CELEX: 32015M7541
Language: en
Date: 2015-07-14 00:00:00
Title: Commission Decision of 14/07/2015 declaring a concentration to be compatible with the common market (Case No COMP/M.7541 - IAG / AER LINGUS) according to Council Regulation (EC) No 139/2004 (Only the English text is authentic)

|[pic]                             |EUROPEAN COMMISSION                                                                                      |

Brussels, 14.07.2015
C(2015) 5026 final

                                        [pic]

                                        |To the notifying party:                                            |                                                                   |

Dear Madam(s) and/or Sir(s),

Subject:    Case M.7541 – IAG/AER LINGUS
Commission decision pursuant to Article 6(1)(b) in conjunction with Article 6(2) of Council Regulation  No 139/2004[1]  and  Article  57  of  the
Agreement on the European Economic Area[2]

                                                                TABLE OF CONTENTS

I.    The Parties      4

I.1.  IAG   4
I.2.  Aer Lingus 4

II.   Concentration    5

III.  EU DIMENSION     5

IV.   MARKET DEFINITION      5

IV.1. Overview of Parties' activities   5
IV.2. Air transport of passengers 6
IV.2.1.     Origin and destination approach (O&D)  6
IV.2.2.     Distinction between groups of passengers     7
IV.2.3.     Markets for direct flights and indirect flights   9
IV.2.4.     Airport substitutability    11
IV.2.5.     Provision of access to flights of another carrier for connecting passengers in the context of interlining arrangements     22
IV.3. Maintenance, repair, overhaul ('MRO')  26
IV.4. Groundhandling   27
IV.5. Landside cargo handling     27

V.    COMPETITIVE ASSESSMENT Air Transport of Passengers 28

V.1.  Methodology for calculating market shares    28
V.2.  Conceptual framework   29
V.2.1.      Treatment of joint ventures for the assessment of the Transaction  30
V.2.2.      Competitive situation likely to prevail absent the Transaction     30
V.3.  Filters    31
V.4.  Closeness of competition    32
V.4.1.      General approach to closeness of competition issues     32
V.4.2.      Parties' and competitors' market positions   33
V.4.3.      Business models and brands  33
V.4.4.      Existence of significant bases at route ends 36
V.5.  Airport congestion     36
V.5.1.      London Heathrow  37
V.5.2.      London Gatwick   39
V.5.3.      London City      39
V.5.4.      London Luton     40
V.5.5.      London Stansted  40
V.5.6.      London Southend  41
V.5.7.      Dublin     41
V.6.  Direct/direct overlap routes      43
V.6.1.      London–Dublin    43
V.6.2.      Belfast–London   52
V.6.3.      Dublin–Madrid    60
V.6.4.      Dublin–Barcelona 64
V.6.5.      Dublin–New York  69
V.6.6.      Dublin–Chicago   74
V.7.  Direct/indirect overlap routes    79
V.8.  Indirect/indirect overlap routes  86
V.9.  IAG's position at London Heathrow post Transaction 88
V.10. Feed traffic issues    89
V.10.1.     Introduction     89
V.10.2.     Commission's assessment     90

VI.   COMPETITIVE ASSESSMENT Groundhandling  112

VI.1.1.     Horizontal relationships    112
VI.1.2.     Vertical relationships      113
VI.1.3.     Conclusion 117

VII.  COMPETITIVE ASSESSMENT landside cargo handling     117

VIII. COMPETITIVE ASSESSMENT MRO  117

VIII.1.1.   Horizontal relationships    117
VIII.1.2.   Vertical relationships      119

IX.   Commitments      123

IX.1. PROPOSED COMMITMENTS   123
IX.1.1.     The slot commitments  124
IX.1.2.     The SPA commitments   126
IX.1.3.     Other provisions 128
IX.2. ASSESSMENT OF THE FINAL COMMITMENTS    129
IX.2.1.     The slot commitments  130
IX.2.2.     The SPA commitments   134
IX.3. Overall conclusion on the Final Commitments  140

X.    CONCLUSION 141

 1) On 27 May 2015, the Commission received a notification of a proposed concentration pursuant to Article  4  of  Council  Regulation  (EC)  No
    139/2004 by which International Consolidated Airlines Group, S.A. ("IAG") acquires indirectly within the meaning of Article 3(1)(b)  of  the
    Merger Regulation control of the whole of Aer Lingus Group, plc. ("Aer Lingus") by way of a public offer (the "Transaction").

 2) IAG and Aer Lingus are hereinafter referred to as the "Parties".

       The Parties

1 IAG

 3) IAG is the holding company of each of British Airways Plc[3] ("BA"), Iberia  Líneas  Aéreas  de  España,  S.A.[4]  ("Iberia"),  and  Vueling
    Airlines, S.A.[5] ("Vueling").[6] The IAG airlines (BA, Iberia and Vueling) fly to around 200 destinations with approximately a further  200
    destinations served under various codesharing relationships.

 4) BA has its main hub at London Heathrow (LHR) and also operates bases at London Gatwick (LGW) and London City (LCY). Iberia's main hub is  at
    Madrid Barajas (MAD). Iberia also has franchise arrangements with Air Nostrum under the Iberia Regional brand. Vueling's  main  base  is  at
    Barcelona EI Prat (BCN). It also has significant operations at Malaga Airport (AGP), Brussels International (BRU) and Rome Fiumicino  (FCO),
    as well as a number of smaller aircraft bases (1-3 aircraft) at other Spanish cities, depending on the  season.  Vueling  rotates/overnights
    aircraft at a number of other airports in Europe.

 5) Both BA and IB are members of the oneworld alliance. Vueling is not a member of any alliance.

2 Aer Lingus

 6) Aer Lingus is a publicly listed Irish-based airline. Aer Lingus serves more than 75 destinations, primarily in the EEA  and  North  America.
    Aer Lingus' main base is at Dublin (DUB) with operational bases at Belfast City (BHD), Cork (ORK), LGW, and Shannon (SNN).[7]

 7) Aer Lingus was previously a member of the oneworld alliance but has terminated the membership and left the alliance as of  April  2007.  Aer
    Lingus currently has codeshare agreements with Flybe[8], United Airlines, Air Canada, KLM, BA, JetBlue and Etihad. Aer  Lingus  also  has  a
    franchise agreement with Stobart Air whereby Stobart Air operates services under the Aer Lingus Regional brand.

       Concentration

 8) The proposed Transaction concerns an acquisition of sole control of Aer Lingus by IAG, through its subsidiary AERL Holding Limited,  by  way
    of a public offer.

 9) The offer document issued by IAG is subject to eight conditions precedent to closing. In particular,  the  Government  Acceptance  condition
    provides that the Minister for Finance of Ireland shall validly accept the offer in compliance with the requirements of the  Irish  Takeover
    Rules. The Ryanair Acceptance condition sets up that the Ryanair Group shall validly accept the offer under the same terms. The Connectivity
    Resolutions condition, negotiated between the Parties and the Irish Government, shall notably result in the creation of a  new  class  of  B
    share retained by the Minister for Finance and in the adoption of new rules governing the operation of the London-Heathrow  slots  currently
    held by Aer Lingus for up to seven years following the Transaction.

10) Provided that all conditions are met, or where permitted waived by IAG, IAG will complete the offer and acquire sole control of Aer Lingus.

11) The Transaction thus constitutes a concentration within the meaning of Article 3(1)(b) of the Merger Regulation.

       EU DIMENSION

12) The undertakings concerned have a combined aggregate world-wide turnover of more than EUR 5 000 million[9]. Each  of  them  has  an  EU-wide
    turnover in excess of EUR 250 million, but each does not achieve more than two-thirds of its aggregate EU-wide turnover within one  and  the
    same Member State[10]. The notified operation therefore has an EU dimension.

       MARKET DEFINITION

1 Overview of Parties' activities

13) The Parties submit that the relevant product markets for the purpose of the assessment of the Transaction are (i)  passenger  air  transport
    services, (ii) cargo air transport services,[11] (iii) maintenance, repair and overhaul (MRO), (iv) ground handling, and (v) landside  cargo
    handling.

2 Air transport of passengers

1 Origin and destination approach (O&D)

1 Demand-side considerations

14) In its decisional practice, the Commission has traditionally defined the relevant market for scheduled passenger air transport  services  on
    the basis of the "point of origin/point of destination" ("O&D") city-pair approach.[12] Such a market definition  reflects  the  demand-side
    perspective whereby passengers consider all possible alternatives of travelling from a city of origin to a city of destination,  which  they
    do not consider substitutable for a different city pair. As a result, every combination of a point of origin and a point of  destination  is
    considered a separate market.[13]

15) The Parties do not object to this approach but submit that the market for passenger  air  transport  services  increasingly  has  a  network
    dimension (in particular for long-haul carriers).[14]

16) In addition, a large majority among all groups of respondents to the market investigation has confirmed the relevance of  the  O&D  approach
    for the purpose of analysing the competitive effects on the overlap routes.[15]

2 Supply-side considerations

17) The Commission has in its practice taken into consideration the network competition between airlines.[16] This is particularly  relevant  on
    the supply-side, as network carriers build their network and decide to fly essentially on routes connecting to their hubs.

18) While some network carriers argued that competition between carriers takes place on the network level,[17] in  line  with  the  Commission's
    notice on market definition and with  the  Commission's  decision  practice,[18]  the  Commission  has  given  pre-eminence  to  demand-side
    substitution, whereby it considered that customers still need transportation from one point to another  and  that  competition  still  takes
    place on an O&D city-pair basis.

3 Conclusion

19) In light of the above, the effects of the Transaction will be primarily assessed on the basis of the  city  pair  O&D  approach,  while  all
    substitutable airports will be included in the respective points of origin and destination provided that they are perceived as substitutable
    by travellers. The question of airport substitutability will be examined for relevant O&D routes in Section IV.2.4.

2 Distinction between groups of passengers

20) The Commission has traditionally found that a distinction may be drawn between time sensitive ("TS"  or  premium)  passengers  and  non-time
    sensitive ("NTS" or non-premium) passengers.[19] Time sensitive passengers  tend  to  travel  for  business  purposes,  require  significant
    flexibility with their tickets (such as cost-free cancellation and modification of the time of departure,  etc.)  and  tend  to  pay  higher
    prices for this flexibility. Non-time sensitive customers travel predominantly for leisure purposes or to visit friends and relatives,  book
    long time in advance, do not require flexibility with their booking and are generally more price-sensitive.

21) The Parties do not regard the Commission's approach of distinguishing between TS and NTS passengers  as  meaningful,[20]  they  consider[21]
    that the line between TS and NTS passengers has never been clear-cut and has further blurred in recent years.  In  particular,  the  Parties
    submit[22] that (i) airlines are increasingly offering a single cabin in their aircraft, and/or simply move the curtain (at least on  short-
    haul flights) to change the demarcation between cabins, with little, if any, product differentiation; (ii) low-cost  carriers  ("LCCs")  are
    increasingly attractive options for business travel; and (iii) any TS passengers buy restricted (or NTS) tickets and then simply purchase  a
    second ticket or pay a fee if they are unable to make their booked flight.

22) A majority of respondents in the market investigation has confirmed the Commission's approach of distinguishing between time  sensitive  and
    non-time sensitive passengers, acknowledging that this distinction was relevant for the assessment of the Transaction.[23]

23) Several respondents[24] have nonetheless indicated that the distinction between time sensitive and non-time sensitive passengers has  become
    blurred; passengers are becoming increasingly price-sensitive in times of slow economic growth[25] and more corporate customers apply lowest
    fare policies.[26]

24) Moreover, several respondents to the market investigation have also indicated that on short-haul flights, the distinction between TS and NTS
    has become somewhat artificial.[27] As argued by the Parties, there is indeed not much of a difference anymore in the offerings for  TS  and
    NTS passengers on short-haul routes. The transportation of both categories of passengers usually takes place in the same cabin  and  further
    product differentiation (e.g. included meals, newspapers and magazines) are mostly also available to NTS passengers for an upgrade fee.

25) The market investigation has also shown that a substantial part of business customers increasingly choose LCCs for their business trips thus
    further levelling the differences between network carriers' traditional focus on TS customers and LCCs' traditional claim on  NTS  customers
    only.[28] Conversely, European LCC carriers (who operate mostly, if not exclusively, short haul services) have  developed  over  the  recent
    years strategies to attract business customers. The "Business Plus" offering introduced recently by Ryanair is an example of this evolution.

26) As concerns the argument that TS customers are willing to pay more for their ticket to have full flexibility regarding  the  time  of  their
    flight, TS customers increasingly adhere to the practice of buying restricted tickets and letting them lapse should  they  be  impeded  from
    taking the flight they had originally chosen.[29] A substantial number of TS customers buy a new ticket for another flight instead.[30]

27) For long-haul flights (in excess of six hours) however, a majority of  respondents  to  the  market  investigation  have  indicated  that  a
    substantial part of the criteria originally justifying the distinction between TS and NTS is still in  place  (different  cabins,  different
    level of service, little competition yet from LCCs, etc.).[31]

28) In light of the above, the Commission considers on balance that it is not appropriate in the present case to distinguish  different  markets
    for TS and NTS on short-haul flights. Instead a market comprising all passengers will be considered. Should it be necessary  to  distinguish
    between the needs of TS and NTS passengers on short-haul routes, this will be done in the framework of the competitive assessment.

29) For long-haul routes, it may be still relevant to distinguish between TS and NTS passengers markets and the assessment will carried out  for
    both groups of passengers. However, for the assessment of the Transaction, the conclusion on whether TS passengers and NTS passengers belong
    to the same market on long-haul flights can be left open as the outcome of the Commission's competitive assessment would  not  change  under
    any alternative market definition.

3 Markets for direct flights and indirect flights

30) On a given O&D pair, passengers can travel either by way of a direct[32] flight between the point of origin and the point of destination  or
    by way of an "indirect" flight on the same O&D pair but via an intermediate destination.[33]

31) The level of substitutability of indirect flights for direct flights largely depends on the duration of the flight. As a general  rule,  the
    longer the flight, the higher the likelihood that indirect flights exert a competitive constraint on direct flights.[34]

32) When defining the relevant O&D markets for air transport services, the Commission has considered in previous decisions[35] that with respect
    to short-haul routes (generally below 6 hours flight duration) indirect/indirect flights do not generally provide a  competitive  constraint
    to direct/direct flights absent exceptional circumstances (for example, the direct connection does not allow for a one-day  return  trip  or
    the share of indirect flights in the overall market is significant).

33) The Commission has in its practice[36] considered that, with respect to long-haul routes (more  than  6  hours  flight  duration),  indirect
    flights constitute a competitive alternative to direct services under certain conditions (for example if they  are  marketed  as  connecting
    flights on the O&D pair in the computer reservation system).

34) The Parties concur with the Commission's previous approach.[37]

35) The respondents in the market investigation have demonstrated strong support for the distinction between direct  and  indirect  flights  for
    both short and long haul flights.[38] A large majority of respondents to the market investigation confirmed  that  indirect  services  could
    constitute competitive alternatives to direct services as identified above.[39] A majority of the respondents also confirmed  that  indirect
    services with a greater difference in duration constituted a smaller competitive constraint to direct services than indirect services with a
    shorter difference in duration.[40]

36) However, for the assessment of the Transaction, the conclusion on whether or not direct and indirect flights belong to the same  market  can
    be left open as the outcome of the Commission's competitive assessment would not change under any plausible alternative market definition.

4 Airport substitutability

1 Framework of assessment

37) When defining the relevant O&D markets for air transport services, the Commission previously found that flights from or  to  airports  which
    have sufficiently overlapping catchment areas can be considered as substitutes in the eyes of passengers.

38) In order to correctly capture the competitive constraint that flights from and to two (or more) different airports exerts on each  other,  a
    detailed analysis is necessary by taking into consideration the specific characteristics of the  case  at  hand.[41]  Passengers  take  into
    account a number of elements like travel time, travel costs, flight times/schedules/frequencies and the quality of service when it comes  to
    choosing between air transport services to and from different airports. The passenger's choice for one or the  other  airline  service  will
    ultimately be driven by a combination of these elements.

39) The Commission's approach is to analyse the question of airport substitutability from the perspective of customers using  the  technique  of
    bundling evidence.

40) The evidence used to characterise airport substitutability includes inter alia a  comparison  of  distances  and  travelling  times  to  the
    indicative benchmark of 100 km/1 hour driving time,[42] the outcome of the market investigation (views of the airports, the competitors, and
    other market participants), and the Parties' practices in terms of monitoring.

41) Airport substitutability cannot be assessed in the abstract but can only be determined  taking  into  account  the  characteristics  of  the
    passengers travelling on the routes at stake.

42) In the present case, airport substitutability is particularly relevant for the routes to and from London, Belfast, Barcelona, New  York  and
    Chicago.

2 London airports

43) The city of London is served by six airports, namely Heathrow (LHR), Gatwick (LGW), City (LCY), Stansted (STN),  Luton  (LTN)  and  Southend
    (SEN).

44) The question of airport substitutability as regards the six London airports is relevant for two direct/direct  overlap  routes,  namely  ex-
    Dublin and ex-Belfast.

45) Ex-Dublin, the Parties offer services from Heathrow. In addition, IAG flies to City, whereas Aer Lingus to Gatwick. Other competitors on the
    route are Ryanair which offers services from Gatwick, Luton and Stansted, and CityJet which operates from City.

46) Ex-Belfast, the Parties operate from Heathrow. Aer Lingus flies also to Gatwick. Other competitors on the route are  easyJet,  which  offers
    services from Gatwick, Luton and Stansted, and Flybe, which operates from City.

47) Therefore, the substitutability of the London airports is relevant for determining to what extent the activities of the Parties overlap  and
    for the assessment of the competitive constraints from airlines which currently operate or intend to operate in the  near  future  at  other
    London airports.

       Precedents

48) Previous Commission decisions suggested that a certain degree of substitutability exists between the London  airports,  at  least  for  non-
    premium passengers.[43]

49) Also, the Commission found in previous decisions that at least the airports of  London  Heathrow,  London  Gatwick,  and  London  City  were
    considered substitutable for both premium and non-premium passengers flying from London to Madrid and to Barcelona[44] and that the airports
    of London Heathrow and London Gatwick were considered substitutable for both premium and non-premium passengers flying  between  London  and
    Athens.[45] The Commission also found evidence in past cases suggesting that a certain degree of substitutability may exist at least between
    some of these airports (i.e. Heathrow, Gatwick, and City) on specific routes.[46]

50) In the IAG/Bmi decision[47], the Commission assessed each of the  relevant  routes  on  the  narrowest  possible  market,  namely  a  market
    comprising flights to and from London Heathrow only. In addition, in line with the approach adopted in the decision relating to case  M.5747
    – Iberia/British Airways, the effects of the concentration were examined on a  "London  (three)"  market  comprising  flights  to  and  from
    Heathrow, Gatwick and City and also on a "London (five)" market comprising flights to and from Heathrow, Gatwick, City, Luton, and Stansted.

51) In case M. 6663 – Ryanair/Aer Lingus III,[48] the Commission considered that  scheduled  point-to-point  passenger  air  transport  services
    between Dublin, Cork, Shannon or Knock and the five London airports (Heathrow, Gatwick, City, Stansted and Luton) belong to the same market,
    while the question of whether Southend should also be treated as substitutable with the other London Airports was left open.

52) In other decisions on long-haul flying from London, the Commission examined the effects of the concentration on a market comprising  flights
    to and from Heathrow only, and on a wider market comprising flights to and from Heathrow, Gatwick and City, but the  market  definition  was
    left open.[49]

       Parties' views

53) The Parties consider that all six London airports are substitutable regardless of the  city-pair  serviced  on  a  market  encompassing  all
    passengers. In support of this assertion, they refer to the Commission's conclusion in case M. 6663 – Ryanair/Aer Lingus III.

54) The Parties also argue that all six airports are attractive for TS passengers and are substitutable in terms of overall customer experience,
    due to the availability of similar "ground products" (online check-in, valet, bag drop, business lounge, etc.) at London airports, including
    similarities in IAG's own product offering at these airports.

55) The Parties also refer to certain documents prepared some years ago by the UK CAA with  respect  to  the  various  London  airports.[50]  In
    addition, the six London airports have been considered as substitutable by the UK competition authorities, in the context of their review of
    Ryanair's minority stake in Aer Lingus.[51]

56) The Parties also claim that the substitutability of London airports can also be seen by the way in which [IAG route  planning  strategy  and
    monitoring activities].[52]

57) As regards marketing activities, the Parties argue that the destination page on London for BA's website does  not  distinguish  between  the
    three London airports to which BA operates, simply stating "With regular flights to London from the world over,  the  city's  never  out  of
    reach".[53] However, among the documents the Parties submitted, there are also examples of advertisements for  BA's  Dublin  and  Belfast  –
    London services that specifically single out London Heathrow: "To improve. To invest. To create the terminal voted the world's best. Flights
    from Dublin and Belfast now arrive into London Heathrow Terminal 5", or "Discover the  world  from  Belfast.  With  connections  via  London
    Heathrow".[54] Regarding Aer Lingus, the Parties submit that Aer Lingus' marketing strategy  is  generally  city  specific,  focused  around
    particular events in that city, regardless of the airport served in London, and that Aer Lingus' marketing campaigns are mainly run  through
    newspapers, radio, and email emphasizing the level of frequencies it offers between Dublin and London. [55] In  case  M.6663  –  Ryanair/Aer
    Lingus, it was also noted that on its website, under the destinations "London  Gatwick",  "London  Luton"  and  "London  Stansted",  Ryanair
    describes the city of London and its main attractions.[56] This is still the case today.

58) Finally, the Parties acknowledge that airlines themselves may not be indifferent as to which London airport they fly to/from. In  particular
    they refer to the importance of London Heathrow for network carriers. However, they argue that this fact should not prevent  the  Commission
    from concluding that services from any of the London airports are part of the same market.

       Commission's assessment

59) The assessment of a concentration shall be based on  the  specificities  of  the  case  under  review.  Therefore,  the  assessment  on  the
    substitutability of London airports is tailored to the specificities of the present case, such as preferences of passengers  travelling  out
    of London to Dublin or Belfast, the degree of differentiation of the services offered by the merging parties and their competitors  as  well
    as the characteristics of each route.

60) Regarding the availability of similar "ground products" at London airports, such similarities in offerings cannot constitute by themselves a
    basis for assessing demand-side substitutability of airports. Indeed, airports that are located in  different,  non-neighbouring  countries,
    with no potential geographic overlap, could also provide similar ground products without being considered substitutable.  The  argument  may
    however be relevant for the assessment of closeness of competition between carriers.

61) Regarding documents prepared e.g. by the UK CAA with respect to the various London airports,  the  reports  were  already  assessed  by  the
    Commission in the context of previous decisions.[57] The Commission previously took the view that these various reports, even though they do
    support that there is indeed a certain degree of overlap between the catchment areas of  the  various  London  airports,  are  as  such  not
    sufficient to conclude whether or not flights offered from these various airports are substitutable for passengers  travelling  on  specific
    routes.[58] This conclusion still applies today.

62) The Commission takes into account a range of evidence, enabling it to assess the extent to which substitution would take place, such as  the
    100km/1hour benchmark, the replies to competitors, airports and other relevant replies to the market investigation, the Parties'  monitoring
    activities and internal documents.

