
[20-30]%
[0-5]%
[80-90]%
[60-70]%
[20-30]%
[0-5]%
[80-90]%
NTS
[30-40]%
[20-30]%
[0-5]%
[50-60]%
[30-40]%
[20-30]%
[0-5]%
[60-70]%
All
passengers
[30-40]% [20-30]% [0-5]% [60-70]%
[40-50]% [20-30]% [0-5]% [70-80]%
Source: Form CO, paragraph 747.
(320) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(321) The table below provides the market shares of the Parties on the CDG/ORY-BOS
airport pair.
276
Boston Logan International Airport (BOS).
277
Form CO, paragraphs 741 and 747.
62
Table 24 - Market shares of the Parties on CDG/ORY-BOS
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[50-60]%
[10-20]%
[0-5]%
[70-80]%
[50-60]%
[20-30]%
[0-5]%
[80-90]%
NTS
[30-40]%
[20-30]%
[0-5]%
[50-60]%
[30-40]%
[20-30]%
[0-5]%
[60-70]%
All
passengers
[30-40]% [20-30]% [0-5]% [50-60]%
[40-50]% [20-30]% [0-5]% [60-70]%
Source: Form CO, paragraph 741.
(322) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(323) In addition, the Parties will remain constrained by the other airlines operating on
this route. On the CDG-BOS airport pair, oneworld operated a weekly direct
service in Summer 2017 IATA Season and Norwegian started to operate a non-
stop service in 2018.
278
In addition, Star Alliance, oneworld, Aer Lingus and
Icelandair operate indirect services all year round.
279
On the ORY-BOS airport
pair, oneworld, Icelandair and TAP Portugal operate indirect services.
280
Air
Europa operated a one-stop service in Summer 2017 IATA Season.
281
(324) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
282
A competitor
also indicated it intends to provide several weekly frequency on the route on a
seasonal basis.
283
(325) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Paris – Boston route under any plausible
market definition.
278
Form Co, paragraph 731.
279
Form Co, paragraph 732.
280
Form Co, paragraph 733.
281
Form Co, paragraph 733.
282
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
283
Reply to eQ1 - Questionnaire 1 for Competitors, question 19.
63
5.1.3.6. Nice – New York
(326) In Summer 2017 IATA Season, [60.000-80.000] passengers travelled between
Nice and John F. Kennedy airports and [5.000-10.000] passengers flew between
Nice and Newark airports.
284
In Winter 2017/2018 IATA Season, [0-20.000]
passengers travelled between Nice and John F. Kennedy airports while [0-5.000]
passengers travelled between Nice and Newark airports.
285
(327) In Summer 2017 Season, AFKL/Delta operated direct services on the NCE-JFK
airport pair and an indirect service all-year round; Virgin Atlantic operates an
indirect service on this airport pair.
286
AFKL/Delta and Virgin Atlantic also
operate indirect services on the NCE-EWR airport pair on a year-round basis.
287
(328) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: NCE-JFK, NCE-EWR and
NCE-JFK/EWR.
(329) The table below provides the market shares of the Parties on the NCE-JFK airport
pair.
Table 25 - Market shares of the Parties on NCE-JFK
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[10-20]%
[50-60]%
[0-5]%
[70-80]%
[30-40]%
[10-20]%
[0-5]%
[50-60]%
NTS
[20-30]%
[40-50]%
[0-5]%
[70-80]%
[20-30]%
[5-10]%
[10-20]%
[40-50]%
All
passengers
[20-30]% [40-50]% [0-5]% [70-80]%
[20-30]% [5-10]% [10-20]% [40-50]%
Source: Form CO, paragraph 774.
(330) In Summer IATA Season, the increment brought about by the Transaction is de
minimis under any plausible market definition. With regard to TS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% with respect to the NTS segment. In Winter IATA Season, the
increment brought about by the Transaction is moderate on the overall and NTS
segments (below [10-20]%). With regard to TS passengers in Winter IATA
Season, the increment attributable to the Transaction would be de minimis
([0-5]%).
284
Nice Côte d’Azur airport (NCE).
285
Form CO, paragraphs 774 and 780.
286
Form Co, paragraph 756 et seq.
287
Form Co, paragraph 758.
64
(331) The market shares of the Parties’ competitors are as follows:
Table 26 - Market shares of competitors on NCE-JFK
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
oneworld
Star Alliance
oneworld
Star Alliance
TS
[10-20]%
[0-5]%
[20-30]%
[0-5]%
NTS
[10-20]%
[0-5]%
[20-30]%
[0-5]%
All passengers
[10-20]%
[0-5]%
[20-30]%
[0-5]%
Source: Form CO, paragraph 774.
(332) The table below provides the market shares of the Parties on the NCE-EWR
airport pair.
Table 27 - Market shares of the Parties on NCE-EWR
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[5-10]%
[0-5]%
[10-20]%
[0-5]%
[5-10]%
[0-5]%
[10-20]%
NTS
[0-5]%
[5-10]%
[0-5]%
[10-20]%
[0-5]%
[0-5]%
[20-30]%
[20-30]%
All
passengers
[0-5]% [5-10]% [0-5]% [10-20]% [0-5]% [0-5]% [10-20]% [20-30]%
Source: Form CO, paragraph 780.
(333) On the NCE-EWR airport pair, the Parties’ combined market shares are less
than 30% on any plausible passenger segmentation in both Summer and Winter
IATA Seasons and the increment is limited.
(334) The table below provides the market shares of the Parties on the NCE-JFK/EWR
airport pair.
Table 28 - Market shares of the Parties on NCE-JFK/EWR
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[10-20]%
[50-60]%
[0-5]%
[60-70]%
[30-40]%
[10-20]%
[0-5]%
[40-50]%
NTS
[20-30]%
[40-50]%
[0-5]%
[60-70]%
[20-30]%
[5-10]%
[10-20]%
[40-50]%
All
passengers
[10-20]% [40-50]% [0-5]% [60-70]%
[20-30]% [5-10]% [10-20]% [40-50]%
Source: Form CO, paragraph 769.
(335) In Summer IATA Season, the increment brought about by the Transaction is de
minimis under any plausible market definition. With respect to the TS passengers,
the increment attributable to the Transaction would be [0-5]%. With regard to
NTS passengers, the increment would be [0-5]%.
(336) In Winter IATA Season, the Parties’ combined market shares are below [40-50]%
under any plausible market definition and the increment brought about by the
Transaction is moderate. The increment is [10-20]% in respect of NTS passengers
65
and [10-20]% without distinguishing between TS and NTS passengers. With
regard to TS passengers, the increment is even de minimis ([0-5]%).
The market shares of the Parties’ competitors are as follows:
Table 29 - Market shares of competitors on NCE-JFK/EWR
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
oneworld Star Alliance oneworld
Star Alliance
TS
[10-20]% [5-10]% [20-30]% [10-20]%
NTS
[5-10]% [0-5]% [20-30]% [5-10]%
All passengers
[10-20]% [5-10]% [20-30]% [5-10]%
Source: Form CO, paragraph 769.
(337) On all plausible airport pairs, the Parties will remain constrained by the
competition of other carriers’ services. In particular, oneworld operates a year
round indirect service on the NCE-JFK airport pair
288
and Star Alliance is
operating a year-round indirect service on NCE-EWR.
289
In addition, as of
May 2019, La Compagnie will offer a five-time weekly direct service on NCE-
EWR on a seasonal basis.
290
(338) As already stated above (Section 5.1.1.5), the Commission considers that other
carriers like the members of the Star Alliance or oneworld exert significant
competitive pressure on the Parties post-Transaction on the affected
direct/indirect overlap routes.
(339) It is noteworthy that the increment attributable to the Transaction is lower than
the market share of the Parties’ biggest competitor post-Transaction in both
Summer 2017 and Winter 2017/2018 IATA Seasons under any plausible market
segmentation.
(340) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
291
(341) In light of the above and of all available evidence, the Commission considers that
the Transaction does not raise serious doubts as to its compatibility with the
288
Form CO, paragraph 774.
289
Form CO, paragraph 780.
290
La Compagnie’s press release, available https://www.lacompagnie.com/media/1627/la-co-nice-
announcement- -final.pdf .
