In Inside Traveller we pointed out how ridiculous it was for the EU to ban the proposed merger between Aegean and Olympic on competition grounds. It is not as if Greece has a queue of new airlines wanting to take over slots or routes and there is no way the small country could support two airlines competing over the same routes. Without a merger, we would have expected Olympic to go out of business sooner or later. Allowing a deal would have meant the two could have got together in an orderly fashion, with staff and creditors protected and any necessary safeguards put in place to ensure the consumer would not be adversely affected. The EU decision showed them to be hopelessly out of touch and lost in a world of competition theory which ignores the practicalities of real business.
Olympic has been losing money heavily since its re-birth and now has to make serious cuts to its services. They have cancelled their London route, amongst others, and between three and six of their Airbus aircraft are being leased out.
At the same time, Aegean is increasing its services to London and starting a new route from Heathrow to Larnaca using the slots freed by Olympic. To support their growth, they need new aircraft and guess where these will come from?
The first of three Olympic Airbuses is currently at Norwich being repainted into Aegean livery ready for the summer season.
So, Brussels gets its way. And the merger, in all but name, will go ahead. Another triumph for the Eurocrats.
The December edition of Inside Traveller should be with subscribers now. In our regular feature, “Airlines to Avoid”, we give pride of place to the newly re-born Olympic Air. Of course, this was written a couple of weeks ago but we note that today, the CEO has admitted that the airline is losing heavily and is “possibly in trouble”.
The airline is trying to merge with its much stronger competitor, Aegean (effectively a buy-out with Olympic likely to disappear) but the EU is investigating the deal and is not due to report until 12th January.
It is quite possible that Olympic’s remarks are meant to sway the EU into giving permission but, in a way, it hardly matters. Olympic is rapidly running out of money, has very little clout in the market and, whether it is bought by Aegean or merely allowed to slowly disappear with some of its routes and staff going to Aegean, we very much doubt it will last in its current form for much longer.
Olympic is just one of the airlines listed in this month’s “Avoid” section. Over the years we have drawn attention to countless airlines with problems sometimes weeks and sometimes months before they closed.
There are rumours in Greece that Aegean and the newly-privatised and much slimmed-down Olympic are discussing some form of co-operation or even a full merger.
This would make sense. In the last few years, Aegean has become the de facto flag carrier of Greece as customers deserted Olympic. The “new” Olympic has been formed very much as a copy of Aegean and the investors behind the company even poached the man who set up Aegean to run it. Olympic now has a new fleet, new staff (since many of the older Olympic employees opted to take generous redundancy terms when the government closed it down) and a much smaller route network. Greece is a small country and, even without its economic problems, there really does not seem much point in having two parallel airlines, “Aegean Mark One” and “Aegean Mark Two”. Most small countries struggle to support one national airline so there is really little chance of Greece maintaining two for the long term.
Maybe the Greek financial crisis will give this merger the push it needs.
Greece’s new airline, Olympic Air, has a glitch. At the end of its first week of operation, the airline’s website still does not seem to exist, at least as far as google is concerned. (Which is pretty pathetic for 2009 – and don’t blame google.) Let’s hope everything else is going more smoothly for them. And after a little digging, we found them here.