63) The travel distances and times between these airports and the centre of London, and certain other city districts, are summarised in Table 1:

                                             Table 1: Distances and travel times from London airports

|Airport         |Distance                |Car                 |Public transport                                            |
|CENTRAL LONDON                                                                                                              |
|LCY             |14 km                   |20 min              |22 min (rail to Bank Station)                               |
|LHR             |28 km                   |65 min              |15 min (rail to Paddington Station)                         |
|                |                        |                    |60 minutes (underground to King's Cross)                    |
|                |                        |                    |65 min (bus to Victoria Coach Station)                      |
|LGW             |46 km                   |85 min              |30 min (rail to Victoria Station)                           |
|                |                        |                    |95 min (bus to Victoria Coach Station)                      |
|LTN             |54 km                   |44 min              |10+26 min (bus+rail to Kings Cross)                         |
|                |                        |                    |80 min (bus to Victoria Coach Station)                      |
|STN             |59 km                   |85 min              |46 min (rail to Liverpool Street)                           |
|                |                        |                    |90 min (bus to Victoria Coach Station)                      |
|SEN             |68km                    |105 min             |53 min (rail to Liverpool Street Station)                   |
|CITY OF LONDON (Bank underground station)                                                                                   |
|LCY             |11 km                   |22 min              |22 min                                                      |
|LHR             |31 km                   |46 min              |45 min                                                      |
|LGW             |49 km                   |72 min              |43 min                                                      |
|LTN             |55 km                   |60 min              |57 min                                                      |
|STN             |58 km                   |47 min              |55 min                                                      |
|SEN             |64 km                   |60 min              |60 min                                                      |
|LONDON DOCKLANDS (Canary Wharf underground station)                                                                         |
|LCY             |6 km                    |11 min              |12 min                                                      |
|LHR             |36 km                   |53 min              |48 min                                                      |
|LGW             |51 km                   |53 min              |43 min                                                      |
|LTN             |60 km                   |61 min              |69 min                                                      |
|STN             |54 km                   |36 min              |74 min                                                      |
|SEN             |59 km                   |47 min              |60 min                                                      |

      Source:     Form CO, Annex 6, Airport Substitutability, Section 2

64) All six airports are located within a 100 kilometre radius and an approximately one hour drive from London city centre as well as  to  other
    key financial London districts: the City of London (represented by Bank underground station) and London  Docklands  (represented  by  Canary
    Warf station). On the basis of the 100km/1 hour benchmark, all the London airports appear prima facie to be substitutable  from  the  demand
    side for point-to-point scheduled passenger air transport services ex-Dublin and ex-Belfast in terms of distance and if the travel  duration
    by car or public transport is considered.

65) The Parties' internal documents indicate that both IAG and Aer Lingus take into consideration in their monitoring practices  and  commercial
    strategies the conduct of other airlines, including LCCs, across some London airports. [IAG  route  planning  monitoring  strategy].  [[59]]
    [[60]]

66) In addition, [IAG assessment of constraint according to London airports]. This means that, although  the  Parties  consider  several  London
    airports in their commercial strategies, the intensity of the competitive pressure exerted by the services offered by  the  Parties'  rivals
    from a given London airport on the services provided by the Parties from another London airport may vary considerably.

67) The market investigation indicates that there is a degree of differentiation across London airports for routes to/from  Dublin  or  Belfast.
    The extent of such differentiation depends on several factors, such as the airport's catchment area, the types of services  offered  at  the
    airport, and the different needs of passengers.[61] For instance, the Dublin Airport Authority  mentioned  that  ""[..]  within  this  broad
    grouping of London airports there are likely to be varying degrees of substitutability between the individual airports/routes  depending  on
    price, market characteristics or intended use".[62] Similarly, Ryanair answered that "A proper assessment requires a case-by-case  analysis,
    taking into account of traffic origination, passengers profiles, distances involved, etc."[63] Further, the degree of  substitutability  may
    also depend upon the length of the sector covered, as  catchment  areas  increase  with  sector  length.  As  pointed  out  by  some  market
    participants, for routes to London ex Dublin or Belfast, where the length of the sector is quite short, passengers may be less  inclined  to
    change their preferred airport, "as the additional time/cost required to get to their ultimate surface origin/destination is likely to be  a
    greater proportion of the total travel time/cost".[64]

68) The results of the market investigation on the substitutability between Heathrow and the other London  airports  on  the  London–Dublin  and
    London–Belfast routes are assessed in detail in Sections V.6.1 and V.6.2 below.

69) The Commission performed a quantitative analysis to determine the degree of competitive constraints  exerted  on  Heathrow  by  Gatwick  and
    City.[65] The Commission's analysis assessed whether on a given city pair from London BA's and Aer Lingus'  fares  from  Heathrow  responded
    differently to an event specific to Heathrow than their fares from Gatwick and City, using the so-called difference-in-differences analysis.
    If the fares from Heathrow changed significantly more than the fares from Gatwick and City after a certain event, this would  indicate  that
    the competitive conditions at Heathrow were to some extent differentiated from those prevailing at Gatwick and City.

70) The Commission used Heathrow-Glasgow, Heathrow-Edinburgh, Heathrow-Manchester (for BA)  and  Heathrow-Dublin  (for  Aer  Lingus)  as  "event
    routes", that is, those routes where the event occurred.[66] BA and Aer Lingus operate or operated also from Gatwick and City  to  the  same
    destinations. The Commission used those routes as "control routes", that is, routes used to compare the evolution of the fares in the  event
    routes.

71) Although in some cases the observed variation in fares from Heathrow could not be linked based on the available information with a  specific
    event under investigation, overall the results of the Commission's quantitative analysis indicated that BA's  and  Aer  Lingus'  fares  from
    Heathrow appear to have responded differently than BA's and Aer Lingus' fares from Gatwick  and  City.  Therefore,  the  empirical  analysis
    suggests that the competitive conditions at Heathrow  are  to  some  extent  differentiated  from  those  prevailing  at  the  other  London
    airports.[67]

72) The Parties presented a case study of the hub-to-hub Heathrow-Madrid airport pair, where it is argued that the fares in Heathrow-Madrid  did
    not increase after the merger between BA and Iberia in 2011, and that there are several beneficial effects  of  a  merger  on  a  hub-to-hub
    airport pair.[68] However, the study does not compare the Heathrow-Madrid fares with any other fare from another London airport  to  Madrid,
    which limits the insights that can be drawn from the study. Second, BA and Iberia were already under an alliance agreement since 2004, which
    allowed scheduling and pricing co-ordination. Hence, the 2011 merger would likely not have had any material effect on the pricing  decisions
    of the merged entity BA-Iberia, as such decisions were already  co-ordinated  in  the  pre-merger  period.[69]  For  such  limitations,  the
    Commission considers the Parties' submission as inconclusive for the purpose of assessing  the  degree  of  competition  across  the  London
    airports.

73) The Parties also submitted another case study on London-Glasgow (previously submitted for the IAG/bmi merger) which argues in that the  exit
    of bmi from the Heathrow-Glasgow airport pair did not have any material effect on the competition on the London-Glasgow  city-pair.[70]  The
    study was already dismissed in the IAG/bmi decision.

74) As a conclusion, in light of the above and of the other available evidence, the Commission considers that scheduled point-to-point passenger
    air transport services between Dublin and Belfast, and the six London airports belong to  the  same  market.  However  London  airports  are
    differentiated and the degree of substitutability between the London airports is liable to vary depending on precisely  which  airports  are
    taken into consideration for flights to/from Dublin or Belfast as well as on other factors, such  as  the  preferences  of  passengers,  the
    degree of differentiation of the services offered by the merging parties and their competitors, as  well  as  the  characteristics  of  each
    route.

75) The assessment of the competitive constraints exercised on each of the relevant routes will be conducted in Section V.6.

6 Barcelona airports

76) The city of Barcelona is served by three airports: El Prat (BCN), Girona-Costa Brava (GRO) and Reus (REU).

77) The question of airport substitutability as regards El Prat, Girona-Costa Brava and  Reus  airport  is  relevant  for  the  route  ex-Dublin
    Airport, where Ryanair and the Parties both fly to El Prat airport (and in addition Ryanair flies from Girona-Costa Brava and Reus).

78) In the Ryanair/Aer Lingus III decision, the Commission concluded that all three  Barcelona  airports  were  part  of  the  same  market  for
    scheduled point-to-point passenger air transport services between Dublin and Barcelona.[71]

79) The travel distances and times between these airports and the centre of Barcelona are provided in Table 2.

                                           Table 2: Distances and travel times from Barcelona airports

|Airport           |Approximate distance to city centre|By car/taxi         |By bus              |By train            |
|BCN               |13 km                              |25 mins             |25 mins             |20 mins             |
|GRO               |100 km                             |60 mins             |70 mins             |None                |
|REU               |80 km                              |70 mins             |80 mins             |None                |

      Source: Form CO, Annex 6, Table 4.1, M.6663 – Ryanair/Aer Lingus, Table 4

80) The Parties submit that all three airports are substitutable for flights ex-Dublin.[72]

81) All three airports are located within a 100 kilometre radius and an approximately one hour drive from Barcelona city centre. On the basis of
    the 100km/1 hour benchmark, Barcelona-El Prat, Girona-Costa Brava and Reus airports appear prima facie to be substitutable from  the  demand
    side for point-to-point scheduled passenger air transport services ex-Dublin in terms of distance and if  the  travel  duration  by  car  is
    considered.

82) Some evidence collected through the market investigation indicates that point-to-point flights between Dublin on the one hand and the  three
    Barcelona airports, would not belong to the same market. Indeed, the operator of Barcelona-El Prat,  Girona-Costa  Brava  and  Reus  airport
    explained that "an increase by 5-10% in the price of flights is not enough to motivate a change of airport". [73] A majority of  respondents
    to the market investigation in this particular case share this view.

83) For the assessment of the Transaction, the conclusion on the substitutability of the three Barcelona  airports  can  be  left  open,  as  no
    competition concerns arise under any alternative market definition.

7 Belfast airports

84) Two airports serve the city of Belfast: Belfast International Airport (BFS)[74] and George Best Belfast City Airport (BHD)[75].

85) The question of airport substitutability as regards the two Belfast airports is relevant for the route ex-London.

86) Ex-London, the Parties fly to George Best Belfast City Airport.  Other  competitors  on  the  route  are  easyJet,  operating  from  Belfast
    International Airport, and Flybe, operating from George Best Belfast City Airport.

87) As the Parties both fly to George Best Belfast City Airport,  the  substitutability  of  the  two  Belfast  airports  is  not  relevant  for
    establishing the overlap, but for determining the competitive constraints from airlines which currently operate or intend to operate in  the
    near future at the other Belfast airport.

88) The Commission has not assessed the substitutability of the two Belfast Airports so far.

89) The Parties consider that flights to/from both Belfast airports should be considered as substitutable.[76] The Parties refer to two previous
    national regulatory authority decisions, with the UK Office of Fair Trading having found the  two  airports  to  be  substitutable  on  both
    occasions.[77]

90) The Parties also argue that both airports are attractive for TS passengers, and indicate that this is supported by the similarity of the "on
    the ground" products offered at each airport. Furthermore, the Parties claim that two events support supply-side  substitutability:  easyJet
    moved its Belfast–London service from George Best Belfast City Airport to Belfast International Airport in 2011 and Aer Lingus moved all  of
    its services from Belfast International Airport to George Best Belfast City Airport in 2012.

91) The travel distances and times between these airports and the centre of Belfast are provided in Table 3.

                                  Table 3: Journey distances and times from Belfast Airports to the city centre

|Airport                                  |Approximate distance to city centre    |Private car         |By bus              |
|BHD                                      |5 km to the East                       |12 min              |15 min              |
|BFS                                      |21 km to the North West                |26 min              |40 min              |

      Source: Form CO

92) Both Belfast airports are located within a 100 kilometre radius and less than one hour drive from Belfast city centre. On the basis  of  the
    100km/1 hour benchmark, both Belfast airports appear prima facie to be substitutable from  the  demand  side  for  point-to-point  scheduled
    passenger air transport services ex-London in terms of distance and if the travel duration by car or public transport is considered.

93) The George Best Belfast City Airport has one terminal, which provides capacity for six million passengers a year, and one runway. The second
    airport serving Belfast is Belfast International. This airport also has one terminal, which provides capacity for six million  passengers  a
    year, and two runways.

94) During the market investigation, regarding the question of airport substitutability at both ends of the route, that is to say  both  at  the
    Belfast end between the two Belfast airports, and at the London end between the various London airports, a majority of respondents indicated
    that flights on the routes George Best Belfast City Airport – London Heathrow or George Best Belfast City Airport – London Gatwick would not
    be substitutable with flights from Belfast International Airport (BFS) to another London airport. However, these results can  be  viewed  in
    light of a significant degree of differentiation across London airports as previously described in Section IV.2.4.2. Indeed, a  majority  of
    respondents to the market investigation consider both Belfast airports to be substitutable for flights to/from London.

95) In light of the above and of all other available evidence, the Commission considers that, for the relevant route, the two  airports  serving
    the city of Belfast (Belfast International Airport and George Best Belfast City Airport) belong to the same market.

8 Chicago airports

96)  Chicago is served by two airports, O'Hare International Airport (ORD) and Midway International Airport (MDW).  Long  haul  destinations  in
    Europe, Asia, Africa, and the Middle East can be reached from O'Hare International, whereas Midway  International  focuses  on  services  to
    North American destinations.

97) The travel distances and times between these airports and the centre of Chicago are provided in Table 4.

                                  Table 4: Journey distances and times from Chicago Airports to the city centre

|Airport                                    |Approximate distance to city centre             |Private car     |By bus / rail   |
|ORD                                        |41 km                                           |45 min          |15 min          |
|MDW                                        |18 km                                           |30 min          |35 min          |

      Source: Form CO

98) The Parties consider that O'Hare International Airport (ORD) and Midway International Airport (MDW) are substitutable.

99) However, because the assessment of the Transaction would not change materially regardless of whether the two Chicago airports are considered
    to be part of the same market or not, the question of substitutability between these airports can be left open.

9 New York airports

100) New York has three airports, namely JFK, Newark Liberty International Airport ("Newark") and  La  Guardia.  La  Guardia  only  serves  North
    American destinations and there are no direct flights to and from La Guardia relevant for the assessment of the Transaction.[78] La  Guardia
    will therefore not be included in the airport substitutability analysis.

101) The Parties consider that JFK and Newark should be regarded as  substitutable  for  transatlantic  flights  from  Dublin.[79]  Besides,  the
    Parties refer to previous decisions where the Commission found that transatlantic services between London and JFK,  on  the  one  hand,  and
    between London and Newark, on the other hand, were part of the same relevant market.[80]

102) The travel distances and times between JFK and Newark and the New York city centre are provided in Table 5.

                                  Table 5: Journey distances and times from New York Airports to the city centre
|Airport           |Approximate distance to city      |By car           |By bus            |By rail               |
|                  |centre                            |                 |                  |                      |
|JFK               |31 km                             |30 min           |52 min            |75 min                |
|EWR               |21 km                             |22 min           |24 min            |24 min                |

    Source: Form CO, M.6828 – Delta/Virgin, paragraph 44 and following

103) JFK and Newark are located within a 100 kilometre radius and an approximately one  hour  drive  from  New  York  city  centre.  Furthermore,
    respondents to the market investigation have indicated that JFK and Newark are substitutable for both TS and NTS passengers.[81]

104) Therefore, for the purpose of the assessment of the present transaction the Commission considers that JFK and  Newark  belong  to  the  same
    market.

5 Provision of access to flights of another carrier for connecting passengers in the context of interlining arrangements

1 Parties' views

105) The Parties consider that feed is not a relevant product market for the purposes of the application  of  the  Merger  Regulation;  and  that
    interlining and other feed traffic arrangements do not involve "supplies" made by an operator at a higher level of the supply  chain  to  an
    operator at a lower level of the supply chain.[82] In particular, the Parties submit[83] that (i) airlines are not engaged in the  provision
    of access to flights for connecting passengers. Rather, an airline designs its schedule, in part in conjunction with its  partner  airlines,
    to provide options for consumers to move from Point A to Point B. This resulting network may or may not provide connecting opportunities for
    third party carriers; and (ii) from the supply-side, an operator which operates a direct long-haul service  can  ensure  that  the  operated
    sector has sufficient load-factor to be in several other ways than by using feed at points  behind/beyond  the  relevant  long-haul  sector,
    including by attracting sufficient numbers of high margin point-to-point passengers from each end of the sector or by codesharing.

2 Commission's assessment

106) "Connecting" or "transfer passengers" are passengers who fly indirectly on a given city-pair  (e.g.  Dublin-Chicago  via  London  Heathrow).
    These passengers do not necessarily travel each "leg" or "sector" of their journey on the same carrier (e.g. the carrier who sold  them  the
    ticket). In particular for long-haul flights, traffic made up by passengers connecting at either or both  ends  of  the  route  is  commonly
    referred to as "feed traffic".

107) There are a variety of agreements whereby single tickets may be sold for indirect journeys including two legs operated respectively  by  the
    two carriers which concluded the agreement. In the framework of such agreements, the carrier granting access to its  flights  to  passengers
    connecting onto another carrier's flight and travelling with a single ticket issued by this second carrier provides an "input" to the latter
    and is remunerated for it. This "input" is used to supply the downstream service, i.e. a ticket for an indirect journey  on  a  given  city-
    pair. Two carriers that interline are thus engaged in a vertical relationship when one of them sells tickets for indirect journeys including
    one leg operated by the other carrier.[84]

108) The main different types of "feeder traffic" or "interlining arrangements" are the following:[85]

     a. IATA standard terms: IATA standards are effectively a default system for allowing passengers to travel from one place  to  another  using
        two or more airlines. Multilateral Interline Traffic Agreement (MITA), which is the basis for giving carriers the ability  to  sell  onto
        each other's service.[86] MITAs provide a standard traffic document (i.e. passenger ticket) for these tickets and provide procedures  for
        settlement of the revenue owed to the carrying airline (under the IATA Multilateral Prorate Agreement (MPA) and/or IATA  Revenue  Account
        Manual;[87]

     b. Special Prorate Agreements (SPA), which provide a specific financial settlement in terms of flown  tickets  which  can  depart  from  the
        "default" financial settlement rules provided for by the MITA system[88];

     c. Codeshare agreements allowing one carrier to sell tickets on another carrier's flight under its own name and  flight  code.  The  carrier
        operating the flight is referred to as the ‘operating carrier', while the carrier marketing the flight under its own code is referred  to
        as a ‘marketing carrier'. Although most airline alliance partners codeshare on flights (when permitted by regulators), not all  codeshare
        agreements are between alliance partners. Codeshare agreements also include a set of operational and commercial agreements concerning  at
        least access to, and prices for, seat inventory;

     d. alliance memberships typically entail codesharing (although the details tend to  be  left  to  bilateral  negotiations  between  the  two
        relevant alliance members). Alliance membership typically implies a number of mutual obligations which go beyond those required by simple
        codesharing (for example, mutual Frequent Flyer Programme participation).

109) These agreements are in principle mutually beneficial as they give each party the opportunity to increase its load  factors.  In  principle,
    they also benefit passengers as they increase connection opportunities, allow passengers to be compensated in case of missed connections and
    spare them from taking back luggage at the connection airport.

110) There are cases where both carriers can sell tickets for indirect journeys including one leg operated by the other party to  the  agreement.
    In such a situation, the vertical relationship is symmetrical: both carriers are active upstream and downstream in respect of  one  another.
    There are also cases where the ticket for the indirect journey is sold by a third party (e.g. a travel agent).  In  such  situations,  which
    also result from the existence of an agreement between the two carriers, these are active on closely  related  markets:  they  both  provide
    inputs corresponding to each leg of the indirect journey, which are used to offer the downstream service (the indirect journey).

111) Moreover, depending on which company sells a ticket for such indirect journeys (one of the two carriers or a third party such  as  a  travel
    agent), the two carriers may be regarded as engaged in a vertical relationship or active on neighbouring markets.

112) Overall, for the purposes of the present analysis, the exact nature of the relationship between the two carriers is of no relevance and  the
    competitive assessment is the same no matter whether the two carriers are engaged in a  vertical  relationship  or  are  active  in  closely
    related markets[89], providing the "inputs" necessary to a sale of tickets for indirect journeys by a third party.[90]

113) In any event, the carrier or distributor operating the downstream service sells a ticket for an indirect journey between  two  cities  to  a
    passenger. The downstream service is the market for the provision of air transport services between these two cities. As assessed above (see
    Section IV.2.1), this market has to be defined on an O&D basis, i.e. by reference to the two cities (or as the  case  may  be,  to  the  two
    airports) at both ends of the indirect itinerary. Depending on the specific O&D, such a downstream market may include  services  to  various
    airports serving the same city and / or transport services relying on another mode than air.

114) The carrier operating the upstream service provides to the downstream carrier or distributor access to its flights between one  end  of  the
    city pair on which the indirect journey is offered, and a connecting airport (e.g. for indirect journeys between Dublin  and  San  Francisco
    via London Heathrow, an upstream market for the provision of access to flights for connecting passengers corresponds  to  the  Dublin–London
    Heathrow leg). Such an upstream market has to be also defined on the basis of the city / airport pair between  which  the  flight  to  which
    access is provided is operated. Indeed, a carrier or distributor wanting to supply indirect journeys e.g. between Dublin and  San  Francisco
    via London Heathrow would need as an input access to flights between Dublin and London Heathrow. Flights between  other  cities  cannot,  in
    principle, constitute a valid substitute.

115) Moreover, for the purposes of defining such an upstream market, it appears that when London Heathrow or London  Gatwick  is  the  connecting
    airport, it cannot be considered substitutable by other airports of the London area.

116) Indeed, IAG underlines the possibility for connecting passengers to reach London Heathrow by  transferring  after  flying  to  other  London
    airports than Heathrow.

117)  However, respondents in the market investigation indicate that if certain cases of inter-airport connections may  exist  (mostly  for  very
    specific routings involving connections to/from Channel Islands at Gatwick), they  appear  to  be  marginal.  In  any  event,  inter-airport
    connections, while a growing trend, would hardly be regarded either by interlining carriers,  travel  agents  or  passengers  connecting  at
    Heathrow as an acceptable substitute for through-connections based on feed traffic to Heathrow.[91] This would seem to be notably due to the
    extra time compared to a through-connection at Heathrow, the absence of through-check-in and through-baggage services.

118) As a conclusion, it appears that the relevant markets for the provision of access to flights  from  a  number  of  airports  in  Europe  for
    connecting passengers in the context of interlining arrangements have to be defined on an O&D basis.  This  assessment  is  carried  out  in
    Section V.10. Furthermore, when Heathrow or Gatwick  are  the  connecting  hubs,  it  also  appears  that  other  London  airports  are  not
    substitutable to them due to the limited amount of inter-airport connections.

3 Maintenance, repair, overhaul ('MRO')

119) With regard to the product market definition, the Commission distinguished in earlier  decisions  four  separate  segments  within  the  MRO
    market, namely (i) line maintenance, (ii) heavy maintenance, (iii) engine maintenance, and (iv) components maintenance.[92]

120) The Parties agree with the Commission's previously established product market definition  and  a  majority  of  respondents  to  the  market
    investigation confirmed the Commission's view.[93] They have also confirmed the Commission's definition of a geographic market.[94]

121) With regard to the geographic scope of the market for MRO services, the Commission has found that heavy maintenance  services  might  be  at
    least EEA-wide, whereas line maintenance could be local in scope[95] and engine maintenance world-wide.[96] With regard to MRO services  for
    components, the Commission considered these services to be world-wide.[97] In other decisions,  the  Commission  left  open  the  geographic
    market definition with regard to MRO services.[98]

122) The Parties submit that the precise scope of the geographic market definition for MRO can be left open.

123) For the assessment of the Transaction, the precise scope of the product market definition and of the geographic market  definition  for  MRO
    can be left open as the outcome of the Commission's competitive assessment would not change under any alternative market definition.

4 Groundhandling

124) The Commission has previously concluded that ground handling services – consisting of ramp handling, passenger  handling,  baggage  handling
    and airside cargo handling – constitute a relevant product market.[99] The Parties agree with, and a majority of respondents to  the  market
    investigation in this case confirmed, the Commission's view. [100]

125) Therefore, for the assessment of the present Transaction, the relevant  product  market  definition  for  the  provision  of  groundhandling
    services encompasses ramp handling, passenger handling, baggage handling and airside cargo handling.