291
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
66
internal market with respect to the Nice – New York route under any plausible
market definition.
5.1.3.7. Dublin – New York
(342) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
Dublin and John F. Kennedy airports and [100.000-200.000] passengers flew
between Dublin and Newark airports.
292
In Winter 2017/2018 IATA Season,
[100.000-200.000] passengers travelled between Dublin and John F. Kennedy
airports while [60.000-80.000] passengers travelled between Dublin and Newark
airports.
293
(343) In Summer 2017 and Winter 2017/2018 IATA Seasons, AFKL/Delta operated
direct services on the DUB-JFK airport pair, while Virgin Atlantic offered only
indirect services on this airport pair via London.
294
Furthermore, Virgin Atlantic
also offer a one-stop service on the DUB-EWR airport pair.
295
(344) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: DUB-JFK/EWR and DUB-JFK.
296
(345) The table below provides the market shares of the Parties on the DUB-JFK/EWR
airport pair.
Table 30 - Market shares of the Parties on DUB-JFK/EWR
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]%
[10-20]%
[0-5]%
[10-20]%
[0-5]%
[10-20]%
[0-5]%
[10-20]%
NTS
[5-10]%
[10-20]%
[0-5]%
[10-20]%
[5-10]%
[10-20]%
[0-5]%
[20-30]%
All
passengers
[5-10]% [10-20]% [0-5]% [10-20]%
[5-10]% [10-20]% [0-5]% [20-30]%
Source: Form CO, paragraph 798.
(346) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
292
Dublin airport (DUB).
293
Form CO, paragraphs 798 and 804.
294
Form Co, paragraph 789.
295
Form Co, paragraph 791.
296
The effects of the Transaction on the DUB-EWR airport pair (indirect/indirect overlap) will not be
further assessed as the Transaction is unlikely to give rise to competition concerns given that the
Parties’ combined market shares will be below [0-5]% under any plausible market definition
(Form CO, paragraph 807).
67
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(347) The table below provides the market shares of the Parties on the DUB-JFK airport
pair.
Table 31 - Market shares of the Parties on DUB-JFK
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[20-30]%
[0-5]%
[20-30]%
[0-5]%
[10-20]%
[0-5]%
[20-30]%
NTS
[5-10]%
[10-20]%
[0-5]%
[20-30]%
[10-20]%
[20-30]%
[0-5]%
[30-40]%
All
passengers
[5-10]% [10-20]% [0-5]% [20-30]%
[5-10]% [20-30]% [0-5]% [30-40]%
Source: Form CO, paragraph 804.
(348) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(349) In addition, Aer Lingus offers a daily all-year round non-stop service on the
DUB-JFK airport pair.
297
With respect to indirect flights, oneworld and Star
Alliance operate all-year round.
298
On the DUB-EWR airport pair, oneworld and
Aer Lingus offer a daily all-year round non-stop service; Star Alliance and
oneworld also offer a one-stop service on this airport pair.
299
(350) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
300
(351) In light of the above and of all available evidence, the Commission considers that
the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the Dublin – New York route under any plausible
market definition.
297
Form CO, paragraph 789.
298
Form CO, paragraph 790.
299
Form CO, paragraph 791.
300
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
68
5.1.4. Direct/Indirect affected markets between the United Kingdom and destinations
excluding North America and Continental Europe/Ireland
5.1.4.1. London – Lagos
(352) In Summer 2017 IATA Season, [100.000-200.000] passengers travelled between
London Heathrow and Lagos airports and [200.000-300.000] passengers flew
between London Heathrow, Gatwick and City and Lagos airports.
301
In Winter
2017/2018 IATA Season, [100.000-200.000] passengers travelled between
London Heathrow and Lagos airports and [100.000-200.000] passengers flew
between London Heathrow, Gatwick and City and Lagos airports.
302
(353) In both Seasons, Summer 2017 IATA Season and Winter 2017/2018 IATA
Season, Virgin Atlantic operated direct services as well as indirect services on the
LHR-LOS airport pair. AFKL offers indirect services on this airport pair as well
as on the LCY-LOS airport pair. Delta does not operate this route.
(354) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-LOS and LHR/LGW/LCY-
LOS.
(355) The table below provides the market shares of the Parties on the LHR-LOS
airport pair.
Table 32 - Market shares of the Parties on LHR-LOS
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[10-20]%
[0-5]%
[40-50]%
[50-60]%
[5-10]%
[0-5]%
[40-50]%
[50-60]%
NTS
[10-20]%
[0-5]%
[30-40]%
[50-60]%
[10-20]%
[0-5]%
[30-40]%
[40-50]%
All
passengers
[10-20]% [0-5]% [30-40]% [50-60]%
[10-20]% [0-5]% [30-40]% [50-60]%
Source: Form CO, paragraph 1080.
(356) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-LOS airport pair.
301
Murtala Muhammed International Airport (LOS).
302
Form CO, paragraphs 1074 and 1080.
69
Table 33 - Market shares of the Parties on LHR/LGW/LCY-LOS
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[10-20]%
[0-5]%
[40-50]%
[50-60]%
[5-10]%
[0-5]%
[40-50]%
[50-60]%
NTS
[10-20]%
[0-5]%
[20-30]%
[40-50]%
[10-20]%
[0-5]%
[20-30]%
[40-50]%
All
passengers
[10-20]% [0-5]% [30-40]% [40-50]%
[10-20]% [0-5]% [30-40]% [40-50]%
Source: Form CO, paragraph 1074.
(357) On both airport pairs, the Parties’ combined market share would be below 60% in
both IATA Seasons.
(358) Post-Transaction, the Parties will remain constrained by the competition from
other airlines operating the London – Lagos route. In particular, oneworld is a
significant competitor operating a direct daily all-year round service on the LHR-
LOS airport pair, whose market share (on all plausible market) is higher than the
increment brought about by the Transaction.
303
(359) The Parties’ competitors’ market share is as follows:
Table 34 - Market shares of the Parties’ competitors on LHR-LOS
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
oneworld Star Alliance oneworld
Star Alliance
TS
[30-40]%
[0-5]%
[30-40]%
[0-5]%
NTS
[10-20]%
[0-5]%
[20-30]%
[0-5]%
All passengers
[20-30]%
[0-5]%
[20-30]%
[0-5]%
Source: Form CO, paragraph 1080.
Table 35 - Market shares of the Parties on LHR/LGW/LCY-LOS
Summer 2017 IATA Season Winter 2017/2018 IATA Season
oneworld Star Alliance oneworld Star Alliance
TS
[30-40]% [0-5]% [30-40]% [0-5]%
NTS
[10-20]% [0-5]% [10-20]% [0-5]%
All
passengers
[10-20]% [0-5]% [20-30]% [0-5]%
Source: Form CO, paragraph 1074.
(360) The increment brought about by the Transaction is lower than the market shares
of the Parties’ biggest competitor post-Transaction.
303
On LHR/LCY/LGW-LOS, in the NTS segment in Summer IATA Season, the share of oneworld
would be equivalent to the increment brought about by the Transaction (Form CO, paragraphs 1074
and 1080.
70
(361) As already stated above (Section 5.1.1.5), the Commission considers that other
carriers like the members of the Star Alliance or oneworld exert significant
competitive pressure on the Parties post-Transaction on the affected
direct/indirect overlap routes.
(362) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
304
(363) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Lagos route under any plausible
market definition.
5.1.4.2. London – Shanghai
(364) In Summer 2017 IATA Season, [300.000-400.000] passengers travelled between
London Heathrow and Shanghai airports and [300.000-400.000]passengers flew
between London Heathrow, Gatwick and City and Shanghai airports.
305
In Winter
2017/2018 IATA Season, [100.000-200.000] passengers travelled between
London Heathrow and Shanghai and [100.000-200.000] passengers flew between
London Heathrow, Gatwick and City and Shanghai.
306
(365) In both Seasons, Summer 2017 IATA Season and Winter 2017/2018 IATA
Season, Virgin Atlantic operated direct services on the LHR-PVG airport pair.
AFKL offers indirect services on this airport pair as well as on the LCY-PVG
airport pair. Delta does not operate on this route.
