Warning on fares over IAG stake building in Norwegian

By Eamon Quinn and Pádraig Hoare

Potential plans by Aer Lingus-owner IAG to gobble up Norwegian Air Shuttle is bad news for Ireland’s consumers less than three years after the Government sold its 25% stake in the Irish airline, the Consumers’ Association of Ireland has said.

The share purchase by IAG in Norwegian comes as Shannon Airport enjoys its largest number of US services in over 17 years.

Dermott Jewell, who oversees policy and is council adviser at the Consumers’ Association, said it is the first clear example of the way the takeovers in huge industries like the airlines will lower competition while consumers are left on the sidelines as “powerless” observers because transatlantic fares will inevitably rise.

Mr Jewell called on the Competition and Consumer Protection Commission to review whether its existing powers and competition law are adequate to protect consumers when a huge group like IAG takes out an upstart rival like Norwegian. 

“It just goes to show that consumers have no choice or power in a market where competition is below where it should be.”

The scaling back by Norwegian of Cork’s first ever transatlantic flights to Providence has become more stark in contrast with Dublin, Shannon and Belfast’s lucrative routes to the US.

Norwegian said yesterday it would expand its Shannon/New York flight from winter 2018 to a daily service, having scrapped its winter Shannon/Providence route.

It means Shannon now has its largest number of US services in over 17 years, with six airlines operating to seven destinations, including Aer Lingus, British Airways, American Airlines and United Airlines.

The 2015 takeover of Aer Lingus was dominated by a discussion on its valuable 24 slots at crowded Heathrow servicing Dublin, Cork, Belfast, and Shannon, and on whether then transport minister Paschal Donohoe was selling the stake far too soon and should wait to get more than the €350m for the Government’s stake.

But Mr Jewell said by casting its eyes on Norwegian, IAG — which also owns British Airways, Iberian and Vueling and is run by Willie Walsh — would clearly affect Irish consumers.

IAG is valued at £12.49bn (€14.37bn). In a statement earlier this week, IAG disclosed it had picked up over 4.6% in Norwegian and said it had not ruled out bidding for the rest of the company.

“The minority investment is intended to establish a position from which to initiate discussions with Norwegian, including the possibility of a full offer for Norwegian,” IAG said and confirmed “no such discussions have taken place to date”.

At the time of the 2015 sale, Ryanair owned just short of 30% in Aer Lingus but had been ordered on competition grounds by EU and UK authorities to sell down the stake.

Etihad, the Abu Dhabi airline, which owned over 4% of Aer Lingus at the time, also didn’t oppose the takeover.

Dublin has 15 operators flying to US cities, with Delta, American and United Airlines all increasing their routes last year. Total transatlantic passengers grew to 3.5m last year, up 20%.

Belfast International Airport has flights to a number of US cities, including Las Vegas and Orlando.


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