Lufthansa's Acquisition of ITA Stalls as EU Demands Stronger Concessions

European Union antitrust regulators are poised to block Lufthansa's bid to acquire a stake in Italian airline ITA unless the German carrier offers significantly improved remedies to address concerns about stifled competition. Sources familiar with the matter revealed that the remedies proposed by Lufthansa last week fell short of appeasing the European Commission's anxieties. The primary concern is that the merger could significantly reduce competition on both short-haul and long-haul routes connecting Italy to other European destinations. Additionally, the EU regulators fear that the deal would solidify ITA's dominant position at Milan Linate Airport, a major aviation hub in Italy.

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While details of the initially proposed remedies haven't been made public, it's understood that Lufthansa offered to maintain competition on some short-haul routes to destinations like Germany, Belgium, Switzerland, and Austria. Interlining agreements with rival airlines were also proposed as part of the initial concessions. Interlining agreements enable passengers to seamlessly connect between flights operated by different airlines on a single itinerary.

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Despite these initial offerings, the EU Commission is demanding more substantial concessions to ensure a fair marketplace. The deadline for Lufthansa to submit a revised proposal is July 4th, 2024, before the Commission delivers its final verdict. This potential roadblock comes as Lufthansa seeks to expand its footprint in the Italian market. ITA, the successor to the bankrupt Alitalia airline, presents an attractive target for the German carrier. However, the EU's antitrust watchdog is determined to prevent the deal from creating an unfair advantage for Lufthansa, potentially leading to higher prices and fewer flight options for travelers.

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The coming weeks will be crucial for Lufthansa as they scramble to formulate a new set of remedies that effectively address the EU's concerns. If successful, the deal could reshape the European aviation landscape, with Lufthansa emerging as a major player in the Italian market. However, if the EU remains unconvinced, Lufthansa's ambitions for Italian expansion may be grounded.

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