(366) As explained in section 4.2.1.4 above, the Commission will assess the effect of
the Transaction on the following airport pairs: LHR-PVG and LHR/LGW/LCY-
PVG.
(367) The table below provides the market shares of the Parties on the LHR-PVG
airport pair.
304
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
305
Shanghai Pudong Airport (PVG).
306
Form CO, paragraphs 1106 and 1113.
71
Table 36 - Market shares of the Parties on LHR-PVG
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[0-5]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[20-30]%
[20-30]%
NTS
[5-10]%
[0-5]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[20-30]%
[30-40]%
All
passengers
[0-5]% [0-5]% [20-30]% [20-30]%
[0-5]% [0-5]% [20-30]% [20-30]%
Source: Form CO, paragraph 1113.
(368) The increment brought about by the Transaction is de minimis in both IATA
Seasons with regard to TS passengers and an overall market comprising all
passengers. With regard to TS passengers, the increment attributable to the
Transaction would be [0-5]% in Summer 2017 IATA Season and [0-5]% in
Winter 2017/2018 IATA Season. With regard to NTS passengers, the increment
attributable to the Transaction would also be de minimis in Winter 2017/2018
IATA Season, while in the Summer 2017 IATA Season, the increment brought
about by the Transaction is rather limited ([5-10]%).
(369) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-PVG airport pair.
Table 37 - Market shares of the Parties on LHR/LGW/LCY-PVG
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[0-5]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[20-30]%
[20-30]%
NTS
[5-10]%
[0-5]%
[20-30]%
[20-30]%
[0-5]%
[0-5]%
[20-30]%
[30-40]%
All
passengers
[0-5]% [0-5]% [20-30]% [20-30]% [0-5]% [0-5]% [20-30]% [20-30]%
Source: Form CO, paragraph 1106.
(370) The increment brought about by the Transaction is de minimis in both IATA
Seasons and under any plausible market definition. With regard to TS passengers,
the increment attributable to the Transaction would be [0-5]% in Summer IATA
Season and [0-5]% in Winter IATA Season. With regard to NTS passengers, the
increment attributable to the Transaction would be [5-10]% in Summer IATA
Season and [0-5]% in Winter IATA Season.
(371) In addition, post-Transaction, the Parties will remain constrained by the all year
round direct service of China Eastern and oneworld on the LHR-PVG airport pair.
In addition, several other airlines provide indirect services on the LHR-PVG and
LGW-PVG airport pairs.
307
307
See Form CO, paragraphs 1096 et seq.
72
(372) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
308
(373) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Shanghai route under any plausible
market definition.
5.1.4.3. London – Havana
(374) In Summer 2017 IATA Season, [40-000-60.000] passengers travelled between
London Heathrow, Gatwick and City and Havana airports.
309
In Winter
2017/2018 IATA Season, [40-000-60.000] passengers flew between London
Heathrow, Gatwick and City and Havana airports.
310
(375) Virgin Atlantic operates direct flights on the LGW-HAV airport pair, as well as
an indirect service all-year round. AFKL offers indirect flights on the LHR-HAV
airport pair in both IATA Seasons. Delta does not operate on this route.
311
Therefore, the Parties’ activities do not overlap on the LHR-HAV airport pair.
(376) In view of the above and as explained in section 4.2.1.4 above, the Commission
will assess the effect of the Transaction on the LHR/LGW/LCY-HAV airport
pair.
(377) The table below provides the market shares of the Parties on the
LHR/LGW/LCY-HAV airport pair.
312
308
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
309
José Martí International Airport (HAV).
310
Form CO, paragraph 1135.
311
Form Co, paragraph 1140.
312
For the sake of completeness, it can be noted that the Parties’ market shares on a narrower market
LHR/LGW-HAV are similar and therefore, the competition assessment will remain unchanged.
73
Table 38 - Market shares of the Parties on LHR/LGW/LCY-HAV
313
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[5-10]%
[0-5]%
[80-90]%
[90-100]%
[0-5]%
[0-5]%
[80-90]%
[90-100]%
NTS
[10-20]%
[0-5]%
[60-70]%
[70-80]%
[0-5]%
[0-5]%
[70-80]%
[70-80]%
All
passengers
[10-20]% [0-5]% [60-70]% [70-80]% [0-5]% [0-5]% [70-80]% [80-90]%
Source: Form CO, paragraph 1135.
(378) Virgin Atlantic has high market shares on the London – Havana route, being the
only carrier offering direct flights on this route.
314
In Winter IATA Season, on the
LHR/LGW/LCY-HAV airport pair, the increments are moderate. In Summer
IATA Season, the increments are between [5-10] and [10-20]%. In addition, the
Parties submit that Virgin Atlantic has decreased its direct services from three to
two weekly services in Winter 2018/2019 IATA Season.
315
(379) It is noteworthy that Virgin Atlantic operated a twice weekly direct flight in
Summer 2017 IATA Season; it increased its offering to three direct weekly
frequencies in Winter 2017/2018 but it has decreased its direct services to two
weekly services in Winter 2018/2019 IATA Season.
316
Despite high combined
market shares, the Parties will remain subject to an effective competitive
constraint post-Transaction on the above airport pairs. Close to 25% of passengers
on the London – Havana route flew on indirect services in IATA year 2017.
317
Indirect flights therefore exercise an effective competition constraint on Virgin
Atlantic’s direct flights, notably because they are more frequent than its twice-
weekly direct offering.
318
In particular, Spanish carriers Iberia and Air Europa
offer indirect flights on the LGW-HAV airport pair and IAG (Iberia and British
Airways), Aeroméxico and Alitalia offer indirect flights on the LHR-HAV airport
pair.
319
313
Market shares excluding seats sold by e.g. Thomas Cook/Condor or AeroMexico do not significantly
differ (Form CO, paragraph 1131).
314
Form CO, paragraph 1132.
315
Form CO, paragraph 1127.
316
Form CO, paragraph 1127.
317
Form CO, paragraph 1132.
318
Form CO, paragraph 1132.
319
Form CO, paragraph 1132.
74
(380) The market shares of the Parties’ main competitors are as follows:
Table 39 - Market shares of competitors on LHR/LGW/LCY-HAV
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
Star
Alliance
oneworld
Iberia (part of
oneworld)
Air
Europa
Star
Alliance
oneworld
Iberia (part of
oneworld)
Air Europa
TS
[0-5]%
[5-10]%
[0-5]%
[0-5]%
[0-5]%
[5-10]%
[0-5]%
[0-5]%
NTS
[0-5]%
[10-20]%
[5-10]%
[5-10]%
[0-5]%
[10-20]%
[5-10]%
[0-5]%
All
passengers
[0-5]% [10-20]% [5-10]% [0-5]% [0-5]% [10-20]% [5-10]% [0-5]%
Source: Form CO, paragraph 1135.
(381) Besides, the Parties submit that charter carriers offering dry seats not captured by
the DDS data are active on the route and exert a meaningful competitive
constraint on carriers operating scheduled services, in particular, given the leisure
nature of the route.
320
Therefore, it is very likely that the Parties’ market shares
are overstated.
(382) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
321
(383) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London - Havana route under any plausible
market definition.
5.1.4.4. London – Montego Bay
(384) In Summer 2017 IATA Season, [40.000-60.000] passengers travelled between
London Heathrow and Gatwick and Montego Bay airports.
322
In Winter
2017/2018 IATA Season, [40.000-60.000] passengers flew between London
Heathrow and Gatwick and Montego Bay airports.
323
(385) Virgin Atlantic operates direct flights on the LGW-MBJ airport pair, as well as an
indirect service all-year round on the LHR-MBJ airport pair. AFKL offers an
indirect service on the LHR-MBJ airport pair, but has a minimal number of
bookings.
324
Therefore, the Parties’ activities do not overlap on the LHR-MBJ
airport pair. Based on the information provided by the Parties, no airline operates
320
Form CO, paragraph 1134.
321
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
322
Sangster International Airport (MBJ).
323
Form CO, paragraph 1135.
324
Form CO, paragraph 1152.
75
the LCY-MBJ airport pair.
325
Therefore, the Commission will assess the effects
of the Transaction on the LHR/LGW-MBJ airport pair combination.