126) As regards geographic market definition, the Commission has considered ground handling either at a single airport  or  airports  within  the
    same catchment area as the appropriate geographic parameters for assessment of ground handling markets.[101]

127) For the purposes of analysing any impact the Transaction may have on the markets for the supply of ground  handling  services,  the  Parties
    consider the narrowest possible geographic market (individual airports) but the Parties note that the definition can also be  left  open  in
    the present case as no competition concerns arise under any plausible market definition.

128) In the present case, the market investigation was not entirely supportive of a single airport  market  definition.[102]  On  the  one  hand,
    several respondents declared that groundhandling services offered (in particular at the affected Spanish  airports)  vary  from  airport  to
    airport. On the other hand, other respondents indicated that from a demand side perspective, airlines sometimes bundle several airports in a
    common agreement with a supplier in a specific country, in order to achieve better conditions,  thus  contracting  with  one  groundhandling
    supplier for all or a number of airports from/to where they operate. From the supply side, some respondents also indicated that one  handler
    can serve several airports with the same staff and shift equipment dependent on summer and winter seasons operations.

129) Therefore, it cannot be excluded that the market for groundhandling services may have a wider  geographic  dimension  encompassing  in  some
    cases more than one airport. However, the precise definition can be left open as the Transaction does not raise serious doubts  irrespective
    of the precise geographic market definition adopted.

5 Landside cargo handling

130) Landside cargo handling may comprise many different services, including cargo terminal operations, warehousing and inventory control,  cargo
    security, handling of dangerous goods, documentation for import and export, customs clearance, global cargo tracking  or  even  live  animal
    management.[103]

131) The Commission has previously concluded that landside cargo handling is a  separate  relevant  market  from  ground  handling,[104]  but  in
    earlier cases had left the question open.[105]

132) As regards geographic market definition, the Commission has considered landside cargo handling  either  at  a  single  airport  or  airports
    within the same catchment area as the appropriate geographic parameters for assessment of landside  cargo  handling  markets.[106]  For  the
    purposes of analysing any impact the Transaction may have on the markets for the supply of landside cargo  handling  services,  the  Parties
    have considered the narrowest possible geographic market (individual airports).

133) For the purposes of this Decision, the precise scope of the product market definition and of the geographic market definition  for  landside
    cargo handling can be left open since the Transaction does not raise serious doubts under any plausible market definition

       COMPETITIVE ASSESSMENT Air Transport of Passengers

134) The Parties’ activities overlap in a number of O&D routes as previously defined. In order  to  assess  the  impact  of  the  Transaction  on
    competition, the Commission will first set out (i) the methodology for calculating market shares,  (ii)  the  conceptual  framework  of  its
    analysis (notably regarding the treatment of joint ventures and airline alliances as well as the competitive  situation  likely  to  prevail
    absent the Transaction), and (iii) certain filters applied to exclude unproblematic routes  from  the  competitive  analysis.  In  addition,
    closeness of competition and the relevance of airport congestion for the competitive assessment will be discussed. Finally,  the  Commission
    will analyse the competitive impact of the Transaction on each of the affected routes with a view to determine  whether  it  raises  serious
    doubts as to a significant impediment to effective competition in the internal market or a substantial part of it.

1 Methodology for calculating market shares

135) The Parties have submitted data on market size and market shares on the basis of IATA data for  each  relevant  O&D  route.  The  data  were
    primarily obtained from the Passenger Intelligence Services tool ("PaxIS") developed by IATA's Business Intelligence Service. Since it  does
    not cover all ticket sales (in particular, "LCCs") and most direct airline sales do  not  go  through  the  IATA's  Billing  and  Settlement
    Plan[107], IATA uses statistical modelling to estimate total passenger numbers for airlines operating on a route ("PaxIS PLUS").

136) The Commission has previously used Marketing Information Data Tapes ("MIDT") data[108] and PaxIS PLUS  data[109]  as  appropriate  proxy  to
    estimate market shares for air transport of passengers.

137) The Parties have also used data from survey evidence and actual flown data collected from the UK CAA, available across  carriers  on  direct
    routes to/from the UK in winter 2013/2014 and summer 2014 IATA seasons.[110]

138) The Commission has reviewed the data provided by the Parties, as well as data available from the Dublin Airport  Authority  ("DAA"),  across
    carriers on direct routes to/from Ireland in winter 2013/2014 and summer 2014 IATA seasons.

139) The Commission has also undertaken a market reconstruction for transatlantic routes, asking the Parties and  their  competitors  to  provide
    actual passenger numbers on two relevant O&D routes.[111] The overall market shares as calculated on the basis of the market  reconstruction
    confirmed the market shares calculated using PaxIS data.

140) The Parties have indicated that complete PaxIS data for winter 2014 will not be available until at  least  June  2015.[112]  Therefore,  the
    Parties have provided passenger data for winter 2013/2014 and summer 2014 IATA seasons only. However capacity data for winter 2014/2015  and
    summer 2015 IATA seasons were provided.

141) The Commission is of the view that the methodology used by the Parties in order to gather relevant data is appropriate  for  the  assessment
    of the Transaction.

2 Conceptual framework

142) Prior to analysing the competitive impact of the Transaction, the conceptual framework for  the  assessment  must  be  determined.  In  this
    respect, the Transaction raises the following conceptual issues:

    a) The treatment of the joint-ventures to which BA and Iberia belong for the purpose of both the determination of affected  markets  and  the
       competitive assessment.

    a) The competitive situation likely to prevail absent the Transaction.

143) The issues of slot availability and dominance of carriers at slot restricted airports are addressed  as  part  the  competitive  assessment,
    notably in the assessment of airport congestion, the analysis of potential entry  and  exits  in  the  route-by-route  assessment,  and  the
    assessment of IAG's position at London Heathrow post Transaction.

1 Treatment of joint ventures for the assessment of the Transaction

144) BA and IB are members of the global "oneworld alliance".[113] The members of the oneworld alliance  have  concluded  several  framework  and
    implementing agreements, such as the Brand Alliance Agreement, the Global Brand Delivery Requirements  and  the  non-Shareholder  Membership
    Agreements.

145) Consistent with the Commission's practice in previous cases,[114] IAG's oneworld alliance partners are not generally considered  as  forming
    a single economic entity with IAG for the determination of affected markets.

146) The exception is IAG's relationship with American Airlines (including US Airways following the AA/US merger)[115] and Finnair  as  a  result
    of the Transatlantic Joint Business Agreement entered into between BA, AA and IB on 14 August 2008 ("JBA") which was joined by Finnair on  1
    July 2013. The JBA is a metal neutral business agreement between BA, IB, AA and AY, involving extensive cooperation such as  revenue-sharing
    and joint management of schedules, pricing and capacity on all routes between North America and Europe.

147) Consistent with the Commission's approach,[116] each of the other metal neutral joint ventures are  treated  as  a  single  entity  for  the
    purposes of assessing market shares.

2 Competitive situation likely to prevail absent the Transaction

148) The Parties consider that, absent the Transaction, the most likely outcome will be that Ryanair's stake in Aer Lingus will  be  returned  to
    wide public ownership and that Aer Lingus will continue as an independent operator but will in the medium- to long-term need  to  engage  in
    the pattern of consolidation that has begun in Europe's fragmented aviation sector.[117] The Parties also highlight that Aer Lingus – one of
    the few remaining independent former flag-carriers – is limited in its ability to grow organically due  to  the  constraints  of  the  Irish
    market. While the short to medium-term scenario absent the Transaction is Aer Lingus' continuation as an  independent  carrier,  a  possible
    medium- to long-term perspective is that Aer Lingus would join the pattern of industry consolidation.[118]

149) In assessing the competitive effects of a concentration, the Commission compares the competitive  conditions  that  would  result  from  the
    Transaction with the conditions that would have prevailed absent the Transaction. In most cases the competitive conditions existing  at  the
    time of the Transaction constitute the relevant comparison for evaluating its effects. However, in some circumstances,  the  Commission  may
    take into account future changes to the market to the extent that they can be reasonably predicted. It may, in particular, take  account  of
    the likely entry or exit of firms if the merger did not take place when considering what constitutes the relevant comparison.[119]

150) In the case at hand, looking e.g. at the financial situation of Aer Lingus, the Commission is of the view that it is likely that Aer  Lingus
    would continue to operate in the medium term in a way similar to that in which it has operated  until  now.  In  light  of  the  above,  the
    Commission considers that the competitive conditions existing at the  time  of  the  Transaction  constitute  the  relevant  comparison  for
    evaluating its effects.

3 Filters

151) Consistent with its previous practice,[120] the Commission has applied the following filters to exclude  likely  unproblematic  routes  from
    the scope of its investigation (all criteria must have been met in the 4 last completed IATA seasons[121] and for all passenger segments for
    a route to be excluded under the filters):

      a) For direct/indirect overlaps:[122]

            i) the Parties' combined market share was below 25%; or

           ii) one of the Parties had a market share below 2%; or

          iii)  short-haul routes where the total share of indirect operations in the relevant market was below 10%; or

           iv)  at least one end of the city pair is outside the EU and the total annual traffic was below 30 000 passengers;[123] or

            v) the route was below the HHI thresholds of paragraph 20 of the Horizontal Merger Guidelines.[124]

      b) For indirect/indirect overlaps:[125]

            i) the Parties' combined market share was below 25%; or

           ii) one of the Parties had a market share below 2%; or

          iii)  as regards short-haul routes where the total annual traffic was below 15 000 passengers or as regards long-haul routes where the
               total annual traffic was below 30 000 passengers; or

           iv)  the route was below the HHI thresholds of paragraph 20 of the Horizontal Merger Guidelines.[126]

152) There have been no filters for direct/direct overlaps, therefore the general rules apply  (there  is  no  affected  market  if  the  Parties
    combined market share is below 20%). For these overlaps, the Parties have provided a competitive assessment based on  direct  services  only
    (with the exception of Dublin–New  York  and  Dublin–Chicago  where  the  Parties  have  also  provided  an  assessment  including  indirect
    services).[127]

153) As a result of the above criteria  the  Parties  submitted  the  routes,  including  direct/direct,  direct/indirect  and  indirect/indirect
    overlaps, which would be affected by the Transaction.[128]

154) The filters were applied consistently.

4 Closeness of competition

1 General approach to closeness of competition issues

155) The concept of "closeness of competition" may play an  important  role  in  better  understanding  the  competitive  constraint  exerted  by
    different competitors on each other in differentiated markets such as airline markets. [129]

156) For two airlines to be considered as offering services which are close substitutes to each other it is not necessary that the  two  services
    are identical. Some services may be closer substitutes than others. What matters from a substantive  competition  perspective  is  the  high
    degree of substitutability between the services of the various carriers on the overlap city and airport pairs.

157) Therefore, route-specific assessment of the closeness of competition between the Parties, and with the competitors on the  relevant  routes,
    will be conducted in Section V.6.

158) However, some aspects of the analysis of the closeness of competition between the Parties, and with  competitors,  apply  generally  on  the
    affected markets, and are therefore already presented here.

159) The following sections will address general arguments in relation to closeness of competition,  concerning  the  Parties'  and  competitors'
    market positions, their business models, their brands, and the existence of significant bases at route ends.

2 Parties' and competitors' market positions

160) In its assessment of closeness of competition, the Commission will take into account the market shares of the  competitors  on  an  affected
    market, as there is a strong presumption that two carriers are each other's closest competitors in those markets where each of the  carriers
    are by far the largest competitors in terms of market shares.

161) The Commission will also consider whether the Parties and their competitors operate from the same or  from  different  airports.  Even  when
    different airports serving the same catchment area belong to same relevant market, the competitive constraint exercised on  one  another  by
    carriers operating from the same airport pair may be higher than that exercised by  carriers  serving  different  airports.[130]  Therefore,
    carriers operating from the same airport are likelier to be each other's closest, or  close,  competitor  than  carriers  serving  different
    airports.

3 Business models and brands

162) Carriers offering scheduled air  transport  services  form  a  heterogeneous  group,  with  significant  differences  among  carriers.  Such
    differences among carriers relate mainly to the operating model followed by each company ("network" as opposed to "point-to-point" carriers)
    and to the level of service that is offered to passengers ("full service" as opposed to "low-frills" or "no-frills" carriers).  Intermediate
    levels of services can also be provided by some carriers.[131]

163) In this context, the services offered by different airlines will be considered to be close substitutes  for  one  another  it  they  reflect
    close business models and have a similar level of service.[132]

164) Aer Lingus positions itself as a "value carrier" and has a level of services that is between that of low-frills/no-frills carriers and full-
    service carriers.[133] BA and Iberia mainly follow a full-service business model, although on certain routes have adopted a model  close  to
    the low-frills/no-frills one. In particular, Iberia Express has been created as a low cost subsidiary of  Iberia  and  operates  up  to  two
    seasonal daily frequencies on the Dublin–Madrid route.[134] Vueling operates a low cost model.[135]

165) Both IAG and Aer Lingus offer similar products to  their  passengers,  including  different  travel  classes  (Aer  Lingus  offers  a  split
    economy/business (Premier) cabin on long-haul routes), different fare classes (with some of them including refundability, both for long-haul
    and short-haul routes), loyalty programmes, access to airport lounges and support for connecting passengers.[136]  The  two  airlines  carry
    significant numbers of business passengers,[137] passengers on holiday and passengers visiting friends and relatives.

166) Moreover, both IAG and Aer Lingus fly to main airports, while LCCs would fly more frequently  to  secondary  airport  bases.  [IAG  business
    strategy].[138] However, several LCCs, including Ryanair recently, have offered more flights to main airports.

167) In addition, promotional and marketing campaigns of both IAG and Aer Lingus target business and leisure customers in Ireland and the UK.  In
    particular, the Parties acknowledge that "as a result of relentless [low-cost carriers] competition, British Airways'  short-haul  marketing
    campaigns are currently focused on reversing the customer perception, resulting from BA's traditional use  of  all-in  fares  which  display
    poorly on price comparison websites, of BA being pricey and not relevant to their travel needs. In 2014 (and in plan for 2015) BA's LCY  and
    LHR marketing teams worked together to deliver an advertising campaign designed to promote the Dublin–London and  Belfast–London  routes  to
    business and leisure customers, and raise awareness of the move of these services to T5." [139] Conversely, Aer Lingus' marketing  campaigns
    aim to "emphasise the quality of its services"[140] which "suit [a] business budget".[141]

168) The Parties' business models also coincide to some extent regarding network  aspects.  In  particular,  while  the  Aer  Lingus'  short-haul
    network is still primarily point-to-point, the airline has in recent years, similarly to a full-service carrier, further developed Dublin as
    a hub to connect its European routes with its growing transatlantic network.

169) As indicated in the route-by-route analysis, both IAG and Aer Lingus take the behaviour of each other, and of other competing carriers  into
    account in determining their prices. The Commission will consider the monitoring patterns in the route  by  route  assessment  conducted  in
    Section V.6, as relevant.

170) Ryanair is a major competitor to the Parties, and is present on three of the direct/direct  overlap  routes  (London–Dublin,  Dublin–Madrid,
    and Dublin–Barcelona). Ryanair has recently implemented a series of initiatives designed to improve customer experience, and has also  begun
    to "aggressively" target business customers.[142] Ryanair has indeed launched services such as  "Business  Plus",  which  includes  priority
    boarding, premium seats, free airport check-in, and flexibility on ticket changes. [143]

171) The Commission considers that Ryanair's business model has thus evolved since the decision in M.6663 – Ryanair/Aer Lingus in February  2013.
    Ryanair's business model now includes certain services aimed at time-sensitive passengers, thus making it closer to Aer Lingus. [EI business
    strategy].[144]

172) Overall, the Commission considers that both BA and Ryanair have become closer to Aer Lingus in terms  of  service  (e.g.  type  of  service,
    quality of services, pricing, level of frequencies, service on board and at the airport, etc.) on London–Dublin since February 2013.

173) easyJet, which is a competitor of the Parties on the Belfast–London route, is the UK's largest airline  by  passengers  flown  and  Europe's
    fifth largest airline by the same metric. The airline has also targeted the business travel segment expanded  its  distribution  methods  to
    include business travel agents and GDSs (Galileo, Amadeus and Sabre), in addition to its traditional self-booking tools.[145]

174) Internal strategic documents of the Parties also exemplify the transition of these various competitors in the past years, such as in  Figure
    1 below.

                                                        Figure 1: [IAG business strategy]

                                             Source: Form CO, annex 18.1, Exhibit 6 Part IV, page 17.

175) Flybe is a regional carrier which has recently undergone a period of a brand re-launch, a redesigned website, a  new  advertising  campaign,
    and improvements to the on-board experience. The Parties argue that Flybe is  focused  on  business  passengers  with  nearly  half  of  its
    passengers falling into this category in 2013.[146]

176) Another competitor of the Parties on the London–Dublin route is Cityjet. The Parties submitted that City Jet also offers comparable  service
    propositions and is attractive for business travellers.[147]

177) Overall, in light of the preceding, the Commission therefore considers that in recent years there has been a  convergence  of  the  business
    models of full-service and low-cost carriers.

178) [BA business and marketing information].

                                              Figure 2: [BA business and marketing information][148]

                                                Figure 3: [BA business and marketing information]

    Source: Form CO, annex 18.1, Exhibit 22

179) [BA business and marketing information][149].

4 Existence of significant bases at route ends

180) Aer Lingus' main base is located at Dublin airport. Ryanair has a significant base at this airport, with 21 aircraft. [150]

181) Aer Lingus has an operational base at Belfast City (BHD) airport. easyJet has a base at Belfast International (BFS).

182) BA has its main hub at London Heathrow and also operates bases at London Gatwick and London City. Ryanair has its  biggest  base  at  London
    Stansted (34 based aircraft) and another base at London Luton (4 aircraft). easyJet has bases at London  Gatwick,  London  Stansted,  London
    Luton, and London Southend.

183) Iberia's main hub is at Madrid Barajas. Ryanair has 11 aircraft based at the same airport.

184) Vueling's main base is at Barcelona El Prat. Ryanair has bases at Barcelona El Prat (10 aircraft), and Girona-Costa Brava (five aircraft).

185) Furthermore, American Airlines – the JBA's USA partner – has hubs in several locations in the USA, including in New  York  at  the  John  F.
    Kennedy International Airport (JFK) and in Chicago at the O'Hare International Airport (ORD). Delta also  has  a  hub  at  JFK  as  well  as
    significant operations at ORD. United has hubs in New York (Newark) and at ORD.

5 Airport congestion

186) Capacity constraints exist to different degrees at airports relevant to the Commission's assessment. These constraints could make  entry  or
    expansion by airlines on routes to/from these airports more difficult. This is because in order to operate a flight to/ from a given airport
    an airline needs access to airport facilities, such as a runway, stands, and terminals.

187) This Transaction mainly has an impact on flights to and from the six London airports: Heathrow, Gatwick, City,  Luton,  Stansted,  Southend,
    and at Dublin airport. This Section will describe the airport congestion issue at  these  London  airports  and  at  Dublin  airport,  while
    constraints at the other end of the routes will be assessed where relevant in the respective route by  route  analysis  (see  below  Section
    V.6).

1 London Heathrow

1 Slots at Heathrow

188) Heathrow is a fully coordinated airport under the EU Slot Regulation (Level  3)[151],  meaning  that  each  business  and  general  aviation
    movement requires the prior allocation of a slot.

189) Regarding allocated slots for summer 2015, IAG (BA and Iberia) – with 365 slot pairs per day (52.6% of all slots) –  has  the  largest  slot
    portfolio at Heathrow. The Lufthansa group's (including all wholly and  partially  owned  subsidiaries:  Germanwings,  Swiss,  Austrian  and
    Brussels) percentage slot holding at Heathrow is 7.8%.[152] Virgin has 35 slot pairs per day (5.1% of all slots) and Aer Lingus has 23  slot
    pairs per day (3.3% of all slots). Little Red (Virgin) currently uses 12 slots to operate short-haul operations from Heathrow. Nine of these
    slots were released by IAG to Little Red as part of the commitments in IAG/bmi. Little Red will cease all  operations  by  the  end  of  the
    summer 2015 season and the slots will revert to IAG, at least for the summer 2015 season.[153] The Parties note that slots at  Heathrow  can
    be acquired through secondary slot trading or by leasing slots from other airlines.

190) ACL, the slot coordinator at this airport, confirmed during the market investigation the known congestion situation  of  Heathrow  regarding
    lack of slots and runway, terminal and stand constraints. ACL indicated that capacity is constrained by the air transport movement  cap  and
    the night noise limit where all night slots are historically allocated. There are a limited number of runway slots  available  on  different
    days with no daily lined up slots available. Terminals are full to capacity at different times of the  day  with  limited  availability  for
    growth and new entrants and it is expected that within the next 3 to 5 years, the continuation of the cap will  restrict  growth  as  demand
    outweighs runway/terminal capacity.[154] HAL also indicated that slot shortages  are  expected  to  continue  for  the  foreseeable  future.
    Heathrow is currently seeking to increase capacity but even if permission to increase capacity is granted, it is not expected to materialize
    in the next 3 to 5 years.[155]

2 Access to infrastructure at Heathrow

191) Currently, Heathrow airport has five terminals. IAG operates services from Terminals 1, 3 and 5. [156] [IAG business strategy].[157]

192) In summer 2014, Aer Lingus moved its operations from Terminal 1 to Terminal 2, where it is now co-located with the Star  Alliance  carriers.
    [158]

193) [The parties' business strategy regarding LHR].[159]

194) Some competitors argued that due to the Transaction, IAG would reinforce its presence at Heathrow and gain  additional  market  power  which
    would lead to various anti-competitive non-route specific effects. In addition to slot-related issues, these  effects  would  in  particular
    cover limited access to competitive ground facilities at Heathrow, and IAG's footprint at various terminals.[160]

195) During market investigation, ACL confirmed that the air transport movement cap and the night noise limit have been reached  and  that  there
    is limited runway/terminal availability, throughout all hours of the day between 05:00 and 21:55. Heathrow terminals are full to capacity at
    different times of the day with limited availability for growth and new entrants. [161] HAL also indicated that the runway is fully utilized
    throughout the period of operation and Heathrow has a legal planning limitation of 480 000 aircraft  movements  per  year  which  is  almost
    completely utilized, while other than improving operational efficiency and aircraft flows there are no measures expected in the next 3 years
    that will alleviate existing limitations.[162] Overall, HAL stated that it expects "this transaction to have a neutral impact on slot access
    and it may have a positive impact on airport infrastructure services where airlines choose to consolidate support services  such  as  ground
    handling and aircraft maintenance."[163]

196) Therefore, there are constraints at Heathrow on airline access to slots during the entire operating day. It is not  currently  possible  for
    an airline to rely on the slot pool at Heathrow to launch or extend services and each season there is either very limited availability or no
    availability at all. In addition, increased traffic growth also creates additional constraints on the existing infrastructure.[164]

2 London Gatwick

197) Gatwick is designated as a fully coordinated airport under the EU Slot  Regulation  (Level  3).  The  Parties  note  that  Gatwick  is  slot
    constrained (i.e. there is limited slot availability) for most of the day and particularly in peak hours from June to September.[165]

198) Regarding allocated slots for summer 2015, easyJet currently has the largest number of slot pairs at  LGW,  with  191  slot  pairs  per  day
    (42.8% of all allocated slots). IAG has the second largest number with 81 slot pairs per day (17.9%), Norwegian Airlines has 34  slot  pairs
    per day (7.5%) and Thompson has 30 slot pairs per day (6.65%). Aer Lingus has 10 slot pairs per day (2.1%). [166]

199) During market investigation, ACL, the slot coordinator at Gatwick confirmed that at this  airport,  in  the  summer  2014  and  winter  2015
    seasons, some of the early morning (07:00-08:55) and evening hours (18:00-18:55) are fully allocated to their capacity (both for arrival and
    departure) on all days of the week except for maybe Saturday, and that in addition there are also  some  hours  where  either  departure  or
    arrival capacity are restricted. Overall, ACL described a fragmented schedule, with allocation of slots possible  with  varying  degrees  of
    success on different days. ACL also indicated that the Night noise limit has been reached and that runway capacity is increasingly saturated
    due to traffic growth, also leading to reaching terminal capacity limits in summer 15 IATA season.[167]  Overall,  Gatwick  Airport  Limited
    stated that it "do[es] not believe the transaction will affect the ability to access slots at Gatwick."[168] A majority  of  respondents  to
    the market investigation share this view.

