ECONOMY

Merger plan flies into turbulence

Clouds gathered over the proposed merger of Greece’s two main airlines as representatives from the sector gathered in Athens in a bid to boost the troubled tourism industry. The European Union’s antitrust chief said that Aegean Airlines and rival Olympic Air will have trouble meeting competition rules with their planned merger due to their dominance of the local market. «The big difficulty here is that the two companies hold almost all the domestic market in Greece,» EU Competition Commissioner Joaquin Almunia said in Brussels. The Vassilakis group and Marfin Investment Group (MIG), the main shareholders of Aegean and Olympic respectively, announced plans to merge the airlines in February. Each is to hold an equal stake in the newly formed venture, which will be listed on the Athens bourse. A final decision from the EU on the merger is expected by mid-January. Shares in Aegean Airlines added 1.63 percent to 2.50 euros yesterday, reversing earlier losses, while MIG ended flat at 0.83 euros. The broader market eased 0.19 percent. The news came as Deputy Culture and Tourism Minister Giorgos Nikitiadis met with representatives from low-cost airlines and hotels as well as government officials from regional parts of Greece to figure out ways to boost tourist numbers and extend the length of the season. Tourism, which accounts for about 18 percent of the economy, is going through one of its worst seasons in decades, with income in the sector for the first eight months of the year falling 7.2 percent to 7.05 billion euros. Stefanos Vakirtzis, regional operations manager of EasyJet, who took part in the meeting, pointed to the poor quality of airports, with the exception of Athens International Airport, as being among the challenges faced by airlines operating in Greece. «They are often old, with poor infrastructure, and have low staff levels,» he told Kathimerini English Edition. «This creates operational issues for us and problems for our customers.» EasyJet, which entered Greece in 1998, expects passenger traffic to grow 11 percent year-on-year to just over 1.5 million people in 2011, versus 24 percent in 2010. It plans to boost the frequency of flights on its existing Greece network, which includes Athens, Thessaloniki, Myconos and Santorini, he added.