(386) The table below provides the market shares of the Parties on the LHR/LGW-MBJ
airport pair.
Table 40 - Market shares of the Parties on LHR/LGW-MBJ (including seats sold by TUI and
Thomas Cook/Condor)
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined AFKL
DL
VS
Combined
TS
[0-5]% [0-5]% [90-100]% [90-100]% [0-5]% [0-5]% [90-100]%
[90-
100]%
NTS
[0-5]%
[0-5]%
[40-50]%
[40-50]%
[0-5]%
[0-5]%
[40-50]%
[40-50]%
All
passengers
[0-5]% [0-5]% [40-50]% [40-50]% [0-5]% [0-5]% [40-50]% [40-50]%
Source: Form CO, paragraph 1159.
Table 41 - Market shares of the Parties on LHR/LGW-MBJ (excluding seats sold by TUI and
Thomas Cook/Condor)
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL
DL
VS
Combined
AFKL
DL
VS
Combined
TS
[0-5]%
[0-5]%
[80-90]%
[90-100]%
[0-5]%
[0-5]%
[80-90]%
[80-90]%
NTS
[0-5]% [0-5]% [90-100]% [90-100]% [0-5]% [0-5]% [90-100]%
[90-
100]%
All
passengers
[0-5]% [0-5]% [90-100]% [90-100]% [0-5]% [0-5]% [90-100]%
[90-
100]%
Source: Form CO, paragraph 1154 (MIDT data excluding seats sold by airlines TUI and Thomas
Cook/Condor).
(387) The Parties submit Virgin Altantic has high market shares in the TS segment in
Summer and Winter IATA Seasons, because it is the only scheduled carrier to
operate a direct service on this route.
326
(388) The Parties consider that both TUI and Thomas Cook/Condor operate (charter)
direct services on this route and exert a meaningful competitive constraint on the
Parties post-Transaction, particularly in the non-time-sensitive segment of the
market and in the overall market through the sale of dry seats (the latter being
particularly relevant in respect of the leisure nature of the route).
327
325
Form CO, paragraph 1162.
326
Form CO, paragraph 1151.
327
Form CO, paragraph 1158.
76
(389) Irrespective of whether seats sold by TUI and Thomas Cook/Condor are included
or not, in both IATA Seasons, under any plausible market definition, the
increment brought about by the Transaction is de minimis.
(390) Finally, the majority of respondents to the market investigation having expressed
a view considers that there will be sufficient competition on the route to prevent
the Parties’ from raising prices on the route post-Transaction.
328
(391) In light of the above and of all evidence available to it, the Commission considers
that the Transaction does not raise serious doubts as to its compatibility with the
internal market with respect to the London – Montego Bay route under any
plausible market definition.
5.1.5. Indirect/Indirect overlaps
(392) As explained above, the Commission treats each of the metal neutral joint
ventures as a single entity for the purpose of assessing the market shares on all
relevant routes. Consistent with the approach, Delta and AFKL are treated as a
single entity on every route between the Continental Europe/ Ireland and North
America and Delta and Virgin Atlantic are treated as a single entity on every
route between the United Kingdom and North America.
(393) The activities of the Parties also give rise to affected markets on 13 routes on a
city-pair level
329
, where both (only) operate indirect flights. It is noteworthy that
some of these routes are affected only on some segments or during only one of
the two relevant IATA Seasons.
(394) These routes are analysed with respect to combined market shares of the Parties
and the market share increment brought about by the Transaction.
(395) Given that the Transaction does not give rise to serious doubts as to its
compatibility with the internal market under any plausible market definition, the
Commission will, for the purpose of this Decision, take a conservative approach
and assess the effects of the Transaction on the airport pair where the Parties’
market shares are the highest.
(396) An overview of the Parties’ market shares on the relevant routes is provided in the
table below.
328
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
329
Los Angeles – Manchester, Dublin – Las Vegas, Dublin – Orlando, Amsterdam – Orlando, Barcelona
– Los Angeles, Lyon – New York, Marseille – New York, Madrid – San Francisco, Hamburg – New
York, Los Angeles – Milan, Düsseldorf – Los Angeles, Hamburg – Miami and Milan – San Francisco.
77
Table 42 - Market shares of the Parties on indirect/indirect overlap routes (in %)
330
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined
AFKL DL VS Combined
MAN - LAX
TS
[0-5]
[5-10]
[10-20]
[20-30]
[5-10]
[0-5]
[5-10]
[10-20]
NTS
[0-5]
[0-5]
[5-10]
[10-20]
[0-5]
[0-5]
[5-10]
[10-20]
All passengers
[0-5]
[0-5]
[5-10]
[10-20]
[5-10]
[0-5]
[5-10]
[10-20]
DUB - LAS
TS
[0-5]
[5-10]
[10-20]
[20-30]
[0-5]
[0-5]
[10-20]
[20-30]
NTS
[0-5]
[0-5]
[30-40]
[30-40]
[0-5]
[0-5]
[30-40]
[30-40]
All passengers
[0-5]
[0-5]
[30-40]
[30-40]
[0-5]
[0-5]
[30-40]
[30-40]
DUB - MCO
TS
[0-5]
[5-10]
[5-10]
[10-20]
[0-5]
[0-5]
[0-5]
[5-10]
NTS
[0-5]
[0-5]
[10-20]
[20-30]
[0-5]
[0-5]
[10-20]
[20-30]
All passengers
[0-5]
[0-5]
[10-20]
[20-30]
[0-5]
[0-5]
[10-20]
[20-30]
AMS - MCO
TS
[10-20]
[20-30]
[0-5]
[40-50]
[10-20]
[30-40]
[0-5]
[50-60]
NTS
[10-20]
[20-30]
[0-5]
[40-50]
[10-20]
[10-20]
[0-5]
[30-40]
All passengers
[10-20]
[20-30]
[0-5]
[40-50]
[10-20]
[20-30]
[0-5]
[40-50]
BCN - LAX
TS
[10-20]
[10-20]
[0-5]
[30-40]
[10-20]
[10-20]
[0-5]
[20-30]
NTS
[5-10]
[0-5]
[0-5]
[10-20]
[0-5]
[0-5]
[0-5]
[5-10]
All passengers
[5-10]
[0-5]
[0-5]
[10-20]
[5-10]
[0-5]
[0-5]
[5-10]
LYS – JFK
TS
[60-70]
[5-10]
-
[70-80]
[50-60]
[10-20]
-
[60-70]
NTS
[30-40]
[5-10]
[0-5]
[30-40]
[30-40]
[0-5]
[5-10]
[50-60]
All passengers
[30-40]
[5-10]
[0-5]
[40-50]
[40-50]
[5-10]
[5-10]
[50-60]
MRS – JFK
TS
[60-70]
[5-10]
[0-5]
[70-80]
[60-70]
[5-10]
[0-5]
[70-80]
NTS
[30-40]
[5-10]
[0-5]
[40-50]
[40-50]
[0-5]
[0-5]
[40-50]
All passengers
[40-50]
[5-10]
[0-5]
[40-50]
[40-50]
[0-5]
[0-5]
[40-50]
MAD – SFO
TS
[10-20]
[5-10]
[0-5]
[10-20]
[5-10]
[5-10]
[0-5]
[10-20]
NTS
[10-20]
[10-20]
[0-5]
[20-30]
[10-20]
[5-10]
[0-5]
[20-30]
All passengers
[10-20]
[10-20]
[0-5]
[20-30]
[10-20]
[5-10]
[0-5]
[20-30]
HAM – JFK
TS
[5-10]
[0-5]
[0-5]
[10-20]
[10-20]
[5-10]
[0-5]
[20-30]
NTS
[5-10]
[5-10]
[0-5]
[10-20]
[10-20]
[10-20]
[5-10]
[30-40]
All passengers
[5-10]
[5-10]
[0-5]
[10-20]
[10-20]
[10-20]
[5-10]
[30-40]
MXP – LAX
TS
[10-20]
[5-10]
[0-5]
[20-30]
[10-20]
[5-10]
[0-5]
[20-30]
NTS
[5-10]
[5-10]
[0-5]
[10-20]
[10-20]
[5-10]
[5-10]
[30-40]
All passengers
[5-10]
[5-10]
[0-5]
[20-30]
[10-20]
[5-10]
[5-10]
[20-30]
DUS – LAX
TS
[0-5]
[0-5]
[0-5]
[5-10]
[5-10]
[5-10]
[0-5]
[10-20]
NTS
[10-20]
[0-5]
[0-5]
[10-20]
[5-10]
[0-5]
[10-20]
[20-30]
All passengers
[10-20]
[0-5]
[0-5]
[10-20]
[5-10]
[0-5]
[10-20]
[20-30]
HAM – MIA
TS
[0-5]
[0-5]
[0-5]
[0-5]
[5-10]
[0-5]
[0-5]
[5-10]
NTS
[0-5]
[0-5]
[0-5]
[5-10]
[10-20]
[0-5]
[10-20]
[20-30]
All passengers
[0-5]
[0-5]
[0-5]
[5-10]
[5-10]
[0-5]
[5-10]
[20-30]
330
For the Amsterdam-Orlando route and the Manchester-Los Angeles route, the data submitted by the
Parties includes seats sold by Thomas Cook/Condor. Market shares excluding these seats do not
significantly differ (see Form CO, paragraphs 651 and 877), in particular, the analysis is valid
irrespective of whether these seats are included or not.