3 London City

200) London City is designated as a fully coordinated airport under the EU Slot Regulation (Level 3). The Parties note that City is  partly  slot
    constrained in peak hours, but slots are readily available throughout most of the day.[169]

201) According to ACL statistics, an airline can rely on the pool to launch or extend services at London City  in  both  the  summer  and  winter
    seasons. For example in the winter 2014 and summer 2015 IATA seasons ACL were able to accommodate all slot requests, with  92%  of  them  as
    requested.[170] There are however, besides the availability of slots,  some  other  limitations  at  London  City.  Due  to  steep  approach
    conditions, only short haul aircrafts certified to operate at London City are admitted so not all airlines will be able to operate into  the
    airport as they may not have the appropriate aircraft. There is also a very limited capacity constraint for early morning  runway  movements
    during peak week.

202) Regarding allocated slots for summer 2015, IAG currently has the largest number of slot pairs at London City, with 66  slot  pairs  per  day
    (43.1% of all allocated slots). CityJet has the second largest number with 32 slot pairs per day (21.2%) and Flybe has 22 slot pairs per day
    (15.5%). Aer Lingus does not operate at London City.[171]

4 London Luton

203) Prior to the summer 2013 season, Luton was designated as a schedules facilitated (Level 2) airport in accordance  with  the  IATA  Worldwide
    Scheduling Guidelines, meaning there was potential for congestion during some periods of the day or week. Luton is now designated as a fully
    coordinated (Level 3) airport under the EU Slot Regulation.

204) The Parties argue that barriers to entry at Luton are low as slots are available throughout the day, but acknowledge  that  there  are  some
    constraints on terminal capacity at peak departure times between 07:00-10:00 and 14:00-16:00. [172]

205) ACL were able to accommodate all requests to operate services at Luton in  the  summer  2015  IATA  season,  with  99%  of  movements  being
    accommodated at the requested time.[173] In the market investigation, the airport manager of Luton airport  reported  that  the  airport  is
    constrained from 6:00 to 8:00 in the morning all the week long.[174]

206) Regarding slots allocated for summer 2015, easyJet currently has the largest number of slot pairs at LTN, with 57 slot pairs per day  (40.7%
    of all allocated slots). Wizz Air has the second largest number with 39 slot pairs per day (27.5%) and Ryanair has 19  slot  pairs  per  day
    (13.5%). Air Nostrum, an Iberia franchise, has one slot pair per day (0.7%). Aer Lingus does not operate from Luton. [175]

5 London Stansted

207) Stansted is designated as a fully coordinated airport under the EU Slot Regulation (Level 3). According to ACL statistics,  an  airline  can
    rely on the pool to launch or extend services at Stansted in both the summer and winter seasons. For example in winter 2014 and summer  2015
    ACL were able to accommodate all slot requests, with 96% of them at the requested time.[176]

208) Regarding slots allocated for summer 2015, Ryanair currently has the largest number of slots at STN, with 172 slot pairs per day  (68.6%  of
    all allocated slots). easyJet has the second largest number with 33 slot pairs per day (12.8%), and Germanwings has 8  slot  pairs  per  day
    (2.6%). Neither IAG nor Aer Lingus operate at Stansted.[177]

6 London Southend

209) Southend has one terminal which provides the airport with capacity for five million  passengers  a  year.  In  2013,  Southend  accommodated
    around one million passengers. The airport has one runway which can handle aircraft up to the size of a Boeing 757. The Parties indicate the
    airport is not slot restricted or congested and there is good capacity to start new flights at any time of the day.[178]

210) London Southend Airport is indeed only designated as a Data Collection (Level 1) airport in accordance with the  IATA  Worldwide  Scheduling
    Guidelines.

7 Dublin

211) Dublin airport is the only airport serving Dublin and is managed by the DAA, an Irish state-owned company which also  manages  Cork  airport
    in Ireland. The airport currently has two terminals (T1 and T2) which together provide the  airport  with  annual  capacity  of  35  million
    passengers. In 2013, Dublin accommodated 21 million passengers. The airport has two runways which have a maximum capacity  of  48  movements
    per hour. The two runways at Dublin cannot be operated independently of each other and the use of the second runway was only possible  62.7%
    of the days in summer 2012. [179]

212) Dublin is designated as a fully coordinated (Level 3) airport under the EU Slot Regulation, meaning that each business and general  aviation
    movement requires the prior allocation of a slot. The allocation of slots at Dublin is undertaken by  Airport  Coordination  Limited  (ACL).
    Based on the peak week in summer 2014, Aer Lingus had the largest number of slots at Dublin, with 115 slot pairs per day (43% of  all  slots
    used). Ryanair has the second largest number with 82 slot pairs per day (31%) and IAG (BA and IB) has 8 slot pairs per day (3%).[180]

213) In Ryanair/Aer Lingus III,[181] the Commission assessed in detail the congestion situation at Dublin airport. The Commission concluded  that
    there was runway congestion at Dublin airport during morning peak hours and carriers may face some difficulties in having access to  contact
    stands for early morning peak hour flights. This would contribute somewhat to the already high barriers to entry. The  Commission  concluded
    on the other hand that terminal capacity constraints did not appear to be a barrier to entry relevant for that concentration.

214) The Parties claim that the assessment in Ryanair/Aer Lingus III looked at whether a new  entrant  could  establish  a  significant  base  at
    Dublin which would replicate the competitive constraint that Aer Lingus and Ryanair placed on each other, which would not be a factor to the
    assessment of the current case, as the Transaction only involves an increment of two peak morning departure on the London–Dublin route.  The
    Parties also indicate that IAG currently only operates two routes to Dublin: Dublin–Madrid and London–Dublin. It is scheduled to add a third
    route – a summer seasonal service to Barcelona – this summer. IAG accounted for approximately 3% of short-haul capacity at Dublin  in  2014.
    The JBA only operates four routes (year round: Dublin–New  York  City  and  Dublin-Philadelphia;  seasonally: Dublin-Charlotte  and  Dublin-
    Chicago).[182]

215) The Parties consider that generally Dublin airport is not congested. The Parties acknowledge that there are some limitations  on  access  to
    departure slots for peak morning periods which could present a barrier to entry to an airline looking to establish a sizeable base at Dublin
    offering peak morning services to a number of different destinations; however, according to the Parties these limitations should not present
    a barrier to carriers based at other airports looking to add a service to Dublin.[183]

216) During the market investigation, DAA confirmed that Dublin Airport is runway capacity constrained during  the  peak  morning  hours  between
    06:00 and 07:55, with the most critical period between 06:00 and 07:30. In summer 2015, in cases where  slots  were  not  available  at  the
    initially requested times, demand was however accommodated as airlines choose to operate at surrounding hours. Finally, DAA  indicated  that
    there also are some operational limits of facilities at Dublin airport: certain check-in  desks  are  constrained  at  certain  peak  hours,
    aircraft parking stands also, and notably due to the US Preclearance facility in Pier 4, this pier is constrained between  05:00  and  13:00
    for key growth in transatlantic and Aer Lingus activity. The preclearance facility itself is constrained between 08:00 and  17:00.  Finally,
    there are currently runway limitations for certain aircraft used for the ultra-long haul market.[184]

217) DAA also expects demand and slot shortages to increase over the next 3  to  5  years,  particularly  for  peak  hours.  To  alleviate  these
    shortages, a programme is ongoing to maximise the declared capacity of the existing runway, to update Air  Traffic  Control  procedures,  to
    introduce additional ground infrastructure, airspace capacity and monitoring and improving performance and efficiency. This  programme  will
    continue over the next two to three years. To alleviate constraints on air parking stands, it is planned to increase utilisation  of  remote
    stands in the airport and several process, productivity, technology and scheduling improvements are planned to  alleviate  constraints  with
    regards to check-in desk and US preclearance facility operations.[185]

218) Overall, DAA considers that the Transaction will not affect the situation  at  Dublin  airport  in  terms  of  access  to  slots  /  airport
    infrastructure services for competitors of the Parties. A majority of respondents to the market investigation share this view.

6 Direct/direct overlap routes

1 London–Dublin

1 Route characteristics

219) Approximately [4 000 000–4 100 000] passengers travel by air between Dublin and London each year, of  which  [3.500 000–3 600 000]  are  O&D
    passengers. The remaining passengers use the services to transfer (at either Dublin and/or London) onto other services.

220) Around [1 500 000–1 600 000] and [2 500 000–2 600 000] passengers travelled between Dublin and London in the  winter  2013/2014  and  summer
    2014 IATA seasons respectively, of which around [80-90]% and [80-90]% respectively travelled in the O&D route.[186] In the winter  2013/2014
    IATA season, [1 300 000–1 400 000] passengers, including [10 000–20 000] TS passengers, travelled on the O&D route. In the summer 2014  IATA
    season, a total of [2 200 000–2 300 000] passengers, including [200 000–300 000] TS passengers, travelled on the O&D route.[187]

221) The nature of the route is a mix of business and leisure. The CAA survey shows that a relatively high proportion [20–30%] of O&D traffic  on
    London–Dublin is travelling for business purposes.[188]

222) In the winter 2013/2014 and summer 2014 IATA seasons, a majority of IAG's passengers on this route originated in the  UK,  [10-20]%–[20-30]%
    originated in Ireland, [5-10]%–[10-20]% in the US and the rest in other parts of the world. In the winter 2013 IATA season,  a  majority  of
    Aer Lingus' passengers on this route originated in Ireland,[189] while in the summer 2014 IATA season a majority of Aer  Lingus'  passengers
    originated in other parts of the world. [190]

2 Parties' and competitors' operations

223) IAG and Aer Lingus overlap on a city-by-city basis and on one airport pair, as they both offer direct services ex Heathrow to Dublin.

224) IAG (British Airways) operates from Dublin to Heathrow and since the winter 2014/2015  IATA  season  has  been  offering  services  also  to
    City.[191]

225) Aer Lingus operates from Dublin to Heathrow and Gatwick. Aer Lingus has stopped to operate from Dublin to Southend  since  the  summer  2014
    IATA season.

226) British Airways currently has a one-way, free flow codeshare with Aer Lingus, which allows British Airways to place its code on  Aer  Lingus
    flights for connecting passengers flying between Dublin and Heathrow and between Dublin and Gatwick. In addition,  a  codeshare  on  flights
    between Dublin and City which allows Aer Lingus to place its code on British Airways  operated  services  became  operational  on  30  April
    2015.[192]

227) Ryanair operates from Dublin to Gatwick, Luton and Stansted.

228) Air France/KLM offered services from Dublin to City in the winter 2013/2014 and summer 2014 IATA seasons and then exited the route.

229) CityJet has been operating from Dublin to City since the summer 2014 IATA season. Since May 2014, CityJet does not  belong  anymore  to  the
    Air France/KLM group. [193]

230) Flybe operated from Dublin to Southend in the summer 2014 and winter 2014/2015 seasons. Flybe stopped its London–Dublin  services  from  end
    of May 2015.

       Frequencies

231) Table 6 below illustrates the weekly flights operated by the Parties and the other carriers on this route in the  winter  2013/2014,  summer
    2014, winter 2014/2015 and summer 2015 IATA seasons:

    Table 6: Overview of weekly frequencies on London–Dublin

|                      |Airport Pair           |winter       |summer 2014    |winter 2014/2015 |summer 2015    |
|                      |                       |2013/2014    |               |                 |               |
|                      |                       |             |               |                 |               |
|IAG                   |DUB-LHR                |82           |94             |79               |110            |
|IAG                   |DUB-LCY                |-            |-              |52               |48             |
|Aer Lingus            |DUB-LGW                |88           |74             |74               |76             |
|Aer Lingus            |DUB-LHR                |164          |178            |146              |177            |
|Aer Lingus            |DUB-SEN                |32           |30             |-                |-              |
|Combined              |                       |366          |376            |351              |411            |
|AF-KLM                |DUB-LCY                |58           |-              |-                | -             |
|Ryanair               |DUB-LGW                |62           |56             |70               |70             |
|Ryanair               |DUB-LTN                |42           |42             |40               |42             |
|Ryanair               |DUB-STN                |112          |88             |108              |112            |
|Flybe                 |DUB-SEN                |-            |-              |14               | -             |
|Flybe                 |DUB-LCY                |-            |-              |42               | -             |
|Cityjet               |DUB-LCY                |-            |50             |60               |57             |
|TOTAL                 |                       |640          |612            |685              |692            |

    Source: Annex 7.1 to the Form CO

       Market shares – capacity

232) Table 7 below illustrates the total seat capacity offered by the Parties and the other carriers on  this  route  in  the  winter  2013/2014,
    summer 2014, winter 2014/2015 and summer 2015 IATA seasons:

    Table 7: London–Dublin – seat capacity per IATA season

|                  |Airport Pair      |winter 2013/2014      |summer 2014           |winter 2014/2015      |summer 2015           |
|                  |                  |                      |                      |                      |                      |
|IAG               |DUB-LHR           |[10-20]%              |[10-20]%              |[10-20]%              |[10-20]%              |
|                  |                  |                      |                      |                      |                      |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |
|IAG               |DUB-LCY           |-                     |-                     |[0-5]%                |[[0-5]%               |
|                  |                  |                      |                      |                      |                      |
|                  |                  |                      |                      |[confidential]        |[confidential]        |
|Aer Lingus        |DUB-LGW           |[10-20]%              |[10-20]%              |[10-20]%              |[10-20]%              |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |
|Aer Lingus        |DUB-LHR           |[20-30]%              |[30-40]%              |[20-30]%              |[20-30]%              |
|                  |                  |                      |                      |                      |                      |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |
|Aer Lingus        |DUB-SEN           |[0-5]%                |[0-5]%                |-                     |-                     |
|                  |                  |[confidential]        |[confidential]        |                      |                      |
|Combined          |                  |[50-60]%              |[50-60]%              |[50-60]%              |[50-60]%              |
|                  |                  |                      |[confidential]        |[confidential]        |[confidential]        |
|                  |                  |[confidential]        |                      |                      |                      |
|AF-KLM            |DUB-LCY           |[10-20]%              |[˂0-5]%               |-                     |-                     |
|                  |                  |[confidential]        |                      |                      |                      |
|                  |                  |                      |[confidential]        |                      |                      |
|Ryanair           |DUB-LGW           |[10-20]%              |[10-20]%              |[10-20]%              |[10-20]%              |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |
|Ryanair           |DUB-LTN           |(%)                   |[5-10]%               |[5-10]%               |[5-10]%               |
|                  |                  |                      |                      |                      |                      |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |
|Ryanair           |DUB-STN           |(%)                   |[10-20]%              |[10-20]%              |[10-20]%              |
|                  |                  |                      |[confidential]        |[confidential]        |[confidential]        |
|                  |                  |[confidential]        |                      |                      |                      |
|CityJet           |DUB-LCY           |-                     |[5-10]%               |[5-10]%               |[5-10]%               |
|                  |                  |                      |                      |                      |[confidential]        |
|                  |                  |                      |[confidential]        |[confidential]        |                      |
|Flybe             |DUB-LCY           |-                     |-                     |[0-5]%                |-                     |
|                  |                  |                      |                      |[confidential]        |                      |
|Flybe             |DUB-SEN           |-                     |-                     |[˂0-5]%               |-                     |
|                  |                  |                      |                      |[confidential]        |                      |
|TOTAL             |                  |[90-100]%             |[90-100]%             |[90-100]%             |[90-100]%             |
|                  |                  |                      |                      |                      |                      |
|                  |                  |[confidential]        |[confidential]        |[confidential]        |[confidential]        |

          Source: Annex 7.1 to the Form CO

233) Looking at operations at Heathrow, Gatwick and City ("London 3"),  the  Parties'  combined  capacity  shares  would  be  [60-70]%  (with  an
    increment of [20-30]%) and [70-80]% (with an increment of [20-30]%) in the winter 2014/2015 and in the summer 2015 IATA season respectively.

       Market shares – passengers

234) Table 8 below displays the market shares of the Parties and their competitors on the London–Dublin  route,  looking  at  operations  at  all
    London airports:

Table 8: Market shares on the London–Dublin route

|Carrier              |Airport-pair          |winter 2013/2014   |summer 2014       |
|IAG                  |DUB-LHR               |[5-10]%            |[5-10]%           |
|Aer Lingus           |DUB-LGW               |[10-20]%           |[10-20]%          |
|Aer Lingus           |DUB-LHR               |[20-30]%           |[20-30]%          |
|Aer Lingus           |DUB-SEN               |[5-10]%            |[5-10]%           |
|Combined             |                      |[50-60]%           |[40-50]%          |
|AF-KLM               |DUB-LCY               |[5-10]%            |[5-10]%           |
|Ryanair              |DUB-LGW               |[10-20]%           |[10-20]%          |
|Ryanair              |DUB-LTN               |[5-10]%            |[5-10]%           |
|Ryanair              |DUB-STN               |[20-30]%           |[20-30]%          |
|CityJet              |DUB-LCY               |-                  |[0-5]%            |
|Others               |DUB-LHR               |[0-5]%             |[0-5]%            |
|Others               |DUB-LCY               |[0-5]%             |[0-5]%            |
|TOTAL                |                      |[90-100]%          |[90-100]%         |

          Source: Annex 7.1 to the Form CO

235) Considering operations at London 3, the Parties' combined shares would be [70-80] % (with an increment of [10-20]%) and  [70-80]%  (with  an
    increment of [10-20]%) in the winter 2013/2014 and in the summer 2014 IATA seasons respectively.

236) Looking at operations at Heathrow only, the Parties would have a monopoly in both seasons, with an increment of [20-30]% and of [20-30]%  in
    the winter 2013/2014 and in the summer 2014 respectively.

6 Constraint exercised by competitors

       Parties' views

237) The Parties claim that IAG is not Aer Lingus' closest competitor on the London–Dublin route. To support this  argument,  they  rely  on  the
    Commission's assessment of closeness of competition in case M. 6663 – Ryanair/Aer Lingus III, where it was stated  that  "[i]t  is  apparent
    that Aer Lingus is a closer competitor to Ryanair in comparison to IAG (British Airways) and CityJet […]" in  terms  of  product  offerings,
    business models on this route and strong brand presence in Ireland. [Parties’ business strategy and monitoring activities].[194]

238) In addition, the Parties claim that if operations to the London (three) airports or to other London  airports  are  considered,  the  merged
    entity would face strong competition from other carriers such as Ryanair (from Gatwick, Luton and Stansted) and CityJet (from City).[195]

239) In particular, the Parties state that Cityjet has increased its capacity by nearly [10-20%] from the winter 2013 to  the  winter  2014  IATA
    seasons and by [5-10%] from the summer 2014 to the summer 2015 IATA seasons. Ryanair has increased its capacity at Gatwick by [10-20%]  from
    the summer 2014 to the summer 2015 IATA seasons. According to the Parties, in the winter 2014/2015  IATA  season,  Ryanair's  and  CityJet's
    frequencies were convenient and represented a credible alternative to the Parties' flight times. The same would apply for their  frequencies
    in the current summer 2015 IATA season.

       Commission's assessment

240) The assessment of the effects of the Transaction on this route will focus here on the extent to which the services offered  by  the  Parties
    on this route can be considered close substitutes (see Section V.4)

241) In this context, the Commission observes the following.

242) When setting fares and capacities on the London–Dublin route, IAG monitors [Parties'  business  strategy]  [[196]]  [[197]]  The  monitoring
    focuses, inter alia, on competitor's fares and flight schedules, the airport(s) served  and  a  competitor's  position  on  a  given  route,
    including its market share and the capacity added or reduced on the  route.[198]  Aer  Lingus  systematically  monitors  [Parties'  business
    strategy].[[199]] With the exception of IAG, the remaining competitors monitored by Aer Lingus offer services to Dublin from London airports
    other than Heathrow.

243) In addition, Aer Lingus tracks developments of fares and capacities across all London airports on  this  route.  For  example,  [EI  pricing
    strategy] [[200]]

244) While the Parties' internal documents related to the London–Dublin route include  certain  references  to  all  London  airports,  [Parties’
    business strategy and monitoring activities].[201] [[202]]

245) In the assessment of the effects of the Transaction, the Commission considers that the fact that IAG and Aer  Lingus  monitor  each  other's
    fares and capacities as well as fares and capacities of the other carriers present on the London–Dublin route, and use information regarding
    the fares and capacities of the other carriers in their own decision-making as to  pricing  their  own  services  is  particularly  relevant
    because it shows that IAG and Aer Lingus themselves  see  the  other  carriers  as  a  competitive  constraint  on  this  particular  route.
    Furthermore, such evidence indicates that all carriers on the London–Dublin route compete for the same customers.

246) When promoting its services to London, IAG stresses that it serves Heathrow, using the new Terminal 5[203], as well as other London  primary
    airports well connected to the city centre: "British Airways flights serve all three major London airports; London Heathrow, London  Gatwick
    and London City. With excellent transport options from each airport including the Tube, train or taxi, it's easy to reach  the  city  centre
    and start discovering one of the world's most iconic cities".[204] Aer Lingus' marketing strategy focuses simply on the city  pair,  without
    putting any emphasis on the particular airport served on this route.

247)  [[205]] [BA business and marketing information] [[206]]

248) As regards the Parties' and their competitors' business models, over the  last  few  years  the  differentiation  gap  between  full-service
    network and low cost carriers has significantly diminished. Aer Lingus' operating model has  evolved  over  time  from  a  traditional  full
    service carrier to a "value carrier", integrating features of both the low-cost and full-service carriers. For example,  Aer  Lingus,  whose
    short-haul operations had until recently displayed characteristics of a low cost service, has announced the re-introduction of a short  haul
    business class on top of its existing flexible fares.[207] This move may be seen both as a response to Ryanair's  new  strategy  to  attract
    corporate travel,[208] and as Aer Lingus' attempt to render its offering closer to that of British Airways on this route.  Similarly,  IAG's
    operating model has moved to the middle, by reducing the cost base and the level of service, in order to attract passengers for  whom  price
    is the primary driver of airline choice. For example, IAG (British Airways) has started to [IAG business strategy] and  to  introduce  "hand
    baggage only" fares.[209] On the other hand, Ryanair is upgrading its product offering, thereby moving closer to Aer Lingus, IAG and CityJet
    on this route, to appeal more to business passengers.

249) Therefore, it appears, as also described in Section V.4.3, that since the decision in case M. 6663 – Ryanair/Aer  Lingus  III  the  business
    models of carriers offering scheduled air transport services in short haul routes have tended to converge. As a result, those  traditionally
    regarded as, respectively, full-service and low-cost carriers now offer services that, in the eyes of customers, are more comparable.

