Aegean/Olympic merger denied due to domestic dominance; but how monopolistic are other domestic EU markets?

Well, yes, this merger would have been rather dominant, taking over 96% of Greek domestic route capacity. Presumably, Air France’s 80% command of the French market is the acceptable benchmark…

Last March, took a close look at the route network implications of allowing Aegean and Olympic to merge. We highlighted how dominant the combined entity would be in the domestic market, but revealed that on international routes from Athens, only one of the top 30 (as measured by weekly departures) would become a monopoly (Tirana). Eleven months later and the European Commission has decided to block the proposed merger primarily because of concerns about how the merged entity might abuse its dominant position in the domestic market.

But how much more dominant would the ‘new Olympic’ be in the Greek domestic market than other flag-carriers in their domestic markets across Europe? Using the latest schedule data for the first week in February, the market share (by seat capacity) of the three leading airlines in the top 11 European domestic markets was determined.

Top European domestic markets - Share of scheduled capacity (Biggest, Runner-up)

Source: OAG Max Online for w/c 1 February 2011

At present, the most dominant airline in a domestic market is Air France, which has 80% of domestic seat capacity, making it eight times bigger than its nearest rival easyJet. Of course, Air France claims that this ‘dominance’ is not as great as it seems thanks to the domestic TGV high-speed rail network, which it says provides ample competition.

Greece is currently the eighth-biggest domestic market in Europe after the big five (France, Germany, Italy, Spain and UK), Norway and Sweden. It currently ranks fifth for dominance with Aegean having a 55% share of the domestic market. However, when combined with Olympic, this would rise to over 95%, making it over 20 times larger than its nearest (and only) competitor, Sky Express, a small regional carrier based in Crete, which offers virtually no flights to and from Athens. As for competition from ground transportation, this would come from slow ferries in many cases rather than high-speed rail. Ironically, Aegean/Olympic were probably not helped by the demise last September of Athens Airways, which offered a range of domestic flights using primarily smaller Embraer jets. It would be interesting to know if anyone at the European Commission has been tasked with keeping an eye on domestic Greek air fares to ensure that competition is taking place between the two major carriers.

UK has least dominant leading carrier

Unlike Air France, which has determinedly hung on to its dominant position in the French market, British Airways ranks only third in the UK domestic market, well behind both Flybe and easyJet. If British Midland International and its subsidiary bmibaby are combined, the bmi Group would have almost 13% of the UK market, making it the fourth carrier to have at least 10% of the UK domestic market.

In Spain, five carriers (Air Europa, Iberia, Ryanair, Spanair and Vueling) each have at least 10% of scheduled seat capacity. In Italy, there are four carriers with at least 10% shares, although this is slightly misleading as it includes the Air One branded flights that are really under the control of Alitalia. Combining all the separate Alitalia brands and operating names actually gives the airline a 52% share of the Italian domestic market.


  1. Andy says:

    Does the Alitalia figure include Air One? Does SAS include Wideroe?

    • Thanks for raising a relevant point, Andy.

      If you are referring to the figures in the chart, then the answer to both questions is no. The airlines are defined by their IATA codes.

      In the last paragraph of the article, however, there is a combined figure for the whole of Alitalia.

  2. Caitriona says:

    In the Spanish market, Air Nostrum operates a large proportion of Iberia´s domestic flights and Iberia also owns 45% of Vueling so the figures here could also be misleading, as in the case of Italy.

    • Air Nostrum’s flights operating on behalf of Iberia are reported under the IB marketing code and these flights are therefore included in Iberia’s share.

      Vueling is, however, reported separately, but we argue that it is correct to treat it as such, not the least since – as you correctly point out – Iberia’s holding is a minority share.

  3. Max Sorensen says:

    Even on the Tirana route there is daily competition by Belleair who fly the route with an ATR aircraft.

    • Indeed, since we made the analysis in March last year, Aegean has dropped its Tirana route (in September), while Belle Air entered the market in December. (Meanwhile, Olympic has increased frequencies on the route this winter season.)

  4. pazzaone says:

    The Olympic-Aegean merger is not over, this is just the first stage. I think they will try again as it makes sense for the airlines and Greece. They will find a way to satisfy Brussels.

  5. Timur says:

    Are Turkey and Russia excluded from Europe?

    “Greece is currently the eighth-biggest domestic market in Europe after the big five (France, Germany, Italy, Spain and UK), Norway and Sweden. It currently ranks fifth for dominance with Aegean having a 55% share of the domestic market.”

  6. neo says:

    Just for info, out of the 32 Greek domestic markets that are currently being served today by Olympic and Aegean, 19 of them (i.e. 60%) are already monopoly routes since autumn 2010 !!!

  7. Francois Duclos says:

    Air France’s market share is not totally voluntary – she still has to operate “public service obligation” routes, even if some of them are hotly debated by the likes of easyJet. Is it the same for other flag carriers in Europe?

    • Although there are PSO routes in many countries in the EEA, France does have the most. However, it is not a must for Air France to operate any of these. They are made available to all community carriers. If no carrier agrees to the conditions set, then the route will simply remain unserved.

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