78
Summer 2017 IATA Season
Winter 2017/2018 IATA Season
AFKL DL VS Combined
AFKL DL VS Combined
MXP – SFO
TS
[10-20]
[5-10]
[0-5]
[20-30]
[10-20]
[5-10]
[0-5]
[10-20]
NTS
331
[10-20]
[5-10]
[5-10]
[20-30]
[5-10]
[5-10]
[10-20]
[30-40]
All
passengers
332
[10-20]
[5-10]
[5-10]
[20-30]
[5-10]
[5-10]
[10-20]
[20-30]
Source: Form CO, paragraphs 651, 839, 856, 877, 893, 914, 938, 954, 994, 1008, 1024, 1053 and
Form CO, Annex B.04., DDS data
(397) Indirect routes are often established in an opportunistic way by carriers and are
modified from one IATA season to the next. Furthermore, price increases or
reductions of capacity could be countered by competitors who could start
operating on these routes more easily than on direct/direct routes, which require
the deployment of aircraft dedicated to the O&D route.
(398) On all of these routes no competition concerns arise because either the Parties
combined market shares are below 60% or the increment brought about by the
Transaction is below 5% (so that no material merger-specific effect would likely
exist). Given the low competitive constraint between indirect services, market
shares below 60% on routes indicate that there is already prima facie sufficient
competition from other carriers.
(399) The majority of the respondents having expressed a view considers that there will
be sufficient competition on the indirect/indirect overlap routes to prevent the
Parties from raising prices in the markets for passenger air transport services after
the Transaction.
333
(400) In light of the above, the Commission considers that the Transaction does not
raise any serious doubts as to its compatibility with the internal market under any
possible market definition on any of the 13 indirect/indirect overlap routes.
5.1.6. Conclusion
(401) In light of the above, the Commission considers that, under the O&D approach,
the Transaction does not raise any serious doubts as to its compatibility with the
internal market with regard to passenger air transport services, under any
plausible market definition.
331
For the Winter 2017/2018 IATA Season the NTS combined market share is [40-50]% on the plausible
airport-pair LIN – SFO and [30-40]% on the plausible airport-pair LIN+MXP – SFO and therefore
higher than on the plausible airport pair MXP – SFO. However, the market shares are still below 60%,
which indicates that there is already prima facie sufficient competition from other carriers.
332
For the Winter 2017/2018 IATA Season the overall combined market share is [30-40]% on the
plausible airport-pair LIN – SFO and [30-40]% on the plausible airport-pair LIN+MXP – SFO and
therefore higher than on the plausible airport pair MXP – SFO. However, the market shares are still
below 60%, which indicates that there is already prima facie sufficient competition from other carriers.
333
Replies to eQ1 – Questionnaire 1 for Competitors, question 26; eQ2 – Questionnaire 2 to corporate
customers and travel agencies, question 13.
79
5.2. Passenger air transport services under the airport-by-airport approach
5.2.1. Introduction
(402) According to paragraph 36 of the Horizontal Merger Guidelines,
334
"some
proposed mergers would, if allowed to proceed, significantly impede effective
competition by leaving the merged firm in a position where it would have the
ability and incentive to make the expansion of smaller firms and potential
competitors more difficult or otherwise restrict the ability of rival firms to
compete. In such a case, competitors may not, either individually or in the
aggregate, be in a position to constrain the merged entity to such a degree that it
would not increase prices or take other actions detrimental to competition. For
instance, the merged entity may have such a degree of control, or influence over,
the supply of inputs or distribution possibilities that expansion or entry by rival
firms may be more costly."
(403) As explained in section 4.1.2 above, the Transaction entails the increase of the
Parties’ combined slot holding at airports where their slot portfolios overlap,
namely London Heathrow and Manchester airports.
(404) Accordingly, the Commission will first assess whether the Transaction, by
reinforcing the Parties' slot holding at a number of airports and granting it broader
access to their infrastructure, gives the Parties the ability and incentive to prevent
other air carriers from getting access to airport infrastructure and therefore to the
markets for the provision of passenger air transport services from those airports,
preventing or reducing competition on those markets (sections 5.2.2 and 5.2.3
below). The Commission will then analyse the overall effects of the Parties’ slot
holding position on the ability of the Parties’ rivals to compete at the relevant
airports (section 5.2.4).
5.2.2. Ability of the Parties to foreclose access to the market for the provision of
passenger air transport services
5.2.2.1. Conditions for the ability to foreclose access to the market for the
provision of passenger air transport services
(405) In line with its prior decisional practice, the Commission considers that, for the
Parties to be able to foreclose their competitors post-Transaction, the following
conditions must be fulfilled: (i) the slots that the Parties would hold post-
Transaction represent a significant share of the airport capacity, in particular at
peak times; (ii) the Transaction has a material impact on the Parties' slot holding
at the airport, in particular at peak times; and (iii) the Parties’ slot holding could
negatively affect the overall availability of slots as an input for the passenger air
transport markets to or from the relevant airport.
335
334
Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of
concentrations between undertakings, OJ C 31, 5 February 2017, p. 5.
335
See e.g. Cases M.8869 – Ryanair/LaudaMotion, paragraph 508; M.8672 – easyJet/Certain Air Berlin
Assets, paragraph 105; M.8633 – Lufthansa/Certain Air Berlin Assets, paragraph 182.
80
(406) In the present case, the combined slot holdings post-Transaction do not represent
a significant share of the capacity of any of the airports where the Parties’
respective portfolios overlap. In addition, the Transaction has no material impact
on any of the Parties’ slot holding at any relevant airport, as described in
section 5.2.2.3 below. Therefore, it is not necessary to assess whether the third
condition (i.e. the negative impact on the overall availability of slots) is fulfilled.
(407) In assessing whether the merged entity would have the ability to foreclose, the
Commission considers whether rival firms would be likely to deploy effective and
timely counter-strategies in case of foreclosure. In this case, the Commission
notes that there are limited effective and timely counter-strategies that the Parties’
competitors would be likely to deploy in the case of a foreclosure strategy by any
of them. There is no possibility for an air carrier to be less reliant on access to
airport infrastructure and very limited possibility to sponsor the expansion of
airport capacity or the opening of new airports.
336
(408) In light of the above, the Commission will assess the ability of the Parties post-
Transaction to foreclose access to the markets for the provision of passenger air
transport at the relevant airports by taking account of the following two factors
together:
337
(i) the share of slots held by the Parties post-Transaction at the airport
or at substitutable airports being high, in particular at peak times and (ii) the
increment in the Parties' slot holding brought about by the Transaction at the
airport or at the substitutable airports being material, in particular at peak times.
Considering that the Parties' slot holdings at the relevant airports vary between the
Summer and Winter IATA Seasons, the Commission will carry out separate
assessments for each IATA Season.
(409) Before conducting an airport-by-airport assessment of the Parties’ ability to
foreclose access to the markets for the provision of passenger air transport
(section 5.2.2.3), the Commission will detail the methodologies for determining
the slot holding post-Transaction and the increment brought about by the
Transaction.