250) On the London–Dublin route a relevant differentiating factor between the services offered by carriers  appears  to  be  the  London  airport
    served. It is logical to consider that while there is meaningful competition between airlines serving different airports across  the  London
    airports "competition within an airport pair is likely to be stronger than competition across airports in the same city".[210]

251) A majority of corporate customers[211] and competitors,[212] indicated that Aer Lingus' closest competitor  on  this  route  is  IAG,  while
    travel agents[213] stated that Aer Lingus' closest competitor is Ryanair, followed by IAG. A majority  of  the  respondents  to  the  market
    investigation indicated that the closest competitor of IAG on this route is Aer Lingus.[214]

252) In its assessment of closeness of competition, the Commission also takes into account the market shares of the competitors  on  an  affected
    market, as there is a strong presumption that two carriers are each other's closest competitors in those markets where each of the  carriers
    are by far the largest competitors in terms of market shares. If operations from Heathrow, Gatwick, City, Luton and Stansted are considered,
    the market shares of the Parties and their competitors appear to indicate that Ryanair is likely to be closer to Aer Lingus.  If  operations
    from Heathrow, Gatwick and City are considered instead, in the summer 2014 IATA season, Aer Lingus and  Ryanair  would  have  higher  market
    shares than IAG, which in terms of market share would be closer to CityJet.

253) The Commission notes that the replies to the market investigation were mixed as  to  whether  in  case  of  a  price  increase  at  Heathrow
    consumers (meaning all passengers) would consider flights operated to Dublin from Gatwick, City,  Luton,  Stansted  and  Southend  as  valid
    alternatives for flights operated to the same destination from Heathrow.[215] If passengers that are more  time  sensitive  are  considered,
    Heathrow seems to be a differentiated product compared to other London airports.[216] Conversely, if passengers that are less time sensitive
    (and more price sensitive) are considered, a certain degree of substitutability exists between flights to Dublin from Gatwick  and  City  on
    the one hand and from Heathrow on the other hand. [217]

254) Moreover, customers travelling for business seem to increasingly apply "cheapest on day policies" and choose low  cost  carriers  for  their
    business trips on short-haul routes.[218] This means that low cost carriers exert a growing constraint on the Parties'  operations  on  this
    route also in connection with business travel. In particular, Ryanair's flights ex Gatwick is to a certain degree already  constraining  the
    Parties' operations ex Heathrow also regarding more time sensitive passengers.

255) [IAG's internal analysis on customers' purchases patterns][[219]]

256) [EI business strategy]. The Parties' evidence also includes instances when a decrease of traffic share in Heathrow  occurred  simultaneously
    with a capacity increase in City airport, while no other capacity variations had occurred across other London airports.[220]

257) Therefore, the Commission concludes that although operations from Heathrow to Dublin seem to be a somewhat differentiated  product  compared
    to operations to Dublin from other London airports (at least for certain more time-sensitive passengers), the evidence gathered  during  the
    market investigation indicates that the Parties' operations at Heathrow are constrained by other airlines' operations at Gatwick and City.

258) Finally, the Commission considers that the replies to the market investigation were mixed as regards the degree of  competition  that  would
    remain on this route post-Transaction and whether there  would  be  sufficient  competition  to  prevent  the  merged  entity  from  raising
    prices.[221]

259)  In light of the above, the Commission assesses the effects of the Transaction considering operations at Heathrow, Gatwick and  City,  where
    the combined operations of the Parties would be significant. Generally, the Transaction would lead to the removal of the competitive rivalry
    existing between IAG and Aer Lingus, which has been an important source of competition on the London–Dublin route, for  all  passengers  but
    also in particular for more time sensitive passengers.

9 Entry/expansion

260) The London–Dublin route is subject to the barriers to entry described in Section V.5 above.

261) The Parties claim that the economic situation in Ireland has significantly improved compared  to  the  one  existing  at  the  time  of  the
    decision in case M. 6663 – Ryanair/Aer Lingus III. This upturn would favour entry  and/or  expansion  at  Dublin  and  specifically  on  the
    London–Dublin route.

262) As an example of a recent entry, the Parties mention that IAG launched new services from Dublin  to  City  for  the  winter  2014/2015  IATA
    season and subsequently expanded these services by adding a daily frequency.

263) The Parties further submit that there is room for Ryanair and Cityjet[222] to expand  their  capacity  at  Gatwick  and  City  respectively,
    following the exit of Flybe as of May 2015. In addition, the Parties claim that Ryanair has been  constantly  expanding  its  operations  at
    Dublin and will further increase its frequencies on the London–Dublin route.[223]

264) Although Flybe has recently exited the route, the Parties argue that it would be well-placed to re-enter  the  route.  Finally,  they  claim
    that carriers with bases in London, such as Norwegian, easyJet and Wizz air might easily enter the route if they wish to do so.

265) Contrary to the above arguments, the Commission notes that some respondents to the market investigation also indicated that  on  this  route
    barriers to entry are high, and specifically as regards to very limited access infrastructure (slots  and  terminals)  at  Heathrow  and  at
    Gatwick.[224] As for Dublin, a majority of competitors estimated that there  are  no  significant  barriers  to  entry  or  expansion.  Some
    competitors indicated however that Dublin is becoming increasingly constrained operationally, but others indicated that there  are  no  slot
    barriers. [225] Overall, based on the evidence available to it, the Commission considers that while Dublin airport is  capacity  constrained
    during the peak morning hours, airlines possessing a significant percentage of the total slots available at the airport, including  at  peak
    hours, (as is the case for airlines with large bases at Dublin), would face a reduced barrier at that airport for entry or expansion on  the
    London–Dublin route. However, such airlines would still face high barriers to entry or expansion at Heathrow and/or Gatwick.[226]

266) In addition, the Commission did not identify during the market  investigation  any  likely,  timely  and  sufficient  entry/expansion  plans
    regarding the London–Dublin route that would be capable of adding sufficient competitive constraint on the Parties' operations at  Heathrow,
    Gatwick and City, at least in the absence of relevant commitments.

10 Conclusion on the London–Dublin route

267) In light of the above and of the other available evidence, the Commission considers that the Transaction raises serious  doubts  as  to  its
    compatibility with the internal market with respect to the London–Dublin route.

2 Belfast–London

1 Route characteristics

268) Approximately 2 million O& D passengers travel by air between Belfast and London each year. These O&D passengers account for around  95%  of
    traffic on the route. The remainder are passengers using the service to transfer (at either Belfast and/or London) onto other services.[227]

269) Around [500 000–1 000 000] and [1 200 000–1 300 000]  passengers travelled between Dublin and Belfast in the  winter  2013/2014  and  summer
    2014 IATA seasons respectively, of which [90-100%] travelled in the O&D route  respectively.[228]  In  the  winter  2013/2014  IATA  season,
    [500 000–1 000 000] passengers travelled on the O&D route. The percentage of TS passengers out of the total number is insignificant.[229] In
    the summer 2014 IATA season, a total of [1 100 000–1 200 000],  passengers, including [60 000–70 000] TS passengers, travelled  on  the  O&D
    route.[230]

270) The nature of the route is a mix of business and leisure. The CAA survey shows that a relatively high proportion (approximately 35%) of  O&D
    traffic on Belfast–London is travelling for business purposes.[231]

271) In the winter 2013/2014 and summer 2014 IATA seasons, almost all of IAG's passengers on this route originated in the UK, up to  [0-5]%;   in
    the US and around [5-10]% in other parts of the world. In the winter 2013 IATA season, a majority of Aer Lingus' passengers  on  this  route
    originated in Ireland[232], while in the summer 2014 IATA season a majority of Aer Lingus' passengers  originated  in  other  parts  of  the
    world.[233]

2 Parties' and competitors' operations

272) IAG and Aer Lingus overlap on an airport pair basis at both ends of the route, as they both offer direct services  ex  George  Best  Belfast
    Airport to Heathrow. Aer Lingus also offers services from George Belfast Airport to Gatwick.

273) BA currently has a one-way, free flow codeshare with Aer Lingus which allows BA to place its code  on  Aer  Lingus  flights  for  connecting
    passengers flying on George Best Belfast City Airport and London Gatwick.

274) Other carriers operating the route are easyJet and Flybe.

275) easyJet operates flights from Belfast International Airport to Gatwick, Luton and Stansted. In the winter 2013/2014  IATA  season,  it  also
    offered services from Belfast International Airport to Southend but ceased its operations in January 2014.

276) Flybe has been offering services from George Best Belfast Airport to City since the summer 2014 IATA season. In the  winter  2013/2014  IATA
    season, Flybe operated from George Best Belfast International to Gatwick.

       Frequencies

277) Table 9 below illustrates the weekly flights operated by the Parties and the other carriers on this route in the  winter  2013/2014,  summer
    2014, winter 2014/2015 and summer 2015 IATA seasons:

    Table 9: Overview of weekly frequencies on Belfast–London

|Carrier                  |Airport Pair        |winter 2013/2014  |summer 2014       |winter 2014/2015      |summer 2015    |
|                         |                    |                  |                  |                      |               |
|IAG                      |BHD-LHR             |72                |82                |66                    |84             |
|Aer Lingus               |BHD-LGW             |42                |40                |40                    |40             |
|Aer Lingus               |BHD-LHR             |42                |42                |38                    |42             |
|Combined                 |                    |156               |164               |144                   |166            |
|EasyJet                  |BFS-LGW             |60                |62                |56                    |68             |
|EasyJet                  |BFS-LTN             |34                |36                |32                    |46             |
|EasyJet                  |BFS-STN             |44                |40                |40                    |42             |
|EasyJet                  |BFS-SEN             |-                 |-                 |-                     |-              |
|Flybe                    |BHD-LGW             |44                |-                 |-                     | -             |
|Flybe                    |BHD-LCY             |-                 |-                 |36                    |46             |
|TOTAL                    |                    |338               |302               |308                   |368            |

    Source: Form Co and Annex 7.1 to the Form CO

       Market shares – capacity

278) Table 10 below illustrates the market shares based in seat capacity of the Parties and the other carriers operating on  this  route  in  the
    winter 2013/2014, summer 2014, winter 2014/2015 and summer 2015 IATA seasons:

    Table 10: Belfast–London – seat capacity per IATA season

|Carrier        |Airport Pair|winter 2013/14            |summer 2014               |winter 2014/15            |summer 2015               |
|               |            |                          |                          |                          |                          |
|IAG            |BHD-LHR     |([20-30]%)                |([20-30]%)                |([20-30]%)                |([20-30]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|Aer Lingus     |BHD-LGW     |([5-10]%)                 |([10-20]%)                |([10-20]%)                |([10-20]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|Aer Lingus     |BHD-LHR     |([10-20]%)                |([10-20]%)                |([10-20]%)                |([10-20]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|Combined       |            |([40-50]%)                |([50-60]%)                |([50-60]%)                |([40-50]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|EasyJet        |BFS-LGW     |([20-30]%)                |([20-30]%)                |([10-20]%)                |([20-30]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|EasyJet        |BFS-LTN     |([10-20]%)                |([10-20]%)                |([10-20]%)                |([10-20]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|EasyJet        |BFS-STN     |([10-20]%)                |([10-20]%)                |([10-20]%)                |([10-20]%)                |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|EasyJet        |BFS-SEN     |([0-5]%)                  |-                         |-                         |-                         |
|               |            |[CONFIDENTIAL]            |                          |                          |                          |
|Flybe          |BHD-LCY     |-                         |([0-5]%)                  |([5-10]%)                 |(([5-10]%)                |
|               |            |                          |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |
|Flybe          |BHD-LGW     |([10-20]%)                |-                         |-                         |-                         |
|               |            |[CONFIDENTIAL]            |                          |                          |                          |
|TOTAL          |            |([90-100]%)               |([90-100]%)               |([90-100]%)               |([90-100]%)               |
|               |            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |[CONFIDENTIAL]            |

Source: Annex 7.1 to the Form CO

279) Looking at operations at London 3, the Parties' combined capacity shares would be [60-70%] with an increment of [30-40%] and  [60-70%]  with
    an increment of [30-40%] in the winter 2014/2015 and in the summer 2015 IATA season respectively.

       Market shares – passengers

280) Table 11 displays the market shares of the Parties and their competitors on the London–Dublin route:

Table 11: Market shares on the Belfast – London route

|Carrier               |Airport Pair           |winter 2013/2014    |summer 2015         |
|                      |                       |                    |                    |
|IAG                   |BHD-LHR                |[10-20]%            |[10-20]%            |
|Aer Lingus            |BHD-LGW                |[10-20]%            |[10-20]%            |
|Aer Lingus            |BHD-LHR                |[10-20]%            |[10-20]%            |
|Combined              |                       |[30-40]%            |[40-50]%            |
|EasyJet               |BFS-LGW                |[20-30]%            |[20-30]%            |
|EasyJet               |BFS-LTN                |[10-20]%            |[10-20]%            |
|EasyJet               |BFS-STN                |[10-20]%            |[10-20]%            |
|EasyJet               |BFS-SEN                |[0-5]%              |[0-5]%              |
|Flybe                 |BHD-LGW                |[5-10]%             |[0-5]%              |
|TOTAL                 |                       |[90-100]%           |[90-100]%           |

           Source: Annex 7.1 to the Form CO

281) Considering only operations to London 3, the Parties' shares would be [50-60%] (with  an  increment  of  [20-30%])  and  [60-70%]  (with  an
    increment of [20-30%]) in the winter 2013/2014 and in the summer 2014 IATA season respectively.

282) Considering operations to Heathrow only, the Parties would have a monopoly in both seasons, with an increment of [30-40%]  and  of  [40-50%]
    in the winter 2013/2014 and in the summer 2014 IATA seasons respectively.

6 Constraint exercised by competitors

       Parties' views

283) The Parties claim that IAG is not Aer Lingus' closest competitor on the Belfast – London route. To support this argument,  they  claim  that
    Aer Lingus' service proposition and business model are closer to that of a point-to-point low cost carrier such  as  easyJet  than  a  full-
    service network operator like IAG.[234] [Parties’ business strategy and monitoring activities].[[235]]

284) In addition, the Parties claim that if operations to the London (three) airports or to other London  airports  are  considered,  the  merged
    entity would face strong competition from strong players such as easyJet (from Gatwick, Luton and Stansted) and Flybe (from City).[236]

       Commission's assessment

285) The assessment of the effects of the Transaction on this route will focus on the extent to which the services  offered  by  the  Parties  on
    this route can be considered close substitutes (see Section V.4).

286) In this context, the Commission observes the following.

287) [The parties’ respective strategies for the setting of fares and capacities] [[237]] [[238]]

288) [The parties’ respective strategies for the setting of fares and capacities ].[[239]][[240]]

289) [The parties’ respective strategies for the setting of fares and capacities]

290) When promoting its services to London from Belfast, IAG stresses that its only flights serve Heathrow and in particular the new Terminal  5:
    "To improve. To invest. To create the terminal voted the world's best. Flights from Dublin and  Belfast  now  arrive  into  London  Heathrow
    Terminal 5".[241] Conversely, Aer Lingus' marketing strategy focuses on the city pair,  without  putting  any  emphasis  on  the  particular
    airport served on this route.

291) [BA business and marketing information].[[242]] IAG's and Aer Lingus' brands are perceived as being the strongest brands on this route by  a
    majority of respondents to the market investigation.[243]

292) As also described in Sections V.4.3 and V.6.1, service offerings of airlines on short haul routes tend  to  converge.  As  a  result,  full-
    service and low-cost carriers tend to offer more comparable services in the eyes of customers. This applies clearly  to  the  Belfast–London
    route.

293) Similarly to the London–Dublin route, a differentiating factor between the services offered by carriers on this  route  appears  to  be  the
    London airport served.[244] It is logical to consider that while there is meaningful competition between airlines serving different airports
    across the London airports "competition within an airport pair is likely to be  stronger  than  competition  across  airports  in  the  same
    city".[245]

294) A majority of corporate customers[246] travel agents[247] and competitors[248], indicated that Aer Lingus' closest competitor on this  route
    is IAG. A majority of the respondents to the market investigation indicated that the  closest  competitor  of  IAG  on  this  route  is  Aer
    Lingus.[249]

295) In its assessment of closeness of competition, the Commission will take into account the market shares of the  competitors  on  an  affected
    market, as there is a strong presumption that two carriers are each other's closest competitors in those markets where each of the  carriers
    are by far the largest competitors in terms of market shares. If operations from Heathrow, Gatwick, and City are considered, the  shares  of
    the Parties and their competitors appear to indicate that easyJet is likely to be  closer  to  Aer  Lingus.  If  operations  from  Heathrow,
    Gatwick, City, Luton and Stansted are considered instead, in the summer 2014 IATA season, easyJet would have higher shares than each of  the
    Parties.

296) The Commission notes that the replies to the market investigation gave mixed results as to whether in case of a price increase  at  Heathrow
    consumers (meaning all passengers) would consider flights operated to Belfast from Gatwick, City, Luton,  Stansted  and  Southend  as  valid
    alternatives for flights operated to the same destination from Heathrow. [250]

297) If passengers that are more time sensitive are considered, Heathrow seems to be a somewhat differentiated product compared to  other  London
    airports.[251] Conversely, if passengers that are less time sensitive (and more  price  sensitive)  are  considered,  a  certain  degree  of
    substitutability exists between flights to Belfast from Gatwick and City on the one hand and from Heathrow on the other hand. [252]

298) Moreover, customers travelling for business seem to increasingly apply "cheapest on day policies" and choose low  cost  carriers  for  their
    business trips on short-haul routes.[253] As observed in relation to the London–Dublin route (Section V.6.1.3), this  means  that  low  cost
    carriers exert a growing constraint on the Parties' operations on this route  also  in  connection  with  business  travel.  In  particular,
    easyJet's flights ex Gatwick is to a certain degree already constraining  the  Parties'  operations  ex  Heathrow  also  regarding  business
    passengers. This is the result of the recent easyJet's repositioning in the market, which focuses on being an  alternative  to  full-service
    carrier for budget-conscious business travel.

299) Therefore, the Commission concludes that although operations from Heathrow to Belfast seem to be a somewhat differentiated product  compared
    to operations to Belfast from other London airports (at least for certain more time-sensitive passengers), the evidence gathered during  the
    market investigation indicates that the Parties' operations at Heathrow are constrained by other airlines' operations at Gatwick and City.

300)  Finally, of the respondents to the market investigation that expressed a view on the degree of competition that would remain on this  route
    post-Transaction, a majority considered that there will be sufficient competition to prevent the merged entity from raising prices.[254]

301) In light of the above, the Commission assesses the effects of the Transaction considering operations at Heathrow, Gatwick  and  City,  where
    the combined operations of the Parties would be significant. Generally, the Transaction would lead to the removal of the competitive rivalry
    existing between IAG and Aer Lingus, which has been an important source of competition on the Belfast–London route, for all  passengers  but
    also in in particular for more time-sensitive passengers.

9 Congestion at Belfast airports – Entry/expansion

302) George Best Belfast City and Belfast International are designated as schedules facilitated (Level 2) airports under the EU Slot  Regulation,
    meaning that there is potential for congestion at some periods of the day.

303) The Parties claim that neither of the Belfast airports is coordinated nor congested and that there is  capacity  to  start  new  flights  or
    expand existing operations at any time of the day. [255]

304) The airport manager of Belfast City reported that while the airport is not slot-constrained, airlines might suffer  certain  limitations  in
    accessing the airport due to the length of the runway and the operating hours (6:30-21:30, with extensions up to midnight).[256]

305) The route Belfast–London is also subject to the barriers to entry described in Section V.5.

306) However, as an example of recent entry, the Parties mention Flybe, which as of the summer 2014 IATA season re-entered  the  route  from  its
    new City base with three return flights per day, which will rise to four per day in 2015.[257]

307) The Parties further claim that potential new entrants would  be  Jet2,  which  recently  launched  new  international  routes  from  Belfast
    International Airport[258], Wizzair, which operates at Belfast  International  Airport  and  has  recently  announced  new  operations[259],
    Norwegian, from its base at Gatwick and Ryanair, which has operations from City of Derry Airport (located at approximately 1 hour 30 minutes
    by car from Belfast) to Stansted.

308) easyJet has recently announced that as of winter 2015 it will increase its capacity on the route by 125 000  seats  as  compared  to  winter
    2014.[260] However, easyJet's increment in capacity will be spread over three London airports, namely Gatwick, Stansted and Luton, only  one
    of which is relevant for the assessment of the effects of the Transaction on the Belfast–London route. Therefore, the  Commission  does  not
    consider easyJet's expansion plans capable of adding sufficient competitive constraint on the  Parties'  operations  on  the  Belfast–London
    route.

309) Respondents to the market investigation indicated that on this route barriers to entry are high, due to  very  limited  access  to  relevant
    infrastructure (slots and terminals) at Heathrow and to certain extent at Gatwick.[261]

310) Finally, the Commission did not identify during the market investigation likely, timely and sufficient entry plans regarding the  Belfast  –
    London route that, in addition to the expansion plans described above, would be capable of adding sufficient competitive constraint  on  the
    Parties' operations, at least in the absence of relevant commitments.

10 Conclusion on the Belfast–London route

311) In light of the above and of the other available evidence, the Commission considers that the Transaction raises serious  doubts  as  to  its
    compatibility with the internal market with respect to the Belfast–London route.

3 Dublin–Madrid

1 Route characteristics

312) In the winter 2013/2014 and summer 2014 IATA seasons, a total of [300 000- 400 000] passengers  travelled  between  Dublin  and  Madrid,  of
    which [80-90%] travelled in the O&D route.[262] The remainder are passengers connecting  to/from  behind/beyond  routes  (at  either  Dublin
    and/or Madrid). In the winter 2013/2014 IATA season, [100 000–200 000] passengers travelled on the  O&D  route.  In  the  summer  2014  IATA
    season, a total of [200 000–300 000] passengers.[263]

313) According to the Parties, the route has a strong leisure focus [Parties' cost and price structures].[[264]]

314) The route has no significant seasonal patterns. [265]

315) Based on an analysis of point of sale, a majority of Aer Lingus' and IAG's passengers on this route originate at  the  Spanish  end  of  the
    route, namely in Madrid. [40-50%]  of Aer Lingus' passengers and only [10-20%] of IAG's passengers originated from Ireland  in  summer  2014
    IATA Season.[266]

2 Parties' and competitors' operations

316) Both Parties operate the route with non-stop services. Iberia and Aer Lingus overlap on an airport-to-airport  basis,  namely  Dublin–Madrid
    Barajas.

317) The Parties' only competitor on the route is Ryanair, Spain's largest carrier by passengers in the Spanish  medium-  and  short-haul  space,
    which also operates on the same airport-pair.

