Olympic to fly as Aegean’s subsidiary from October 18

Olympic Air will become an Aegean Airlines subsidiary as of October 18 following to the decision by the European Commission competition authorities on Wednesday that cleared the merger of the country’s two biggest air carriers.

The main argument behind the Commission’s favorable verdict was the poor financial state of Olympic, which Brussels believes means it would not have survived in the Greek market without the Aegean merger, and Aegean would have enjoyed a monopoly anyway.

The Commission had rejected the merger two years ago, but Olympic was a much larger company at a time than what it is now, Competition Commissioner Joaquin Almunia said on Wednesday. Olympic had 32 aircraft two years ago against 15 today, and the competition with Aegean concerned 4 million passengers per year in 2011 against just 950,000 today.

The statement by the Commission also noted that the flight schedules of the two carriers currently overlap on no more than five domestic routes (from Athens to Hania, Mytilini, Santorini, Corfu and Kos), and that the financial crisis in Greece has shrunk demand for domestic routes by 26 percent in three years, from 6.1 million passengers in 2009 to 4.5 million last year.

The business plan after the 72-million-euro buyout of Olympic by Aegean provides for the operation of the former as a subsidiary from next week. Flight staff will be largely unaffected though staff cuts will come, mainly from the merger of the administrative and financial services of the two companies.

Last year Aegean President Eftyhios Vassilakis had said that the aim was for the two companies to operate a combined fleet of 48-50 aircraft. Between them they currently have 45.