5.2.2.2. Methodologies
(410) A slot holding is defined as the ratio between the number of slots held by an air
carrier (or the air carriers that are part of the same group) at an airport and the
total available slots at that airport (i.e. the airport runway capacity).
(411) Delta and AFKL have estimated their respective slot holding
338
on the basis of
AFKL’s internal slot data, while VAL estimated its slot holding through data
336
Without prejudice to the exceptional cases of joint ventures between an airport manager and an airline
(see e.g. the joint venture between Lufthansa and Flughafen München GmbH, the company managing
Munich airport).
337
As explained in paragraph (406) above, given that the three conditions are cumulative, there is no need
to assess the third condition given that the first two conditions are not fulfilled.
338
The Parties have submitted slot holding data that captures all the slots which the parties used for their
own operations in Winter 2017/2018 and Summer 2018. This includes remedy slots any party benefits
from, as well as slots leased to or transferred to any of the Parties, as applicable. The data does not
include slots leased to, transferred to, swapped out to or exchanged with another carrier (Reply of the
Parties to RFI 4 of 28 January 2019). Nevertheless, as described in footnote 339 below, the
81
from the slot coordinator and cross-checked against its internal data.
339
The
runway capacity is based on the information provided by Airport Coordination
Limited, which is the slot coordinator at the relevant overlap airports.
340
(412) The Commission has calculated two values for the Parties’ slot holding post-
Transaction: (i) their average slot holding during the opening hours of the airport,
and (ii) their average slot holding during peak times.
341
(413) In order to adopt a conservative approach, the Commission has calculated the
Parties’ combined highest slot holding at any given hour band throughout the
whole week (including any peak hour), which exceeds their combined average
slot holding during peak times.
(414) The increment brought about by the Transaction corresponds to the difference
between the combined slot holding post-Transaction and VAL/Delta’s slot
holding pre-Transaction.
(415) To assess the impact of the Transaction, the Commission therefore considers the
Parties’ combined slot holding post-Transaction, as well as the increment in
AFKL’s slot holding as a result of the Transaction.
5.2.2.3. Airport-by-airport assessment
(416) As explained in section 5.2.1 above, the Commission will assess the effects of the
Transaction on the Parties’ slot holding in both IATA Seasons at London
Heathrow and Manchester airports.
Commission has crosschecked the data of the Parties against the data of the slot coordinator and did
not note any material difference in the slot holding of the Parties.
339
Form CO, paragraph 296. The Commission has cross-checked the data on slot holding provided by the
Parties against Airport Coordination Limited Seasonal Report information, which contains a
breakdown of the number of slots allocated to an airline at a given airport. These reports are available
online https://www.acl-uk.org/airport-info/. See for instance Heathrow airport, Winter 2018/19 Start
of Season Report available on ACL’s website https://www.acl-uk.org/wp-
content/uploads/2018/09/LHR-W18-Start-Of-Season-Report.pdf .
340
The runway capacity of LHR and MAN is available online https://www.acl-uk.org/airport-info-
details/?aid=1, section “Capacity Declaration”.
341
London Heathrow airport is open 24 hours with some restrictions on night flights between 23:30 and
6:00. Similarly, Manchester airports operates on a 24-hour basis with restrictions at night, in particular
between 23:00 and 6:59. Given that the Parties hold some slots at both airports during the restricted
hour bands, in order to adopt a conservative approach, the Commission will take those slots into
account for the sake of calculating the highest slot holding.
82
Table 43 - Slot holding342 - Winter
Airport
Average slot holding Highest slot holding
Virgin Delta AFKL Combined Virgin Delta AFKL Combined
LHR
[0-5]% [0-5]% [0-5]% [5-10]% [10-20]% [0-5]% [0-5]%
[10-20]%
Hour band 4:00-4:59
MAN
[0-5]% [0-5]% [0-5]% [0-5]% [0-5]% [0-5]% [0-5]%
[5-10]%
Hour band 10:00-10:59
Source: Form CO, annex B.03, Slot holding data for LHR and MAN.
(417) In Winter 2018/2019 IATA Season, the Parties estimate that their combined slot
holding post-Transaction at London Heathrow would be no more than [5-10]% on
average at London Heathrow during the relevant airport’s opening hours, with a
gross increment of [0-5]%. At Manchester airport, the combined average slot
holding would be [0-5]% with an increment of [0-5]%. Such levels of slot holding
indicate that the Transaction is unlikely to be problematic.
(418) In Winter 2018/2019 IATA Season, at London Heathrow, the Parties’ highest slot
holding during any specific hour band at each of the overlap airport would not
exceed [10-20]%. At Manchester, the highest slot holding would be [5-10]%.
Table 44 - Slot holding
343
- Summer
Airport
Average slot holding
Highest slot holding
Virgin
Delta
AFKL
Combined
Virgin
Delta
AFKL
Combined
LHR
[0-5]% [0-5]% [0-5]% [5-10]% [10-20]% [0-5]% [0-5]%
[10-20]%
Hour band 4:00 – 4:59
344
MAN
[0-5]% [0-5]% [0-5]% [0-5]% [5-10]% [0-5]% [0-5]%
[5-10]%
Hour band 9:00 – 9:59
Source: Form CO, annex B.03, Slot holding data for LHR and MAN.
(419) In Summer 2019 IATA Season, the Parties estimate that their combined slot
holding post-Transaction at London Heathrow and Manchester airports would be
no more than [5-10]% on average during the relevant airport’s opening hours,
with a gross increment of [0-5]% at most. Such levels of slot holding indicate that
the Transaction is unlikely to be problematic.
(420) In Summer 2019 IATA Season, the Parties’ highest slot holding during any
specific hour band at London Heathrow would not exceed [10-20]%. At
Manchester, the Parties’ combined highest slot holding during any relevant hour
band would be [5-10]%.
(421) Therefore, in both IATA Seasons, the level of the Parties’ slot holdings post-
Transaction is unlikely to give rise to serious doubts as to its compatibility with
342
Rounding effects.
343
Rounding effects.
344
It can be noted that runway movements are limited during the hour band 4:00-4:59. In particular,
landing is prohibited until 4:30 (Form CO, footnote 90). The Parties therefore submit that their highest
slot holding is actually [10-20]% during the hour band 9:00-9:59.
83
the internal market. Furthermore, the limited increment in slot holdings brought
about by the Transaction at London Heathrow and Manchester airports is unlikely
to have any material impact on the Parties’ slot holdings at these airports and thus
their ability to foreclose access to other air carriers.
(422) Finally, the majority of competitors having expressed a view consider that the
Parties would not have the ability to prevent other carriers from providing
passenger air transport services to/from London Heathrow and Manchester
airports.
345
5.2.2.4. Conclusion
(423) In light of the above, given the Parties’ combined slot holding at London
Heathrow and Manchester airports post-Transaction during the relevant IATA
Seasons, the Commission considers that the Parties would likely not have the
ability to foreclose competitors’ access to the markets for the provision of
passenger air transport services.
5.2.3. Incentive of the Parties to foreclose access to the markets for the provision of
passenger air transport services
(424) Although the Commission considers that the Parties will not have the ability to
foreclose their competitors in either IATA Season, the Commission will briefly
assess whether the Parties would have the incentive to foreclose access to market
for the provision of passenger air transport at London Heathrow and Manchester.
(425) A dominant carrier at a relevant airport would in principle have a strong incentive
to pursue a foreclosure strategy, as any new service or expansion by another
carrier would be likely to introduce or increase competition on one of the
dominant carrier's routes. Such dominant carrier would have a greater incentive
than any other carrier at the airport to keep slots out of reach of other carriers. The
incentive to foreclose would also grow with the increased size of the slot portfolio
it would control at the airport.
(426) The Commission notes that the presence of the Parties at London Heathrow and
Manchester airports is limited and they are evidently not dominant. At both
airports, the Parties face the competition of the oneworld alliance, which holds a
larger slot portfolio than the Parties.
346
At London Heathrow, British Airways
operates a base of 233 aircraft and more than 50% of the slots are held by
oneworld alliance’s members British Airways and American Airlines.