       Frequencies

318) Table 12 below illustrates the weekly flights operated by the Parties and the other carriers on this route in the winter  2013/2014,  summer
    2014, winter 2014/2015 and summer 2015 IATA seasons:

                                            Table 12: Overview of weekly frequencies on Dublin-Madrid

|Carrier            |winter 2013/2014        |summer 2014            |winter 2014/2015    |summer 2015        |
|Aer Lingus         |20                      |18                     |18                  |18                 |
|IAG                |6                       |24                     |10                  |26                 |
|Combined           |26                      |42                     |28                  |44                 |
|Ryanair            |20                      |18                     |28                  |28                 |
|Total              |46                      |60                     |56                  |72                 |

    Source: Form Co and Annex 7.1 to the Form CO

       Market shares – capacity

319) Table 13 below illustrates the market shares based in seat capacity of the Parties and the other carriers operating on  this  route  in  the
    winter 2013/2014, summer 2014, winter 2014/2015 and summer 2015 IATA seasons:

                                             Table 13: Dublin-Madrid – seat capacity per IATA season

|Carrier             |winter 2013/2014        |summer 2014              |winter 2014/2015           |summer 2015                |
|Aer Lingus          |([40-50]%)              |([30-40]%)               |([30-40]%)                 |([20-30]%)                 |
|                    |[CONFIDENTIAL]          |[CONFIDENTIAL]           |[CONFIDENTIAL]             |[CONFIDENTIAL]             |
|IAG                 |([10-20]%)              |([20-30]%)               |([10-20]%)                 |([20-30]%)                 |
|                    |[CONFIDENTIAL]          |[CONFIDENTIAL]           |[CONFIDENTIAL]             |[CONFIDENTIAL]             |
|Combined            |([50-60]%)              |([60-70]%)               |([40-50]%)                 |([50-60]%)                 |
|                    |[CONFIDENTIAL]          |[CONFIDENTIAL]           |[CONFIDENTIAL]             |[CONFIDENTIAL]             |
|Ryanair             |([40-50]%)              |([30-40]%)               |([50-60]%)                 |([40-50]%)                 |
|                    |[CONFIDENTIAL]          |[CONFIDENTIAL]           |[CONFIDENTIAL]             |[CONFIDENTIAL]             |
|Total               |[CONFIDENTIAL]          |[CONFIDENTIAL]           |[CONFIDENTIAL]             |[CONFIDENTIAL]             |

            Source: Annex 7.1 to the Form CO

320) Iberia operates significantly more capacity in the summer months whereas Aer Lingus and Ryanair have  a  more  year-round  proposition.  The
    Parties argue that Iberia's business model is more of a traditional network model and, in contrast to the models of Ryanair and Aer  Lingus,
    point-to-point passengers on this route are not IAG's only focus. With the introduction of Iberia Express onto the routes it  also  attracts
    O&D traffic, in particular in the peak summer months.[267]

       Market shares – passengers

321) Table 14 displays the market shares of the Parties and their competitors for all-passengers on the Dublin-Madrid route:

                                                Table 14: Market shares on the Dublin–Madrid route

|Carrier                 |winter 2013/2014              |summer 2014               |
|Aer Lingus              |[30-40]%                      |[30-40]%                  |
|IAG                     |[5-10]%                       |[20-30]%                  |
|Combined                |[40-50]%                      |[50-60]%                  |
|Ryanair                 |[50-60]%                      |[40-50]%                  |
|Total                   |[90-100]%                     |[90-100]%                 |

                       Source: Annex 7.1 to the Form CO

6 Constraint exercised by competitors

       Parties' views

322) The Parties claim that IAG is not Aer Lingus' closest competitor on the Dublin-Madrid route. In case M. 6663 – Ryanair/Aer Lingus  III,  the
    Commission had considered that "Ryanair and Aer Lingus are each other's closest competitor on the Dublin-Madrid route."[268]

323) In addition, the Parties claim that the merged entity would face strong competition from Ryanair.[269]  They  state  that  that  Ryanair  is
    Iberia's principal competitor on short-haul international flying in Madrid. In 2014, Ryanair carried 4 million passengers from  Madrid,  and
    introduced nine new routes and increased frequency on 13 existing routes to/from Madrid in IATA season summer 2015.

324) The Parties also highlight that Ryanair has significantly increased its frequency on Dublin-Madrid in summer 2015 IATA season compared  with
    summer 2014, with 10 extra flights (5 extra return flights) per week. According to  the  Parties,  in  the  winter  2014/2015  IATA  season,
    Ryanair's frequencies were convenient and represented a credible alternative to the Parties'  flight  times.  The  same  applies  for  their
    frequencies in the current summer 2015 IATA season.

       Commission's assessment

325) ,[IAG inventory strategy and monitoring activities] [[270]].[[271]]

326) [IAG business strategy and marketing information] [[272]]

327) The results of the market investigation are mixed as regards closeness of  competition  on  the  route.  While  a  majority  of  respondents
    indicated that Aer Lingus can be considered as IAG's closest competitor, notably  due  to  the  similarity  of  their  business  models  and
    availability of interlining possibilities, a majority of respondents considered Ryanair as the closest competitor  of  Aer  Lingus  on  this
    route, largely due to volume of frequencies and price considerations.[273]

328) Finally, a majority of respondents to the market investigation that expressed a view on the degree of competition that would remain on  this
    route post-Transaction considered that there will be sufficient competition to prevent the merged entity from raising prices.[274]

329) On balance, considering the frequencies and the market shares in terms of capacities and passengers of the Parties and their competitor,  as
    well as their competitive relationships, the Commission concludes that the merged entity would face  a  significant  competitive  constraint
    from Ryanair on the Dublin-Madrid airport pair.

9 Congestion at Madrid airport – Entry/expansion

330) Madrid is designated as a fully coordinated airport under the EU Slot Regulation (Level 3). The airport currently has  four  terminals  (T1,
    T2, T3 and T4) which together provide capacity for 70 million passengers a year. In 2014, Madrid accommodated around 42 million  passengers.
    Regarding allocated slots at Madrid, IAG currently has the largest slot portfolio at the airport: in summer 2014 it held 132 slot pairs  per
    day (23.2% of all available slots); Air Europa had the second largest portfolio with 42 slot pairs per day (7.4%); Ryanair had 20 daily slot
    pairs per day (3.6%); and Aer Lingus had 1.3 slot pairs per day (0.2%).[275]

331)  The Parties note that while the airport is slot constrained for arrivals between 08:00-09:00, capacity exceeds  utilisation  at  all  other
    times of the day for arrivals and departures. [276]

332) AECFA, the slot coordinator at this airport, confirmed during the market investigation that Madrid airport is not slot constrained as  such,
    except during particular peak times. The Commission came to the same finding in case M. 6663  –  Ryanair/Aer  Lingus III. [277] On  average,
    AECFA indicated that three-five hours daily can be referred to as having severe levels of congestion, with less than 20%  slot  availability
    especially for morning and midday movements. While the growth of demand foreseen in the short-medium term (3-5 years) may strengthen some of
    the difficulties that airlines currently face to access airport capacity on the peak days and at the peak times, and  the  capacity  is  not
    expected to change during this period, Aena S.A, the airport  manager,  estimated  that  the  airports  it  manages  currently  have  enough
    capacity.[278]

333) While no likely, timely and sufficient entry leading to significant additional competitive pressure  on  the  Parties  post-Transaction  has
    been identified during the market investigation, the merged entity would still face a significant competitive constraint from Ryanair on the
    Dublin-Madrid airport pair.

10 Conclusion on the Dublin-Madrid route

334) In light of the above and of the other available evidence, the Transaction does not raise serious doubts as to its  compatibility  with  the
    internal market with respect to the Dublin–Madrid route.

4 Dublin–Barcelona

1 Route characteristics

335) In the winter 2013/2014 and summer 2014 IATA seasons, a total of [400 000–500 000] passengers travelled between  Dublin  and  Barcelona,  of
    which [90-100]% travelled in the O&D route.[279] The remainder are passengers connecting to/from  behind/beyond  routes  (at  either  Dublin
    and/or Barcelona). In the winter 2013/2014 IATA season, [80 000–90 000] passengers travelled on the O&D  route.  In  the  summer  2014  IATA
    season, a total of [300 000–400 000] passengers travelled on the O&D route.[280] These figures include Ryanair passengers from  Girona-Costa
    Brava and Reus, as Ryanair not only operates to Barcelona El Prat airport, but also these latter airports

336) According to the Parties, the route is a leisure route characterised by seasonal variations in capacity and  frequent  services  by  charter
    carriers.[281]

337) Based on an analysis of point of sale, a majority of Aer Lingus' passengers on this route originate at the Irish end of  the  route,  namely
    in Dublin. [50-60%] of Aer Lingus' passengers originate from Ireland. [282]

2 Parties' and competitors' operations

338) In summer 2015 IATA season, Vueling will enter the Dublin-Barcelona route, with a seasonal service of 4-6 return flights  per  week  between
    Dublin and El Prat. Dublin-Barcelona is currently operated by Aer Lingus (as well as by Ryanair). Vueling and Aer Lingus  therefore  overlap
    on an airport-to-airport basis, namely Dublin–Barcelona El Prat.

339) The Parties' only competitor on the route is Ryanair, which also operates on the same airport-pair, and at Girona-Costa Brava and Reus.

       Frequencies

340) Table 15 below illustrates the weekly flights operated by the Parties and the other carriers on the routes to Barcelona, Girona-Costa  Brava
    and Reus in the winter 2013/2014, summer 2014, winter 2014/2015 and summer 2015 IATA seasons:

                                      Table 15: Overview of weekly frequencies on DUB–BCN, DUB–GRO, DUB–REU

|Carrier            |Airport pair        |winter 2013/2014       |summer 2014          |winter 2014/2015    |summer 2015       |
|IAG                |BCN-DUB             |                       |                     |                    |10                |
|Combined           |                    |22                     |28                   |18                  |38                |
|Ryanair            |BCN-DUB             |12                     |28                   |28                  |28                |
|Ryanair            |DUB-GRO             |                       |10                   |                    |4                 |
|Ryanair            |DUB-REU             |                       |16                   |                    |12                |
|Total              |                    |34                     |82                   |46                  |82                |

    Source: Form Co and Annex 7.1 to the Form CO

       Market shares – capacity

341) Table 16 below illustrates the market shares based in seat capacity of the Parties and  the  other  carriers  operating  on  the  routes  to
    Barcelona, Girona-Costa Brava and Reus in the winter 2013/2014, summer 2014, winter 2014/2015 and summer 2015 IATA seasons:

                                       Table 16: DUB–BCN, DUB–GRO, DUB–REU – seat capacity per IATA season

|Carrier             |Airport pair        |winter 2013/2014  |summer 2014       |winter 2014/2015    |summer 2015         |
|IAG                 |BCN-DUB             |                  |                  |([0-5]%)            |([10-20]%)          |
|                    |                    |                  |                  |[CONFIDENTIAL]      |[CONFIDENTIAL]      |
|Combined            |                    |([60-70]%)        |([30-40]%)        |([30-40]%)          |([40-50]%)          |
|                    |                    |[CONFIDENTIAL]    |[CONFIDENTIAL]    |[CONFIDENTIAL]      |[CONFIDENTIAL]      |
|Ryanair             |BCN-DUB             |([30-40]%)        |([30-40]%)        |([60-70]%)          |([30-40]%)          |
|                    |                    |[CONFIDENTIAL]    |[CONFIDENTIAL]    |[CONFIDENTIAL]      |[CONFIDENTIAL]      |
|Ryanair             |DUB-GRO             |([0-5]%)          |([10-20]%)        |([0-5]%)            |([5-10]%)           |
|                    |                    |[CONFIDENTIAL]    |[CONFIDENTIAL]    |[CONFIDENTIAL]      |[CONFIDENTIAL]      |
|Ryanair             |DUB-REU             |([0-5]%)          |([20-30]%)        |([0-5]%)            |([10-20]%)          |
|                    |                    |[CONFIDENTIAL]    |[CONFIDENTIAL]    |[CONFIDENTIAL]      |[CONFIDENTIAL]      |
|Total               |                    |([90-100]%)       |([90-100]%)       |([90-100]%)         |([90-100]%)         |
|                    |                    |[CONFIDENTIAL]    |[CONFIDENTIAL]    |[CONFIDENTIAL]      |[CONFIDENTIAL]      |

    Source: Form Co and Annex 7.1 to the Form CO

       Market shares – passengers

342) Table 17 displays the market shares of the Parties and their competitors for all passengers on the routes Dublin to Barcelona,  Girona-Costa
    Brava and Reus:

                                         Table 17: Market shares on the DUB–BCN, DUB–GRO, DUB–REU routes

|Carrier            |Airport pair        |winter 2013/2014       |summer 2014          |
|Aer Lingus         |BCN-DUB             |[50-60]%               |[20-30]%             |
|IAG                |BCN-DUB             |                       |                     |
|Combined           |                    |[50-60]%               |[20-30]%             |
|Ryanair            |BCN-DUB             |[40-50]%               |[40-50]%             |
|Ryanair            |DUB-GRO             |[0-5]%                 |[10-20]%             |
|Ryanair            |DUB-REU             |[0-5]%                 |[20-30]%             |
|Total              |                    |[90-100]%              |[90-100]%            |

    Source: Annex 7.1 to the Form CO

6 Constraint exercised by competitors

       Parties' views

343) The Parties claim that the merged entity would face strong competition from Ryanair, which they view as by far the strongest player  on  the
    route, operating out of all three Barcelona airports.[283] Based on their experience with the launch of Vueling services  to/from  Brussels,
    following which Ryanair entered the same routes as Vueling with very low fares in the summer  2014  IATA  season.  the  Parties  argue  that
    Vueling's entry is also likely to stimulate an aggressive pricing response from Ryanair.

344) In case M. 6663 – Ryanair/Aer Lingus III, the Commission had pointed out the "very close competitive relationship between  Ryanair  and  Aer
    Lingus and […] the important competitive constraint that both carriers exert upon each other "[284] on the Dublin-Barcelona route.

345) According to the Parties, in the winter 2014/2015 IATA season, Ryanair's frequencies were convenient and represented a credible  alternative
    to the Parties' flight times. The same applies for their frequencies in the current summer 2015 IATA season.

       Commission's assessment

346) [Parties' business strategy and monitoring activities] [[285]]

347) [IAG business strategy and marketing information].[[286]]

348) The results of the market investigation are mixed as regards closeness of  competition  on  the  route.  While  a  majority  of  respondents
    indicated that Aer Lingus can be considered as IAG's closest competitor upon Vueling's  entry  on  the  route,  a  majority  of  respondents
    considered Ryanair as the closest competitor of Aer Lingus on this  route  notably  due  to  high  frequencies  of  flights  and  comparable
    costs.[287]

349) Finally, a majority of respondents to the market investigation that expressed a view on the degree of competition that would remain on  this
    route post-Transaction considered that there will be sufficient competition to prevent the merged entity from raising prices.[288]

350) On balance, considering the frequencies and the market shares in terms of capacities and passengers of the Parties and their competitor,  as
    well as their competitive relationships, the Commission concludes that the merged entity would face  a  significant  competitive  constraint
    from Ryanair on the Dublin-Barcelona El Prat airport pair.

9 Congestion at airports in Barcelona – Entry/expansion

351) Barcelona El Prat is a level 3 coordinated airport with some constraints at peak times.  The  airport  currently  has  two  terminals  which
    together provide the airport with capacity for 55 million passengers a year. In 2014, Barcelona El Prat  accommodated  around  37.5  million
    passengers. The airport has three runways and is able to handle 72 movements per hour. The Parties note that while  the  airport  is  partly
    slot constrained between 08:00-11:00 and between 12:00-14:00, there is good slot availability outside these hours.[289]

352) Regarding allocated slots, IAG currently has the largest slot portfolio at Barcelona El Prat; in summer 2014 it held 106 slot pairs per  day
    (25.9% of all available slots); Ryanair had the second largest portfolio with 27 slot pairs per day (6.5%); easyJet had 17  slot  pairs  per
    day (4.1%); and Aer Lingus has 2 slot pairs per day (0.5%).[290]

353) AECFA, the slot coordinator at this airport, confirmed during the market investigation that Barcelona  El  Prat  is  only  slot  constrained
    during particular peak times. The growth of demand foreseen in the short-medium term (3-5 years) may strengthen  some  of  the  difficulties
    that airlines currently face to access airport capacity on the peak days and at the peak times in this airport, but AECFA indicated that  as
    from the seasons starting in 2015 (S15/W15 seasons), the airport manager,  Aena  S.A.  is  already  providing  increased  capacity  (airport
    capacity parameters) at Barcelona-El Prat which will alleviate the current limitations, at least partially. Aena  S.A.  estimated  that  the
    airports it manages currently have enough capacity.[291]

354) Besides, neither Girona-Costa Brava nor Reus is coordinated and each has good availability throughout the day. Both airports are  designated
    as scheduled facilitated (Level 2) airports under the EU Slot Regulation, meaning that although there is potential for  congestion  at  some
    periods of the day, at present, the airports are not slot restricted or congested.

355) Assessing the evidence collected in the market investigation, the  Commission  is  of  the  view  that  no  likely,  timely  and  sufficient
    entry/expansion plans would lead to additional competitive pressure on the merged entity post-Transaction, besides the one already  existing
    from its current competitors. However, as mentioned previously, the merged entity would still face a significant competitive constraint from
    Ryanair on the Dublin-Barcelona El Prat airport pair.

10 Conclusion on the Dublin-Barcelona route

356) In light of the above and of the other available evidence, even if the narrowest hypothetical geographic  market  definition  is  considered
    (i.e. only the Dublin-Barcelona El Prat airport pair), the Transaction does not raise serious  doubts  as  to  its  compatibility  with  the
    internal market with respect to the Dublin–Barcelona route.

5 Dublin–New York

1 Route characteristics

357) As discussed in Section IV.2.4.6, the Commission considers that the two relevant airports serving New York (JFK and Newark)  belong  to  the
    same market.

358) Approximately [500 000–1 000 000] passengers travelled between Dublin and New York in the winter 2013/2014 and summer 2014 IATA seasons,  of
    which [60-70%] travelled on the O&D route.[292] Over the same period, passengers travelling on indirect flights represented [5-10%]  of  the
    total passengers travelling on the O&D route.[293] In the winter 2013/14 IATA season,  [100 000–200 000]  passengers,  including  [30 000  –
    40 000] TS passengers, travelled on the O&D route.[294] In the summer 2014 IATA season, a total of [200 000–300 000]  passengers,  including
    [70 000–80 000] TS passengers, travelled on the O&D route.[295]

359) Approximately [500 000–1 000 000] passengers travelled between Dublin and New York in the winter 2013/2014 and summer 2014 IATA seasons,  of
    which [60-70%] travelled on the O&D route.[296] Over the same period, passengers travelling on indirect flights represented [5-10%]  of  the
    total  passengers  travelling  on  the  O&D  route.[297]  In  the  winter  2013/14  IATA  season,  [100 000–200 000]  passengers,  including
    [30 000–40 000] TS passengers, travelled on the O&D route.[298] In the summer 2014 IATA season, a  total  of  [100 000–200 000]  passengers,
    including [70 000–80 000] TS passengers, travelled on the O&D route.[299]

360) The Parties consider that the travel between Dublin and New York is predominantly leisure travel.[300]

2 Parties' and competitors' operations

361) Aer Lingus serves the route with its own aircraft and operates flights from Dublin to JFK. IAG serves the route through the JBA  on  flights
    operated by American Airlines to JFK. The Sky Team JV flies from Dublin to JFK. The Star Alliance JV operates flights to EWR. Pursuant to  a
    codeshare agreement, the Star Alliance JV also sells tickets for flights operated by Aer Lingus to JFK.

362) The JBA operated on the Dublin–New York route during the winter 2013/2014 IATA season. However, the JBA's winter service was not resumed  in
    the following winter IATA season [BUSINESS SECRETS]. Therefore, the JBA only operates on the route in the summer. Aer Lingus, the  Sky  Team
    JV, and the Star JV offer instead year round services.

       Frequencies

363) Table 18 below provides the number of weekly direct flights operated by the Parties and their competitors on the Dublin–New York route.

    Table 18: Dublin–New York – weekly frequencies

|Carrier                |winter 2013/2014      |summer 2014           |winter 2014/2015      |summer 2015           |
|Aer Lingus             |22                    |28                    |22                    |41                    |
|JBA                    |8                     |14                    |n.a.                  |14                    |
|Combined               |30                    |42                    |22                    |55                    |
|Star JV                |14                    |28                    |14                    |28                    |
|Sky Team JV            |14                    |14                    |14                    |14                    |
|Total                  |58                    |84                    |50                    |97                    |

    Source: Annex 7.1 to the Form CO

364) Table 19 below provides the Parties' and their competitors' total capacity for direct flights on the Dublin–New York route.

    Table 19: Dublin–New York – total capacity

|Carrier           |winter 2013/2014        |summer 2014             |winter 2014/2015        |summer 2015             |
|Aer Lingus        |([10-20]%)              |([50-60]%)              |([50-60]%)              |([10-20]%)              |
|                  |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |
|JBA               |([50-60]%)              |([10-20]%)              |([0-5]%)                |([50-60]%)              |
|                  |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |
|Combined          |([60-70]%)              |([60-70]%)              |([50-60]%)              |([60-70]%)              |
|                  |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |
|Star JV           |([10-20]%)              |([10-20]%)              |([10-20]%)              |([10-20]%)              |
|                  |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |
|Sky Team JV       |([20-30]%)              |([10-20]%)              |([20-30]%)              |([10-20]%)              |
|                  |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |
|Total             |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |[CONFIDENTIAL]          |

    Source: Annex 7.1 to the Form CO

       Market shares – passengers

365) Table 20 and Table 21 below provide the market shares of the Parties and their competitors on the Dublin–New York route  for  the  two  most
    recent 2014 IATA seasons for which data is available.[301]

Table 20: Dublin–New York – market shares (direct flights)

|Carrier             |Itinerary Type    |winter 2013/2014                             |summer 2014[302]                             |
|                    |                  |All             |TS            |Non-TS        |All           |TS            |Non-TS          |
|JBA                 |DO                |[CONFIDENTIAL]  |[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]  |
|                    |                  |[5-10]%         |[0-5]%        |[5-10]%       |[10-20]%      |[0-5]%        |[10-20]%        |
|Combined            |[CONFIDENTIAL]    |[CONFIDENTIAL]  |[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|                |
|                    |[60-70]%          |[80-90]%        |[50-60]%      |[60-70]%      |[80-90]%      |[60-70]%      |                |
|Sky Team JV         |DO                |[CONFIDENTIAL]  |[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]  |
|                    |                  |[20-30]%        |[5-10]%       |[20-30]%      |[10-20]%      |[0-5]%        |[20-30]%        |
|Total                     |[CONFIDENTIAL]   |[CONFIDENTIAL]                             |[CONFIDENTIAL]                             |
|                          |                 |All            |TS          |Non-TS       |All           |TS            |Non-TS        |
|                          |                 |[50-60]%       |[70-80]%    |[40-50]%     |[40-50]%      |[80-90]%      |[30-40]%      |
|JBA                       |                 |[CONFIDENTIAL] |[CONFIDENTIA|[CONFIDENTIAL|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|
|                          |                 |               |L]          |]            |              |              |              |
|                          |                 |[5-10]%        |[0-5]%      |[10-20]%     |[10-20]%      |[0-5]%        |[20-30]%      |
|Combined                  |[CONFIDENTIAL]   |[CONFIDENTIAL] |[CONFIDENTIA|[CONFIDENTIAL|[CONFIDENTIAL]|[CONFIDENTIAL]|              |
|                          |                 |               |L]          |]            |              |              |              |
|                          |                 |[10-20]%       |[10-20]%    |[10-20]%     |[10-20]%      |[10-20]%      |[20-30]%      |
|Sky Team JV               |                 |[CONFIDENTIAL] |[CONFIDENTIA|[CONFIDENTIAL|[CONFIDENTIAL]|[CONFIDENTIAL]|[CONFIDENTIAL]|
|                          |                 |               |L]          |]            |              |              |              |
|                          |                 |[20-30]%       |[5-10]%     |[20-30]%     |[10-20]%      |[0-5]%        |[10-20]%      |
|Total                |[CONFIDENTIAL]        |[CONFIDENTIAL]        |[CONFIDENTIAL]         |[CONFIDENTIAL]                     |
|                     |Weekly frequency      |Weekly frequency      |Weekly frequency       |Weekly frequency (one-way)         |
|                     |(one-way)             |(one-way)             |(one-way)              |                                   |
|Aer Lingus           |14                    |22                    |14                     |22                                 |
|JBA                  |––                    |14                    |––                     |14                                 |
|Star JV              |––                    |                      |––                     |14                                 |

    Source: Annex 7.1 to the Form CO

       Market shares – Capacity

366) Table 23 below illustrates the total seat capacity of the Parties and the other carriers operating for direct flights on this route  in  the
    winter 2013/2014, summer 2014, winter 2014/2015 and summer 2015 IATA seasons.

