Airlines Iberia and Volotea will enter into a mutually beneficial agreement to increase competition in the Spanish market in order to push through the approval process for IAG’s takeover of Air Europa.

Back in November 2019, International Airlines Group announced its plans for a €1 billion takeover of Air Europa. The deal would see IAG further increase its presence in Spain, as it already owns Iberia and Vueling. However, the deal still needs to be cleared by the European Commission, which has concerns about the potential negative implications an IAG takeover of Air Europa could have on Spanish domestic competition.

A “fix it first” solution

In order to ease the European Commission’s concerns about the takeover deal, a solution has been proposed by Iberia. As the IAG group will be completing the acquisition of Air Europa, Iberia is particularly eager to see the deal go through.

As reported by Flight Global yesterday, Iberia has proposed a so-called “fix it first” solution which should increase the likelihood of a European Commission green light. The solution involves a transfer of unspecified slots between Iberia or Air Europa and the smaller Spanish carrier Volotea. According to reports by Reuters, Iberia has already offered a selection of unspecified routes to Volotea in order the get the deal through as soon as possible.

In order to demonstrate to the European Commission that its control of the Spanish market is not becoming too overwhelming, IAG needs to move to increase competition in Spain. As an independent carrier, free from the financial influence of IAG, Volotea is in a good position to profit from IAG’s current need to transfer some of its Spanish slots.

What will Volotea gain from a deal with IAG/Iberia?

Volotea is a reasonably new airline. However, it already has a strong portfolio of 300 routes served by 36 aircraft. It was founded in 2012 by the same men who founded Vueling, which is now one of IAG’s brands. Although the deal will be beneficial for both IAG and Volotea, the connection with Carlos Muñoz and Lázaro Ros may well have played a role in its inception.

A deal which involves the transfer of slots from either Iberia or Air Europa to Volotea will allow the former to strengthen its foothold in Spain. This is a chance it is unlikely to get again, as IAG/Iberia wouldn’t willingly give up slots if not for the looming acquisition of Air Europa. In response to questions about the proposed deal with IAG/Iberia, Volotea said, “If the Commision approves this proposal, Volotea will strengthen significantly its growth in Spain.”

If the agreement with IAG/Iberia goes ahead, Volotea says it will build between two and four bases across Spain. While the location of these new bases is unclear, the carrier currently has bases in both Asturias and Bilbao.

Discussing the Volotea arrangement with Simple Flying, an Iberia spokesperson said:

"We would provide certain assets, including slots, to Volotea to ensure the creation and expansion of the relevant bases."