347
(427) Finally, respondents to the market investigation have not raised substantial
concerns according to which the Parties had previously engaged or would engage
in exclusionary practices such as "slot hoarding",
348
"slot babysitting"
349
or use of
345
Replies to eQ1 – Questionnaire 1 for Competitors, question 21.
346
Form CO, paragraph 294.
347
Form CO, footnote 90.
348
"Slot hoarding" involves the operation of small aircraft and/or low load factors in order to keep slots
rather than lose them under the "use-it-or-lose-it" principle described in section 4.1.2.1 above.
84
its "slot shuffling power".
350
A minority of respondents to the market
investigation expressed concerns about the ability of the Parties, post-Transaction,
to engage in exclusionary practice at London Heathrow through their ability to
share slots through their joint venture. In particular, a competitor submits that the
merged entity would have the ability to “saturate capacity at times [the
competitor] would prefer to operate”.
351
Nevertheless, considering the Parties’
limited slot holding, such a practice appears unlikely (as it would likely require
the Parties’ to cancel or retime their own operations) and could be countered by
British Airways, given its strong position at London Heathrow.
(428) In light of the above, the Commission considers that the Parties’ would not have
the incentive to foreclose competitors’ access to the markets for the provision of
passenger air transport services at London Heathrow and Manchester airports
post-Transaction during either IATA Winter and Summer Season.
5.2.4. Overall effect on competition for passenger air transport services
(429) Effective competition would be significantly harmed if the foreclosed air carriers
played a sufficiently important role in the competitive process on the passenger
air transport markets from and to the overlap airports. The higher the proportion
of carriers which would be foreclosed on these markets, the more likely it would
be that the merger would result in a significant price increase in the passenger air
transport markets and, therefore, to significantly impede effective competition
therein.
(430) On that basis, the Commission will assess whether the strengthening of the
Parties’ slot holdings post-Transaction would result in less effective competition
for passenger air transport services to or from London Heathrow and Manchester
airports.
(431) The Commission notes that, when an air carrier holds a significant slot portfolio
at a given airport while the remaining slot holding is very fragmented and slots
are held by a large number of small air carriers, the latter are unable to translate
these slots into a viable alternative to dominant air carriers. However, as noted in
sections 5.2.2 and 5.2.3 above, the Parties do not hold a slot portfolio at London
Heathrow and Manchester airports post-Transaction that would enable them, or
give them the incentive, to foreclose other air carriers.
(432) In this respect, the Commission notes that the Parties will continue to face strong
competition at London Heathrow and Manchester airports. At London Heathrow
airport, more than 70 airlines compete with the Parties.
352
At Manchester airport,
349
"Slot babysitting" involves the transfer of slots to non-competing airlines, such as partner airlines
within an alliance before shifting them to uses that are more profitable.
350
"Slot shuffling power" refers to the ability to move a flight to a timing close to the timing envisaged by
a new entrant.
351
Replies to eQ1 – Questionnaire 1 for Competitors, question 22.
352
Heathrow airport “Facts and figures » https://www.heathrow.com/company/company-news-and-
information/company-information/facts-and-figures.
85
the Parties face competition from more than 60 airlines.
353
These competitors will
likely have the ability to react to any competitive behaviour by the merged entity.
(433) The Commission therefore considers that it is unlikely that the Transaction will
harm effective competitive on the provision of passenger air transport services at
London Heathrow and Manchester airports, where the Parties’ slot portfolios
overlap.
5.2.5. Conclusion
(434) In light of the above, and considering in particular the Parties’ lack of ability to
foreclose access of competitors to the markets for the provision of passenger air
transport services at any relevant airports, the Commission concludes that, under
the airport-by-airport approach, the Transaction does not raise serious doubts as to
its compatibility with the internal market with respect to the markets for
passenger air transport to or from London Heathrow and Manchester airports,
under any plausible market definition.
5.3. Cargo air transport
5.3.1. Analytical framework for the assessment of air transport of cargo – Alliances and
joint ventures
5.3.1.1. Alliances and joint ventures
(435) Delta, AF, KL and Alitalia are all parties of the TATL Joint Venture, which
covers combined passenger/cargo flights, but excludes cargo-only flights. This
Joint Venture involves cargo operations at seven main hubs: Amsterdam-
Schiphol, Atlanta, Detroit, Minneapolis-St. Paul, New York-JFK, Paris-CDG and
Rome-Fiumicino.
(436) Delta and Virgin Atlantic are also the two members of the DL-VS Joint Venture,
which includes coordination on pricing, sales and capacity in respect of UK –
North America cargo flows.
(437) In addition, AFKL and Delta are members of the SkyTeam Cargo alliance, which
provides for a cooperation between participating SkyTeam members in
transporting cargo across the SkyTeam global network. The SkyTeam alliance
offers a less integrated cooperation than the TATL and DL-VS Joint Ventures and
aims at developing the traffic between members by means of reciprocal
interlining agreements.
354
(438) For the purpose of the Decision, the market position of Delta and Virgin Atlantic
will be analysed as being a single one on all routes covered by the DL-VS Joint
353
Route Development at Manchester airport, https://live-webadmin-
media.s3.amazonaws.com/media/3734/maav-0007-mag-routes-brochure-updated-web.pdf
354
For the avoidance of doubt, the Parties submit that [details about strategic cooperation] (Form CO,
Chapter C, footnote 6).
86
Venture and the market position of AFKL and Delta will be analysed as being a
single one on all routes covered by the TATL Joint Venture.
355
5.3.1.2. Methodology used to calculate market shares
(439) The Commission has previously accepted to take into account in its assessment
estimated market shares based on World Air Cargo Data (“WACD”) and the
Cargo Accounts Settlement System (“CASS”).
356
However, the Commission has
also noted that CASS and/or WorldACD data do not reflect the entire air cargo
markets,
357
and therefore underestimate the total market sizes and overestimate
the Parties’ market shares.
358
The Parties also acknowledge the inherent
limitations in the different datasets available to them with respect to the air
transport of cargo.
359
(440) In fact, CASS does not include sales to agents that are not registered with IATA,
nor direct sales to end-customers, whereas WorldACD data reflect an incomplete
representation of the market as only sixty-six carriers provide their data to
WorldACD.
(441) The Parties have submitted data based on their own estimates on the basis of
World Air Cargo Data (“WACD”) database.
360
However, the Parties have also
compared the WACD data with alternative datasets,
361
and have indicated in their
submission, where those other data sources reinforce the position as shown by the
WACD data or where they suggest a different competitive position.
362
(442) For the purpose of the Decision, the Commission is of the view that the Parties’
best estimates on the basis of WACD data is appropriate for the assessment of the
affected routes in this case.
5.3.2. Horizontal overlaps
(443) Air France-KLM Martinair Cargo is AFKL’s air cargo division. For the air
transport of cargo, AFKL primarily uses belly-hold space in its passenger aircraft
or combi-aircraft (passenger planes with main deck cargo capacity) as well as six
355
The Parties submitted data for AFKL that included AFKL’s cargo-only freighters. Since cargo-only is
excluded from the scope of the cooperation, the Parties combined market shares under the TATL Joint
Venture, which covers only belly-hold cargo, are inflated.
356
M.5440 – Lufthansa/Austrian Airlines, paragraph 283.
357
M.5440 – Lufthansa/Austrian Airlines, paragraph 284.
358
M.6447 – IAG/bmi, paragraph 555.
359
Form CO, paragraph 1427.
360
Form CO, paragraph 1427.
361
The other datasets taken into account by the Parties are the following: the IATA Cargo Accounts
Settlement System (“CASS”), T100 (the U.S. Department of Transport dataset) and Seabury.
362
Form CO, paragraph 1428.
87
full-freighter aircraft.
363
Both Delta and Virgin Atlantic do not operate full-
freighter aircraft and use only belly-hold space in its passenger aircraft.
364
(444) The Transaction gives rise to fifteen affected markets with respect to air transport
of cargo.