    Table 23: Dublin–Chicago – seat capacity on direct services per IATA season

|Carrier               |winter 2013/2014            |summer 2014               |winter 2014/2015            |summer 2015               |
|Aer Lingus            |([90-100]%)                 |([70-80]%)                |([90-100]%)                 |([60-70]%)                |
|                      |[CONFIDENTIAL]              |[CONFIDENTIAL]            |[CONFIDENTIAL]              |[CONFIDENTIAL]            |
|JBA                   |––                          |([20-30]%)                |––                          |([20-30]%)                |
|                      |                            |[CONFIDENTIAL]            |                            |[CONFIDENTIAL]            |
|Star JV               |––                          |––                        |––                          |([5-10]%)                 |
|                      |                            |                          |                            |[CONFIDENTIAL]            |

Source: Annex 7.1 to the Form CO

       Market shares – passengers

367) Table 24 and Table 25 below illustrate the market position of the Parties in the winter 2013/2014 and summer 2014 IATA seasons.

    Table 24: Dublin–Chicago ORD – market shares – direct operations

|Carrier                    |winter 2013/2014                           |summer 2014                                |
|                           |All           |TS            |Non-TS        |All           |TS            |Non-TS        |
|JBA                        |––            |––            |––            |[10-20]%      |[5-10]%       |[10-20]%      |
|Combined                   |[90-100]%     |[90-100]%     |[90-100]%     |[80-90]%      |[90-100]%     |[80-90]%      |
|Star JV                    |[10-20]%      |[10-20]%      |[10-20]%      |[10-20]%      |[5-10]%       |[10-20]%      |
|(code share with Aer       |              |              |              |              |              |              |
|Lingus)                    |              |              |              |              |              |              |
|TOTAL                      |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |

    Source: Annex 07.2 to the Form CO

    Table 25: Dublin–Chicago ORD – market shares – direct and indirect operations

|Carrier                    |winter 2013/2014                           |summer 2014                                |
|                           |All           |TS            |Non-TS        |All           |TS            |Non-TS        |
|JBA                        |[0-5]%        |[0-5]%        |[0-5]%        |[10-20]%      |[5-10]%       |[10-20]%      |
|Combined                   |[80-90]%      |[80-90]%      |[80-90]%      |[80-90]%      |[90-100]%     |[70-80]%      |
|Star JV                    |[10-20]%      |[10-20]%      |[10-20]%      |[10-20]%      |[5-10]%       |[10-20]%      |
|(code share with Aer       |              |              |              |              |              |              |
|Lingus)                    |              |              |              |              |              |              |
|Sky Team JV                |[0-5]%        |[0-5]%        |[0-5]%        |[0-5]%        |[0-5]%        |[0-5]%        |
|Virgin Atlantic            |––            |––            |––            |[0-5]%        |[0-5]%        |[0-5]%        |
|TOTAL                      |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |[90-100]%     |

    Source: Annex 07.2 to the Form CO

368) On direct services only, during the winter 2013/2014 and summer 2014 IATA seasons, the Star JV was active on the route through  a  codeshare
    with Aer Lingus and achieved a market share of approximately [10-20%] and [10-20%] respectively in the all passengers segment. In  the  same
    period Aer Lingus held a share of [90-100%] and [70-80%] respectively.[327] The JBA achieved [10-20%] in the summer 2014 IATA season and was
    not active in the winter 2013/2014 season.

369) When looking at TS passengers the Parties held a combined share of approximately [90-100%] in the winter 2013/2014 IATA season and  [80-90%]
    in the summer 2014 IATA season.

370) The Parties' market shares in a market comprising direct and indirect services were high with [80-90%] and [80-90%] in  the  all  passengers
    segment in the winter 2013/2014 and summer 2014 IATA seasons. Moreover, passengers transported on indirect services  represented  less  than
    [10-20%] of the overall passenger numbers on the route. Therefore,  the  assessment  of  the  likely  effects  of  the  Transaction  on  the
    Dublin–Chicago route can be conducted taking into account the Parties' and their competitors' direct operations only.

371) The increments brought about by the Transaction remains small as far as TS passengers are concerned.

372) The Parties operate 36 weekly frequencies out of 50 and offer [90-100%] of the  total  capacity  on  the  route  in  the  summer  2015  IATA
    season.[328]

7 Constraint exercised by competitors

       Parties' views

373) The Parties submit that post-Transaction they will face strong competition from the Star  JV  and  potentially  the  Sky  Team  JV.  Chicago
    O'Hare, which is the fifth busiest airport in the world, is a hub airport of United.[329] As United (Star) is operating with this hub at one
    end of the route, it would according to the Parties be able to quickly and easily increase capacity on the route in  the  event  it  becomes
    commercially attractive to do so. The Sky Team JV is according to the Parties also well  placed  to  enter  the  route  either  direct  with
    services to ORD (where Delta has operations) or by increasing indirect services via JFK.

       Commission's assessment

374) Based on data for the summer 2014 IATA season, United (Star) and the Parties have similar departure and arrival times at both  ends  of  the
    Dublin–Chicago route in the short period from 4 June to 17 August during which United (Star) offers its direct service.

375) A majority of respondents to the market investigation indicate that Aer Lingus holds the strongest brand among the carriers  active  on  the
    Dublin–Chicago route.[330] Furthermore, they consider that Aer Lingus and the JBA are close competitors and, in particular, that Aer  Lingus
    is the JBA's strongest competitor.[331]

376) The Commission considers that the overlap between the Parties is seasonal only and does not cover the full summer season as the JBA  is  not
    operating for the full summer season (i.e. it operates only from 4 May until 19 October 2015). The  competitive  impact  of  the  merger  on
    competition on the route is therefore limited to part of the summer season only.

377) United's own service is currently somewhat limited in scale. Nonetheless, United's entry shows that barriers to entry are not  prohibitively
    high on the Dublin–Chicago route. Moreover, United's service during the summer season will exert some competitive constraint on the Parties.
    It shows that there is some degree of competition on the route despite Aer Lingus' strong position. Given the fact that United has a hub  in
    Chicago it is well-placed to expand its operations. Under  the  right  circumstances,  United's  service  may  develop  into  a  significant
    competitive constraint on the Parties on this route.

378) However, post-Transaction the Parties would indeed for the time being hold high market shares on the routes,  both  in  terms  of  passenger
    numbers and capacity. The JBA would also still be a competitive constraint, even if limited, on Aer Lingus which would  be  removed  through
    the Transaction. In addition, the Parties together would be in a position to offer a higher  number  of  frequencies  than  their  immediate
    competitor (United) could offer in the short term. Nevertheless, it is also noted that the JBA  and  United  would  operate  similar  weekly
    frequencies (see Table 22) when they are both active on the route.

379) Finally, a majority of respondents to the market investigation that expressed a view on the degree of competition that would remain on  this
    route post-Transaction considered that there will be sufficient competition to prevent the merged entity from raising prices.[332]

10 Congestion at Chicago airports – Entry/expansion

380) Dublin Airport is subject to the generally low barriers to entry described in  Section  V.5.7  above  for  such  types  of  routes.  ORD  is
    designated as a schedules facilitated (Level 2) airport under the IATA Worldwide Slot Guidelines. Therefore  new  entrants  would  not  face
    significant slot constraints should they wish to expand their services between Dublin and Chicago.

381) Beyond United's operations described above, no timely, likely and sufficient entry/expansion plans have been identified on the route  during
    the market investigation.

11 Conclusion on the Dublin–Chicago route

382) In light of the above and of the other available evidence, the Commission considers that the Transaction raises serious  doubts  as  to  its
    compatibility with the internal market with respect to the NTS segment and the all passengers segment for the Dublin–Chicago route.

7 Direct/indirect overlap routes

383) On the basis of the last four IATA seasons the Transaction gives rise to 36 direct/indirect overlaps on a  city-pair  level[333]  and  to  8
    direct/indirect overlaps on an airport-pair level.[334]

384) On these 44 routes, serious doubts as to the compatibility of the Transaction with the internal markets can be excluded  essentially  either
    because of low combined market shares of the Parties (SectionV.7.1.1), the low market share  increment  brought  about  by  the  Transaction
    (Section V.7.1.2), and/or due to significant competitors active on the route (Section V.7.1.3).

1 Low combined market shares

385) Out of the 44 direct/indirect overlap routes, the following 4 city pairs set out in Table 26 do not give rise to serious doubts  as  to  the
    compatibility of the Transaction with the internal market in view of the low combined market shares held by IAG and Aer Lingus.

    Table 26: Direct/indirect overlaps between IAG and Aer Lingus – Combined Market shares at city pair level

|Route      |Route Name          |winter 2013/2014                                    |summer 2014                                     |
|City Pair  |                    |                                                    |                                                |
|               |                  |Passengers                                        |Aer Lingus market share                         |
|               |                  |Passengers                                        |Aer Lingus market share                         |
|               |                  |Passengers                                        |Aer Lingus market share                         |
|                                                                                                             |
|Route Dublin-                             |W13/14                     |S14                                   |
|Dublin-Heathrow                           |[90 000 – 100 000]         |[100 000 – 200 000]                   |
|Dublin-Amsterdam                          |[70 000 – 80 000]          |[100 000 – 200 000]                   |
|Dublin-Chicago O'Hare                     |[40 000 – 50 000]          |[100 000 – 200 000]                   |
|Dublin-Boston                             |[30 000 – 40 000]          |[100 000 – 200 000]                   |
|Dublin-Gatwick                            |[20 000 – 30 000]          |[60 000 – 70 000]                     |
|Dublin–New York-JFK                       |[40 000 – 50 000]          |[100 000 – 200 000]                   |
|Dublin-Manchester                         |[10 000 – 20 000]          |[30 000 – 40 000]                     |
|Dublin-Paris Charles de Gaulle            |[10 000 – 20 000]          |[40 000 – 50 000]                     |
|Dublin-Toronto                            |[˂ 1 000]                  |[20 000 – 30 000]                     |
|Dublin-Rome                               |[5 000 – 10 000]           |[20 000 – 30 000]                     |
|Dublin-San Francisco                      |[˂ 1 000]                  |[20 000 – 30 000]                     |
|Dublin-Edinburgh                          |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Glasgow                            |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Frankfurt                          |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Birmingham                         |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Barcelona El Prat                  |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Orlando                            |[˂ 5 000]                  |[10 000 – 20 000]                     |
|Dublin-Brussels                           |[˂ 3 000]                  |[5 000 – 10 000]                      |
|Route Heathrow-                           |                           |                                      |
|Heathrow-Cork                             |[40 000 – 50 000]          |[60 000 – 70 000]                     |
|Heathrow-Shannon                          |[20 000 – 30 000]          |[40 000 – 50 000]                     |
|Heathrow-Belfast                          |[10 000– 20 000]           |[10 000 – 20 000]                     |

Source: MIDT Data provided by Aer Lingus in Form CO, Annex 18.2, Exhibit 07 (routes with more than a total of  10 000  connecting  passengers  in
winter 2013/14 and summer 2014 IATA seasons)

386) Table 31 below provides an order of magnitude of Aer Lingus feed to/from various third party carriers in 2014 (only including  routes  where
    Aer Lingus provided more than 150 feed passengers in any of winter 2013/14 and summer 2014 IATA seasons). On this selection of  routes,  Aer
    Lingus provided [500 000–1 000 000] feed passengers in 2014 to other carriers.

                                    Table 31: feed traffic provided by Aer Lingus to various carriers in 2014

|Carrier to which feed traffic is provided                |Aer Lingus feed traffic in 2014      |Main connecting airport(s)             |
|                                                         |(number of passengers)               |                                       |
|BA                                                       |[100 000 – 200 000]                  |Heathrow/Gatwick                       |
|Virgin                                                   |[90 000 – 100 000]                   |Heathrow/Gatwick                       |
|Air France-KLM                                           |[70 000 – 80 000]                    |Amsterdam                              |
|United                                                   |[60 000 – 70 000]                    |Chicago O'Hare/Heathrow                |
|Malaysia Airlines                                        |[60 000 – 70 000]                    |Heathrow                               |
|Air Canada                                               |[30 000 - 40 000]                    |Heathrow                               |
|Jet Blue                                                 |[20 000 – 30 000]                    |Boston/New York                        |
|American Airlines                                        |[20 000 – 30 000]                    |Heathrow                               |
|Etihad                                                   |[10 000 – 20 000]                    |Dublin                                 |
|Delta                                                    |[10 000 - 20 000]                    |Amsterdam                              |
|Cathay Pacific                                           |[10 000 – 20 000]                    |Amsterdam                              |
|US Airways                                               |[10 000 - 20 000]                    |Boston/Heathrow                        |
|Singapore Airlines                                       |[5 000 – 10 000]                     |Heathrow                               |
|Qatar Airways                                            |[5 000 – 10 000]                     |Heathrow                               |
|China Airlines                                           |[5 000 – 10 000]                     |Amsterdam                              |

Source: Calculated using the dataset in Form CO, Annex 18.5, Exhibit 5 (routes where Aer Lingus feed represented more than 150 passengers in  any
of winter 2013/14 and summer 2014 IATA seasons)

387) When including all of Aer Lingus routes, each year, around [CONFIDENTIAL]  passengers  connect  from  Aer  Lingus  over  London  to/from  BA
    services.

388) In the context of the market investigation, serious concerns were expressed by certain competitors, corporate customers, travel  agents  and
    aviation authorities as regards the effects of the Transaction on feed traffic at Heathrow. A majority of corporate customers who  expressed
    a view regarding the impact the Transaction would have, on their employees travelling from the UK or Ireland through Heathrow  in  order  to
    take a connecting flight indicated that they expected a negative impact (higher prices, lower services, etc.). A majority of  travel  agents
    who expressed a view regarding the impact of the Transaction shared this view. A majority of corporate customers and of  travel  agents  did
    however not consider that the impact would be negative for passengers originating in  other  regions  than  the  UK  or  Ireland  (ie.  from
    elsewhere in Europe or from other international places). Finally, a majority of competitors who expressed a view regarding  the  impact  the
    Transaction would have on passengers out of Heathrow, in particular on flights benefitting from the Parties' feed, indicated that the impact
    would be negative (in terms of prices offered, quality of services, etc.).[369]

389) In particular, several respondents made references to the fact that Aer Lingus is not currently a member of oneworld  and  is  an  important
    provider of feed to third party carriers, which could potentially change due to the Transaction. For  example,  the  CAA  states  that  "Aer
    Lingus is currently non-aligned having left the oneworld alliance in 2006, having been a member for six years, which allowed it  to  develop
    code shares provide regional feeder traffic to other non-oneworld carriers at Heathrow. In particular, Aer Lingus shares Heathrow Terminal 2
    with members of the Star Alliance. As a result, we consider that the competitive dynamics between oneworld and other  carriers  at  Heathrow
    are extremely important as each alliance competes to develop their networks and  attract  both  point-to-point  and  connecting  (interline)
    passengers. Indeed, if we look at alliances, Star would be the obvious closest  competitor  to  oneworld  at  Heathrow,  albeit  that  their
    networks offer a number of different route choices in addition to those they overlap. The transatlantic market is particularly important  in
    this regard, with business passengers valuing the simplicity of a "through ticket"." [370] The CAA further states:  "The  more  "connecting"
    airlines such as bmi and Aer Lingus are gathered inside IAG (and arguably by extension oneworld), the  more  difficult  will  be  for  other
    carriers to compete with IAG at Heathrow, as the successful operation of routes at Heathrow are in part reliant on the ability to connect to
    a range of other destinations operated by "partner airlines"." [371]

390) Furthermore, the terms of the recommended cash offer by IAG for Aer Lingus include Connectivity Commitments which IAG has  agreed  with  the
    Government of Ireland. The first condition of the Connectivity Commitments is about Aer Lingus slots at  London  Heathrow,  thus  indicating
    that Heathrow is the critical connecting hub for Irish traffic and that Aer Lingus' feed services between Heathrow and  all  Irish  airports
    are critical to ensure adequate connectivity.[372] While the terms of the announcement describe the intentions to grow Dublin as a hub, with
    "Ireland's location in the west of Europe mak[ing] it a natural gateway to connect Europe and North America"[373],  the  concern  to  ensure
    that the relevant Heathrow slots will continue to be used for  Irish  services  could  be  seen  as  implicitly  recognising  that  non-stop
    transatlantic flights on their own are insufficient to ensure the necessary connectivity.

391) In addition to concerns regarding the provision of feed traffic at Heathrow, during market investigation, certain customers and  competitors
    also raised concerns regarding the provision of feed  for  certain  long-haul  routes  from  Gatwick,  Manchester,  Dublin,  Amsterdam,  and
    Shannon.[374]

392) The theory of harm for routes departing from Gatwick is analogous to the theory  of  harm  for  routes  departing  from  Heathrow.  However,
    British Airways, Iberia and Vueling do not operate any direct long-haul services from Manchester, Dublin,  Amsterdam  or  Shannon.  The  JBA
    operates two direct long-haul services from Manchester (Manchester – New York JFK and Manchester – Chicago O'Hare),  one  long-haul  service
    from Amsterdam (Amsterdam – Philadelphia), and one seasonal long-haul service from Shannon (Shannon – Philadelphia).[375] However, IAG  does
    additionally operate long-haul services to/from several the same long-haul destinations from its hub airports at Heathrow and Gatwick.

393) According to this theory of harm, IAG would redirect feed traffic provided by Aer Lingus to third parties at these airports to its  own  hub
    airports in Heathrow and Gatwick in order to feed its own long-haul operations to the same destinations. As passenger data provided  by  the
    Parties  indicates  that  Amsterdam  and  Gatwick  attract  a  significant  share  of  connecting  passengers  from  Ireland   to   specific
    destinations[376], according to this theory of harm options available to connecting passengers to these destinations  would  be  reduced  if
    connecting traffic from Aer Lingus were to be redirected towards Heathrow as sole connecting hub.

394) Table 32 provides a route-by-route overview of  feed  traffic  provided  by  the  Parties  to  third  party  carriers  for  a  selection  of
    international long-haul destinations to which IAG operates from the same connecting hub as the third party-carriers, or from its own hubs at
    Heathrow and Gatwick. These routes and carriers have been selected on the basis of  thresholds  reflecting  the  importance  of  the  feeder
    traffic provided by the Parties relative to the total number of passengers travelling on the services provided by the carrier in question on
    the route, as well as on the basis of the market investigation.

395) Consistent with the Commission's practice in the case IAG/bmi,[377] the criterion applied to  select  the  routes  is  that  feeder  traffic
    provided by the Parties to the service in question accounts for 3% of the total number of passengers, or the feeder traffic provided by  Aer
    Lingus only accounts for 1% of the total number of passengers over winter 2013/14 and  summer  2014  IATA  seasons,  when  the  third  party
    receiving feed is not a member of oneworld. The connecting airports assessed by the Commission  were  all  the  airports  where  Aer  Lingus
    provided more than 150 feed passengers for any long-haul route in any of winter 2013/14 and summer 2014 IATA seasons. In addition, only long-
    haul destinations to which IAG (or including the JBA) carried at least 10,000 passengers from the same connecting hub, or from  Heathrow  or
    Gatwick, were considered. These thresholds focus the Commission's analysis on the routes where (i) feed from Aer Lingus or from the  Parties
    combined is higher than a de minimis proportion of total passengers on the  route,  and  therefore  where  a  hypothetical  foreclosure  may
    potentially impact the operations of the third party carriers; (ii) the third party carrier  is  not  in  the  same  alliance  as  IAG,  and
    therefore IAG may theoretically have an incentive to foreclose; (iii)  IAG's  operations  to/from  the  same  long-haul  destination/origin,
    from/to the same connecting hub or from/to its own hubs, are non-negligible and therefore IAG competes with the third party carrier.

396) A number of routes meeting the above criterion as concerns feed passenger numbers, but where oneworld alliance members  are  the  only  ones
    concerned by the provision of feed from Aer Lingus and/or IAG (e.g. London Heathrow-Kuala Lumpur where Malaysia Airlines is the sole carrier
    receiving feed from the Parties) are not included in the list of routes in Table 32. This exclusion is adequate as IAG is unlikely  to  have
    any incentive to foreclose its partners from the same alliance. Routes where at least one third party which was not  a  member  of  oneworld
    received feed were not excluded through this criterion.

397) The applied criterion is therefore adequate in the present case to focus the Commission's analyses of routes where feeder traffic  could  be
    a material aspect of operations for a third party carrier that is not in the same alliance as IAG.

   Table 32: feed traffic provided by the Parties at Heathrow, Gatwick, Amsterdam, Manchester and Shannon on a selection of international long-
                                                                   haul routes

|Connecting Airport          |Destination[378]                |Carrier to which feeder     |IAG's feed traffic (% of  |Aer Lingus' feed       |
|                            |                                |traffic is provided         |total passengers carried  |traffic (% of total    |
|                            |                                |                            |on the route to/from      |passengers carried on  |
|                            |                                |                            |connecting airport in     |the route to/from      |
|                            |                                |                            |2014)                     |connecting airport in  |
|                            |                                |                            |                          |2014)                  |
|Amsterdam                   |Abu Dhabi                       |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Bangkok                         |China Airlines              |[0-5]%                    |[5-10]%                |
|Amsterdam                   |Bangkok                         |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Beijing                         |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Beijing                         |China Southern Airlines     |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Cairo                           |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Doha                            |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Dubai                           |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Hong Kong                       |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Johannesburg                    |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Lagos                           |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Rio de Janeiro                  |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |São Paulo                       |Air France-KLM              |[0-5]%                    |[5-10]%                |
|Amsterdam                   |Singapore                       |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Tokyo-Narita                    |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Toronto Pearson                 |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|Amsterdam                   |Vancouver                       |Air France-KLM              |[0-5]%                    |[0-5]%                 |
|London Gatwick              |Bridgetown                      |Virgin                      |[0-5]%                    |[0-5]%                 |
|London Gatwick              |Cancún                          |Virgin                      |[0-5]%                    |[5-10]%                |
|London Gatwick              |Las Vegas                       |Virgin                      |[0-5]%                    |[5-10]%                |
|London Gatwick              |Orlando                         |Virgin                      |[0-5]%                    |[5-10]%                |
|London Heathrow             |Boston                          |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Calgary                         |Air Canada                  |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Cape Town                       |Virgin                      |[10-20]%                  |[0-5]%                 |
|London Heathrow             |Chicago-O'Hare                  |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Chicago-O'Hare                  |United                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Hong Kong                       |Virgin                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Houston                         |United                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Johannesburg                    |South African Airways       |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Johannesburg                    |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Los Angeles                     |Virgin                      |[10-20]%                  |[0-5]%                 |
|London Heathrow             |Los Angeles                     |United                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Los Angeles                     |Air New Zealand             |[20-30]%                  |[0-5]%                 |
|London Heathrow             |Los Angeles                     |Delta                       |[10-20]%                  |[0-5]%                 |
|London Heathrow             |Miami                           |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Montréal                        |Air Canada                  |[5-10]%                   |[0-5]%                 |
|London Heathrow             |New York-JFK                    |Delta                       |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Newark                          |United                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Newark                          |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Riyadh                          |Saudia                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |San Francisco                   |United                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |San Francisco                   |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Seoul                           |Korean Air                  |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Seoul                           |Asiana Airlines             |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Shanghai-Pudong                 |Virgin                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Singapore                       |Singapore Airlines          |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Sydney                          |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Tel Aviv                        |El AI                       |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Tokyo-Narita                    |Virgin                      |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Tokyo-Narita                    |All Nippon Airways          |[0-5]%                    |[0-5]%                 |
|London Heathrow             |Toronto Pearson                 |Air Canada                  |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Vancouver                       |Virgin                      |[10-20]%                  |[10-20]%               |
|London Heathrow             |Vancouver                       |Air Canada                  |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Washington-Dulles               |Virgin                      |[5-10]%                   |[0-5]%                 |
|London Heathrow             |Washington-Dulles               |United                      |[0-5]%                    |[0-5]%                 |
|Manchester                  |Bridgetown                      |Virgin                      |[0-5]%                    |[0-5]%                 |
|Manchester                  |Las Vegas                       |Virgin                      |[0-5]%                    |[0-5]%                 |
|Manchester                  |Orlando                         |Virgin                      |[0-5]%                    |[0-5]%                 |
|Shannon                     |Chicago-O'Hare                  |United                      |[0-5]%                    |[5-10]%                |

Source: MIDT data provided by IAG

* Each box in the last two columns contains the percentage of feed traffic on the long-haul route both to and from  the  connecting  airport  for
each of the Parties.

