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Etihad Airways has EC clearance on Alitalia stake

Staff writer |
Etihad Airways got European Commission clearance to go ahead with its stake acquisition of Alitalia, the loss-making Italian flag carrier.

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The EC noted that "with the exception of the Rome-Belgrade route, the transaction does not raise any serious competition concerns, mainly because of the competitive pressure exerted by other carriers".

Etihad and Alitalia committed to release up to two daily slot pairs at Rome and Belgrade airports to allay fears of monopoly in the Rome-Belgrade route. Only Alitalia and Air Serbia, in which Etihad owns a stake, provide direct flights on the route.

A new entrant can also acquire grandfathering rights, or the right to use an airport slot on consecutive years, after a fixed period of time.

The airlines would also give access to their frequent flyer programme to new entrants, to make entry more likely, the EC said in its ruling. Etihad will take control of Alitalia's frequent flyer programme after the transaction. With these commitments, the merger "would not raise serious competition concerns", the EC said in a statement.

The Etihad-Alitalia transaction will involve Etihad buying five pairs of slots at London's Heathrow Airport for €60 million (Dh276m).

While the deal is not expected to have any immediate effect on the competition, it had drawn criticism from Europe's legacy carriers such as Lufthansa, which had asked the EC to block the deal, citing unfair competition. Air France-KLM had voiced concern over the large-bodied aircraft Middle Eastern carriers operate out of Schiphol.

The transaction in which Etihad will take a 49 per cent shareholding in Alitalia is expected to be completed on December 31.

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