365
The market shares of the Parties on the affected markets in 2017 were
as follows:
Table 45 - Parties' market shares in cargo air transport
Routes AFKL Delta Virgin
Atlantic
Combined
EEA – North America (USA
& Canada only)
[10-20]% [0-5]% [5-10]% [20-30]%
North America (USA &
Canada only) – EEA
[5-10]% [5-10]% [0-5]% [20-30]%
Mexico – EEA [20-30]% [0-5]% [0-5]% [20-30]%
UK – North America (USA &
Canada only)
[0-5]% [5-10]% [20-30]% [30-40]%
North America (USA &
Canada only) – UK
[0-5]% [0-5]% [10-20]% [20-30]%
UK – Mexico [10-20]% [0-5]% [20-30]% [40-50]%
Mexico – UK [20-30]% [0-5]% [0-5]% [20-30]%
EEA – Caribbean [20-30]% [0-5]% [0-5]% [20-30]%
Caribbean – EEA [10-20]% [0-5]% [5-10]% [20-30]%
EEA – Cuba [20-30]% [0-5]% [0-5]% [30-40]%
Cuba – EEA [30-40]% [0-5]% [0-5]% [30-40]%
363
Form CO, paragraphs 1402 and 1404.
364
Form CO, paragraphs 1405-1406.
365
In line with the Commission’s established geographic market definition, the Parties have provided data
on an EEA-basis. However, in light of the respective geographic focus of the parties’ activities, the
Parties separately provided data on a UK-only basis in order to allow the Commission to assess the
increment brought about by Virgin Atlantic in a more meaningful way. The Commission accepts to
take account of this additional dataset in its assessment since even on this narrower basis, the
Transaction does not give rise to any competition concerns.
88
Routes AFKL Delta Virgin
Atlantic
Combined
EEA – South Africa [20-30]% [0-5]% [0-5]% [20-30]%
South Africa – EEA [10-20]% [0-5]% [5-10]% [20-30]%
EEA – Nigeria [10-20]% [0-5]% [10-20]% [30-40]%
Nigeria – EEA [20-30]% [0-5]% [5-10]% [30-40]%
Source: Form CO, paragraphs 1435 et seq.
5.3.2.1. The Parties’ views
(445) The Parties submit that their combined market shares in any of the relevant
affected routes do not give rise to competition concerns in that they are generally
below [30-40]%.
366
(446) The Parties note that, given the limited market coverage of cargo market data
sources, the Parties’ market shares on all the affected routes are likely to be
overestimated.
367
5.3.2.2. The Commission’s assessment
(447) As can be seen in Table 45 above, the Parties’ combined market share post-
Transaction will remain below [30-40]% for most of the routes and reach at most
around [40-50]% with small increments of below [10-20]% and not higher than
12% in all affected routes. The only exception is UK-Mexico on which the
combined market shares will be slightly above [40-50]% with an increment of
[10-20]%.
(448) In addition, on all routes, there are several credible and well-established
competitors capable of imposing a significant competitive constraint on the
Parties post-Transaction, such as combination airlines (i.e. Lufthansa, British
Airways, American Airways), belly-hold cargo carriers (i.e. TUI, Thomas Cook),
cargo carriers (i.e. LH Cargo, Cargolux)
368
A majority of respondents to the
market investigation confirmed the existence of alternative credible suppliers in
366
Form CO, paragraph 1401.
367
Form CO, paragraph 1432.
368
Form CO, paragraph 1401, Replies to eQ3 – Questionnaire 3 to customer in cargo transport,
questions 6.1, 6.2 and 6.3. The Parties submit that they are also constrained post-Transaction by
integrators such as e.g. FedEX, UPS and DHL. However, the Parties have also submitted that they
cannot be certain that the WACD data covers integrators such as FedEX and UPS, see Form CO,
paragraph 1430. The Commission notes, that neither FedEX nor UPS or DHL are mentioned as
competitors for the affected cargo flows in the data submitted by the Parties. However, to the extent
that these integrators are operating on the affected cargo flows, the Parties’ combined market shares
post-Transaction are overstated. The competitive analysis does not change, irrespective of whether
integrators are considered or not.
89
the affected routes.
369
As regards to the UK-Mexico flow, the Parties will remain
under a significant competitive constraint, notably from competitors such as
CargoLogicAir’s, Panalpina and Turkish Airlines.
370
This was also confirmed by
a majority of respondents to the market investigation having expressed a view.
371
(449) The Parties are not close competitors, since only AFKL operates both cargo-only
freighters and belly-hold cargo services while Delta and Virgin only provide
belly-hold cargo services. A majority of respondents to the market investigation
confirmed that neither AFKL, Delta nor Virgin Atlantic are each other’s closest
competitor on any affected routes.
372
(450) The majority of the respondents to the market investigation also indicated that
switching between air cargo service suppliers is easy, given the limited costs and
time frame required for a customer to switch to another cargo supplier
373
and the
fact that cargo service contracts are normally concluded for six months to one
year and do not contain exclusivity clauses.
374
(451) Moreover, respondents to the market investigation having expressed a view did
not raise any material concern as regards the effects of the Transaction in terms of
prices or levels of services on any of the affected routes.
375
5.3.2.3. Conclusion
(452) In light of the above considerations and of all evidence available to it, the
Commission concludes that the Transaction does not raise serious doubts as to its
compatibility with the internal market with respect to the market for air transport
of cargo services under any plausible market definition.
5.4. MRO services
(453) AFKL, Delta and, to a limited extent only, VAL are all active in the provision of
maintenance, repair and overhaul (“MRO”) services. AFKL and Delta provide
all the four types of MRO services (i.e. line maintenance, heavy maintenance,
engine maintenance and components maintenance) to third-party carriers at
various locations. The TATL Joint Venture between AFKL and Delta does not
cover MRO services.
369
Replies to eQ3 – Questionnaire 3 to customer in cargo transport, questions 6.1, 6.2 and 6.3.
370
Form CO, paragraphs 1449 and 1461.
371
Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 13.
372
Replies to eQ3 – Questionnaire 3 to customer in cargo transport, questions 6.1, 6.2 and 6.3.
373
Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 8.
374
Replies to eQ3 – Questionnaire 3 to customer in cargo transport, question 7.
375
Replies to eQ1 – Questionnaire 1 for competitors, questions 25, 28 and 29; eQ3 – Questionnaire 3 to
customer in cargo transport, questions 12 and 13.
90
(454) VAL is not active in heavy, engine or components maintenance and only offers
line maintenance services to third-parties at three airports (JFK, JNB and
LHR).
376
5.4.1. Horizontal overlaps
(455) In the EEA, the Transaction does not give rise to any horizontal overlaps with
respect to the provision of heavy maintenance services, engine maintenance
services and components maintenance services.
377
The Parties’ activities overlap
at LHR airport for the provision of line maintenance services to third parties,
however, the market for the supply of line maintenance services at LHR is not
horizontally affected.
(456) In light of the above considerations and all evidence available to it, the
Commission concludes that the Transaction does not raise serious doubts as to its
compatibility with the internal market due to horizontal effects in the markets for
MRO services, under any plausible market definition.
5.4.2. Vertical relationships
(457) The Parties are active on some vertically related markets since the provision of
MRO services is an input for the provision of air transport services. However,
The Transaction does not give rise to any vertically affected markets with respect
to the provision of MRO services to third parties.
(458) In light of the above considerations and all evidence available to it, the
Commission concludes that the Transaction does not raise does not raise serious
doubts as to its compatibility with the internal market due to vertical effects in the
market for the provision of MRO services, under any plausible market definition.
5.4.3. Conclusion
(459) In light of the above considerations and all evidence available to it, the
Commission concludes that the Transaction does not raise serious doubts as to its
compatibility with the internal market with respect to the markets for MRO
services, under any plausible market definition.
5.5. Conclusion
(460) In light of the above considerations and all evidence available to it, the
Commission concludes that the Transaction does not raise serious doubts as to its
compatibility with the internal market with respect to the markets for passengers
air transport services, under both the O&D the airport-by-airport approaches,
cargo air transport services and MRO services, under any plausible market
definition.
376
Form CO, paragraph 1610.
377
Form CO, paragraph 1607.
91
6. CONCLUSION
(461) For the above reasons, the European Commission has decided not to oppose the
notified operation and to declare it compatible with the internal market and with
the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of
the Merger Regulation and Article 57 of the EEA Agreement.
For the Commission
(Signed)
Margrethe VESTAGER
Member of the Commission