398) As shown in Table 32 above, the feed traffic provided by  Aer  Lingus  and  the  combined  traffic  provided  by  the  Parties  account  for
    significant shares of the total number of passengers carried on certain long-haul routes by certain carriers. For example, in  2014,  [0-5%]
    of the passengers carried by Air Canada and [10-20%] of the passengers carried by Virgin on their respective Heathrow-Vancouver routes  were
    carried by Aer Lingus on its "feed routes".[379] As another illustration, for Virgin, which is a significant recipient of feed traffic  from
    the Parties at Heathrow, Gatwick and Manchester, this feed traffic accounted for  approximately  [CONFIDENTIAL]  passengers  on  the  routes
    listed in Table 32, with [CONFIDENTIAL] passengers from Aer Lingus in 2014. [380] Aer Lingus also provides significant feed at Amsterdam  to
    Air France-KLM, and to certain other members of Sky Team on particular routes. This feed traffic from Aer Lingus accounted for approximately
    [CONFIDENTIAL] passengers for Air France-KLM on the routes listed in Table 32 in 2014. [381]

399) Overall, in addition to the concerns expressed during the market investigation, the magnitude of the feed traffic provided  by  the  Parties
    to carriers competing with IAG on a number of long-haul routes out of Heathrow, Gatwick,  Amsterdam,  Manchester  and  Shannon  warrants  an
    assessment of a theory of harm relating to foreclosure of access to flights for connecting passengers.

2 Ability to foreclose

400) To offer an indirect journey on a given city pair via a connecting hub,  access  to  flights  linking  each  end  of  the  route  with  that
    connecting hub may constitute an essential input. Therefore,  restriction  of  access  to  that  input  can  potentially  raise  competition
    problems.[382]

401) MITA and BITA agreements are typically open ended and have a 30 day notice/termination whereas SPAs are generally valid  for  one  year  and
    are renegotiated thereafter. It is also customary for SPAs to have a 30 day prior written notice termination clause that can be exercised by
    either carrier at any time, without cause. Codeshare agreements are  typically  open  ended  and  have  various  termination  clauses.  Most
    termination clauses for codeshare agreements include 3 months, 6 months or 180 days prior written notice by either party.[383]

402) Post-Transaction, IAG would therefore be able to terminate Aer Lingus' feed traffic agreements with third parties in  the  short  term  and,
    given this possibility, to impose on them a revision of such agreements on terms less favourable than pre-Transaction.

403) Moreover, even without terminating or revising interlining arrangements, IAG may be able to restrict interlining  partners'  access  to  its
    flights for example by discriminating against them as regards how access is provided to its seats  inventory.  [IAG's  inventory  management
    system] [[384]] [[385]]

404) Since IAG controls the system through which competing carriers book seats on its flights for connecting passengers, it  seems  possible  for
    IAG to close punctually certain booking classes for passengers  connecting  onto  another  carrier's  flight,  possibly  leaving  open  more
    expensive classes, or to reduce the number of seats available within certain fares  classes  to  passengers  wishing  to  connect  to  third
    parties' operations. It may not be immediately apparent to the other party to the interlining arrangement that  the  class  in  question  is
    still open for passengers connecting onto flights operated by IAG.

405) IAG's ability to foreclose access to its flights for connecting passengers on certain routes may be  limited  depending  on  the  degree  of
    market power that IAG would enjoy on these upstream markets.[386] On behind/beyond routes from Cork and Shannon where  Aer  Lingus  operates
    and IAG does not, Aer Lingus faces no competition (and thus enjoys market power). Therefore post-Transaction, IAG is likely to  be  able  to
    foreclose access to flights to Heathrow for connecting passengers on these routes on which Aer Lingus currently operates.

406) This is also likely to be the case for the two direct-direct overlap routes where the Parties currently operate alone to Heathrow,  or  have
    high combined market shares or frequencies on a Heathrow-only basis (i.e. from  Dublin  and  Belfast).  Indeed,  on  these  routes,  whereas
    currently, attempts by IAG to foreclose access to its own flights may result in carriers switching to Aer Lingus, this would not be the case
    post-Transaction.

407) In addition, according to the market investigation and data submitted by the Parties, the routes from Dublin,  Belfast,  Cork,  and  Shannon
    appear as important routes in terms of provision of feeder traffic to other carriers at Heathrow.[387]

408) Furthermore, based on evidence collected during the market investigation, routes from these airports also  appear  as  important  routes  in
    terms of provision of feed traffic to other carriers at Gatwick, Amsterdam and Manchester.  Routes  from  Heathrow  and  other  regional  UK
    airports appear important for the provision of feed at Dublin and Shannon.[388]

409) As concerns feed:

 a. at Gatwick, Aer Lingus is the only airline currently with interlining capabilities on flights from Dublin to Gatwick (its  major  competitor
    being Ryanair), from Belfast to Gatwick (its major competitor being easyJet), and is the only  airline  operating  services  from  Knock  to
    Gatwick.

 b. at Amsterdam, Aer Lingus currently operates alone on the routes from Dublin and Cork;

 c. at Manchester, Aer Lingus is the only airline currently with interlining capabilities on  flights  from  Dublin  to  Manchester  (its  major
    competitor being Ryanair) and operates alone on the route Cork-Manchester;

 d. at Shannon, Aer Lingus currently operates alone on the route from Heathrow and certain routes from UK regional airports that provide feed.

410) Therefore post-Transaction, IAG is likely to be able to foreclose access to flights  at  Gatwick,  Amsterdam,  Manchester  and  Shannon  for
    connecting passengers on these routes on which Aer Lingus currently operates.

411) The Parties also claim that no competition concerns will arise as a result of the Transaction with respect  to  the  availability  of  feed,
    because particularly for passengers connecting at Heathrow, subject to meeting the eligibility criteria, IAG is already committed  to  agree
    SPAs for the provision of feed passengers under the Article 9 Commitments given to the Commission in 2010 in the  context  of  the  BA/AA/IB
    transatlantic alliance case,[389] as well as the EUMR Phase I commitments given to the Commission in 2012 in the context of the IAG/bmi case
    (together, the "bmi/JBA Commitments").[390]

412) However, according to the Commission notice on  remedies  acceptable  under  Council  Regulation  (EC)  No  139/2004  and  under  Commission
    Regulation (EC) No 802/2004 ("the notice on remedies"), where a concentration raises competition concerns, the parties may  seek  to  modify
    the concentration in order to resolve the competition concerns and thereby gain clearance of their merger.  The  Commission  has  to  assess
    whether the proposed remedies, once implemented, would eliminate the competition concerns identified. Remedies  are  therefore  designed  to
    address competition concerns for a specific concentration. The current Transaction triggers a distinct competitive assessment  and  specific
    issues and is without prejudice to the proper application of other commitments submitted by IAG to resolve other competition concerns.

413) Furthermore, competition concerns at Gatwick, Manchester, Amsterdam  and  Shannon  airports  are  not  covered  by  the  scope  of  previous
    commitments submitted by IAG.

414) To conclude, post Transaction, IAG is likely to be able to hamper  access  to  flights  for  passengers  flying  to/from  certain  long-haul
    destinations and connecting at Heathrow, Gatwick, Amsterdam, Manchester and Shannon from/to the routes  currently  operated  by  Aer  Lingus
    from/to Dublin, Belfast, Cork, Shannon and Knock (and other European behind/beyond routes when Shannon is the connecting hub).

3 Incentive to foreclose

415) The incentives for an airline to foreclose a competitor in the context of feed traffic were described  by  the  Commission  in  the  IAG/Bmi
    decision.[391] In the present case, IAG could also deny or hamper access to its flights – or raise the  costs[392]  of  such  access  –  for
    passengers connecting onto flights operated by another carrier on a route where this carrier would compete with IAG. An objective  could  be
    to raise the costs incurred by other carriers in offering certain indirect journeys (e.g. Dublin–San  Francisco  via  Heathrow),  which  may
    allow IAG to raise prices for such indirect journeys. Another objective could be to divert away passengers from that competitor to IAG's own
    flights, with a view to increasing load factors but also to weaken that competitor and pave the way for price  increases.  For  example,  by
    applying such a foreclosure strategy on various "feed routes" to passengers connecting onto services offered by a competitor on the Heathrow
    – San Francisco route (where IAG also operates), IAG may reduce the number of passengers  carried  on  this  competitor's  services  between
    Heathrow and San Francisco. This competitor would then be weakened on this route and  exerts  less  competitive  pressure  on  IAG,  thereby
    allowing it to raise prices, both for direct journeys out of Heathrow to San Francisco  and  for  indirect  journeys  via  Heathrow  to  San
    Francisco.

416) Aer Lingus is currently providing a significant number of passengers to other carriers (in particular for the  routes  listed  in  Table  32
    above). Control by IAG over such a significant portion of the total number of passengers carried by a competitor on a given route is  likely
    to incentivise IAG to engage in a foreclosure conduct as such a conduct can be expected to have a significant impact on the profitability of
    this competitor and its ability to exert competitive constraint on IAG on the route.

417) [IAG business strategy regarding feed provided to certain carriers].[[393]][[394]]

418) However, one specific example of an interlining relationship is not necessarily representative of  all  such  relationships,  nor  of  IAG's
    overall incentive to foreclose, which needs to be based upon an assessment of these relationships as a  whole.  [IAG's  business  strategy],
    [example of benefit to IAG that could result from a foreclosure strategy].

419) [IAG business strategy].[[395]][[396]][[397]]

420) [EI business strategy].

421) [EI business strategy].[[398]]

422) The above shows that[, in the Commission's view,] IAG may well cause Aer Lingus to terminate many of its cooperation agreements  with  other
    carriers post-Transaction.

423) The incentive to foreclose depends on the degree to which foreclosure would be profitable. IAG is expected to  take  into  account  how  the
    provision of access to its flights for connecting passengers would affect its profits on that upstream market, but also its profits  on  the
    downstream air passenger transport market. IAG would face a trade-off between the profit lost in the upstream market due to a  reduction  of
    input sales to (actual or potential) rivals and the profit gain, in the short or longer term, from expanding sales  downstream  or,  as  the
    case may be, being able to raise prices to consumers. The trade-off is likely to depend on the level of profits the  merged  entity  obtains
    upstream and downstream. Other things being equal, the lower the margins  upstream,  the  lower  the  loss  from  restricting  input  sales.
    Similarly, the higher the downstream margins, the higher the profit gain from increasing.[399]

424) IAG and Aer Lingus provided margin data for a selection of short-haul and international long-haul routes to/from Heathrow, Gatwick,  Dublin,
    Manchester and Madrid, with the short-haul routes being the ones offering most feed traffic, and the long-haul routes  the  ones  benefiting
    from most feed traffic by the Parties. The selection of short-haul routes includes in particular routes from Dublin,  Belfast,  Cork,  Knock
    and Shannon. [Parties’ margin data].

425) Therefore, if IAG undertook a foreclosure strategy on a given route, even a small number of passengers diverted away from a competitor  onto
    one of  its  long-haul  flights  would  likely  make  foreclosure  profitable.[400]  [Parties’  inventory  management  systems  and  network
    contribution][401] [Parties’ inventory management systems and network contribution].[402]

426) In order to assess IAG's incentives to engage in a foreclosure strategy, it is necessary to take into  consideration  the  possibility  that
    certain passengers may switch from services via Heathrow (e.g.  Dublin–San  Francisco  via  Heathrow)  to  services  via  other  hubs  (e.g.
    Dublin–San Francisco via Amsterdam). Such passengers would not be diverted to IAG's services. IAG provided data illustrating that both  ends
    of the various routes operated by third parties from Heathrow, Gatwick, Manchester and Amsterdam would be well connected to a range of other
    European and non-European hubs, thus allowing the third party operators to generate feed at either end of the route  to  increase  its  load
    factor, and that there are realistic alternative routings to the same destinations within the third parties' networks.[403]

427) Heathrow is an important connecting hub for passengers from Ireland. Virgin provided data  indicating  that  23%  of  passengers  travelling
    to/from Ireland (19% of passengers travelling to/from Dublin) on a connecting journey to the rest of the world choose to fly  via  Heathrow,
    as compared to via other international connecting hubs. This percentage increases to 44% for passengers to/from Ireland excluding Dublin. In
    addition, Heathrow is also an important connecting hub among European airports, with 52% of passengers travelling to/from  Ireland  (46%  of
    passengers travelling to/from Dublin) on a connecting journey via an European hub choosing to fly via Heathrow, as  compared  to  via  other
    European hubs. This percentage increases to 75% for passengers to/from Ireland excluding Dublin.[404]

                                 Figure 4: First connecting point for passengers from Dublin and rest of Ireland

                                                                      [pic]

                                                                      [pic]

Source: [Non-confidential version of Virgin's submission of 8 May 2015, VAA analysis based on IATA DDS Estimated data, 2014]

428) Furthermore, Virgin provided data indicating that Heathrow offers a greater number of  frequencies  to  certain  international  destinations
    than are available via other hubs. In particular, there are more flights between Heathrow and the US than there are between any other  major
    hub in Europe and the US.[405] Coupled with the larger number of daily frequencies from Ireland to/from  Heathrow  compared  to  frequencies
    between Ireland and other connecting hubs (including frequencies between Ireland and  hubs  in  North  America),  this  provides  passengers
    connecting at Heathrow to a number of other long-haul destinations with a frequency advantage.

429) IAG also provided data on the proportion of connecting passengers travelling respectively from Ireland, via Heathrow and other  European  or
    non-European hubs, to various geographical regions (e.g. Ireland-North America). According to IAG, those  data  show  that  in  many  cases,
    regardless of which region they are flying to, Irish passengers choose to connect over a range of hub airports  and  are  not  dependent  on
    transferring at Heathrow, Gatwick or Manchester when flying to long-haul destinations outside Europe.[406] For certain city-pairs, IAG  also
    provided an analysis on feed provided by Aer Lingus at Heathrow and Gatwick, in light of other connecting passenger  options.  According  to
    IAG, those data show that for these city-pairs, feed from Aer Lingus at Heathrow, Gatwick or Manchester is not an important  factor  to  the
    sustainability of the third party's services on the long-haul sector. [407]

430) However, the Commission analysed these data, as well  as  data  provided  by  Dublin  Airport  Authority  regarding  Dublin  Airport  onward
    connecting traffic in 2014, and found that for several of these city pairs, more than half of the passengers travel via London Heathrow. The
    frequency of services is also higher for passengers connecting through Heathrow.

431) In addition, the proportion of connecting passengers to/from Ireland excluding Dublin travelling to the same destinations  through  Heathrow
    is often even greater. This constitutes an indication that at least in these cases, a foreclosure strategy leading to  price  increases  for
    indirect journeys via Heathrow offered by IAG's competitors, may not trigger a major switch of customers to indirect services via other hubs
    but may rather entice a large proportion of passengers to switch to IAG's services.

432) Furthermore, even in cases where the proportion of passengers travelling on the city pair via other hubs than Heathrow  is  higher,  it  has
    not been shown that a price increase for access to IAG's feeder flights would lead a large proportion of passengers to  switch  to  services
    via these other hubs. In the framework of the market investigation, travel agents and corporate customers were asked whether when booking  a
    flight which connects at Heathrow and for which the first leg is operated by Aer Lingus,  they  considered  and  compared  prices  of  other
    carriers' flights to the same destination via other European hubs. A large majority of travel agents and corporate customers indicated  that
    they would make such a comparison, for journeys either westwards or eastwards. Moreover, they mentioned various criteria used for the choice
    of a given itinerary, i.e. not only ticket prices but also overall travel time and connecting time and convenience at the hub. The fact that
    price clearly appears not to be the only criterion used to select a connecting hub is an indication that journeys on a given  city-pair  via
    two different hubs may be relatively differentiated services. This may limit the extent to which passengers would switch from  services  via
    Heathrow to services via another hub if they were facing a price increase.

433) Moreover, the Commission also found that for several routes to specific destinations and regions of the  world,  Amsterdam,  Manchester  and
    Gatwick also attract a very high proportion of connecting passengers from Ireland. For example, when travelling to Asia, 21.4% of passengers
    from Ireland connect through Heathrow and 14.7% through Amsterdam, while the other passengers connect through non-European hubs to which the
    frequency of flights from Ireland is lower than through these two hubs.[408] Similar percentages arise for specific routes  through  Gatwick
    and Manchester. Since these airports attract a significant share of connecting passengers from Ireland  to  specific  destinations,  options
    available to connecting passengers to these long-haul destinations would be reduced if  connecting  traffic  from  Aer  Lingus  were  to  be
    redirected towards Heathrow as connecting hub.

434) Aer Lingus' Rule 2.5 announcement on IAG's recommended cash offer also states that "In addition  to  improving  network  options  for  IAG's
    customers and those of its oneworld partner airlines, IAG also expects to gain new feed from the Irish market to support the development  of
    its London and Madrid hubs and help underpin its long haul routes into Asia-Pacific, Africa  and  Latin  America."  This  illustrates  IAG's
    incentive to divert feed from the other European hubs to Heathrow to feed its own long-haul operations.

435) Another relevant element to assess IAG's incentives to foreclose access to its flights for passengers connecting onto a flight  operated  by
    another carrier on a long-haul route where IAG also operates is the presence of a hub of this carrier at the non-London end of the route, or
    at both ends. IAG argues that a carrier with a hub at both ends of a route should be at least equally  well  placed  (if  not  significantly
    better placed) than IAG to provide feed passengers to its own services. Moreover, according to IAG, a carrier with a hub at  the  non-London
    end of a long haul route of concern would be able to leverage its provision of feed to IAG at its hub airport to secure feed from IAG.

436) In particular, the Parties claim that in a number of cases, IAG receives significant feed traffic from competitors on the  long-haul  routes
    of concern that have a hub at the non-London end of the route.[409] The Parties further claim that if IAG undertook a  foreclosure  strategy
    against their competitors on certain routes, this would expose the IAG carriers to the risk of  retaliation,  possibly  in  areas  of  their
    networks where they benefit disproportionately from interline arrangements with the same partner. Moreover, a carrier operating from  a  hub
    has in principle access to plentiful feeder traffic at its hub and, for that reason, would be unlikely to be  significantly  weakened  by  a
    foreclosure strategy undertaken by IAG. In particular, the Parties argue that when the interlining partner has a hub at the other end, IAG's
    incentives to engage in a foreclosure strategy targeting this kind of carriers would appear limited.[410]

437) [BUSINESS SECRETS].[[411]] [[412]] Therefore, while IAG's incentives to foreclose appear to be lessened in cases where it  competes  with  a
    carrier having a hub at the other end of the route (e.g. non-European  end),  situations  might  arise  where  imbalances  in  the  flow  of
    passengers could still lead to an incentive for IAG to engage in a foreclosure strategy on those routes.

438) Finally, the Parties argue that from the supply-side, using feed at points behind/beyond a relevant long-haul sector is only one of  several
    options available to an operator which operates a direct long-haul service in order to ensure that the sector has sufficient load-factor. In
    particular, the Parties argued that self-connecting is a viable and growing alternative for transatlantic passengers. The  Parties  referred
    to an analysis by Gatwick airport which found that "almost 1 million passengers connected at the airport to or from  an  [low-cost  carrier]
    and that this was before the launch of Gatwick Connect, the dedicated self-connection service aimed at encouraging passengers  on  [low-cost
    carriers] to transfer at the airport." Gatwick Connect is a self-connection  service[413]  aimed  at  facilitating  passengers  on  LCCs  to
    transfer at the airport.[414] The parties also submitted a Centre for Aviation article which calls self-connecting "the next vital piece  of
    the [airline] industry's development".[415]

439) However, data provided by Gatwick Connect indicates that the number of such self-connections remains marginal and does not  have  an  impact
    on the competitive assessment in this case. Only 45 000–50 000 passengers in total, of which  3 000–4 000  passengers  from/to  Belfast  and
    6 000–7 000 from/to Ireland used Gatwick Connect in 2014.[416]

440) The market investigation also points out that self-connections, while a growing trend, are still very limited as alternatives to  feed[417],
    notably due to the additional time required, the absence of services available on through-connections (baggage processing, check-in,  etc.),
    an increased risk of missing connections and the fact that self-connecting passengers who travel via the UK  would  be  liable  for  UK  Air
    Passenger Duty, whereas passengers through-connecting from an international flight to another international flight who transit  through  the
    UK (e.g. routing Ireland-UK-United States, connecting at Heathrow) would not.[418]

441) Therefore, the Commission considers that post-Transaction, IAG is likely to have the incentives to restrict access to its  flights  on  some
    and possibly all the routes on which Aer Lingus currently operates for passengers connecting onto flights competing with IAG's  services  on
    certain routes, in particular the routes listed in Table 32, in view of the importance of feeder traffic brought by  the  Parties  to  these
    routes.

4 Overall likely impact on effective competition

442) Anticompetitive foreclosure may occur when a vertical merger allows the parties to increase the costs of downstream  rivals  on  the  market
    thereby leading to an upward pressure on their sales prices. Significant harm to effective competition normally requires that the foreclosed
    firms play a sufficiently important role in the competitive process on the downstream market.[419]

443) During the market investigation, Virgin argued that consumers travelling on connecting routes between  Ireland  and  long-haul  destinations
    outside of Europe will lose altogether, or experience a significant decrease in, choice of carrier for the long-haul leg of  the  connecting
    journey. Indeed, Virgin provided data indicating that, there is currently a significant volume of passengers who travel on such routes via a
    UK point who choose to fly with a carrier other than BA on the long-haul leg. Virgin's submission also argues that Virgin  is  an  important
    provider of services for connecting passengers travelling between points in Ireland and long-haul destinations outside the EU,  despite  not
    operating directly to Ireland.

444) In case of foreclosure, the Commission is of the view that some of these passengers could be harmed  by  the  loss  of  choice.  During  the
    market investigation, some corporate customers and travel agents also expressed the view that, as a result of the  Transaction,  Aer  Lingus
    may stop providing feeder traffic or may provide less feeder traffic to other competitors on some of the routes listed  in  Table  32.  When
    asked whether such a reduction in feed would lead to a negative impact on their organization, certain respondents indicated that this  would
    lead to less connecting options, in particular over Heathrow, and reduce the number of cheap alternatives for travellers.[420]

445) Table 33 sets out for various routes listed in Table 32 the market share  of  various  third  party  airlines  which  could  be  potentially
    foreclosed by IAG, as a percentage of total passengers travelling on the route. Furthermore, the Parties' combined market  shares  are  very
    high on a number of routes, even taking into consideration the long-haul city pairs. If taking into account the airport pairs, these  market
    shares are even higher for some destinations.

     Table 33: % of passengers carried by potentially foreclosed competitors out of Heathrow, Gatwick, Amsterdam, Manchester and Shannon on a
                               selection of international long-haul airport pairs (W2013/14 and S2014 IATA seasons)

|Connecting Airport             |Destination[421]                  |Carrier to which feeder traffic is|%                               |
|                               |                                  |provided                          |                                |
|Amsterdam                      |Abu Dhabi                         |Air France-KLM                    |[50-60]%                        |
|Amsterdam                      |Bangkok                           |China Airlines                    |[20-30]%                        |
|Amsterdam                      |Bangkok                           |Air France-KLM                    |[20-30]%                        |
|Amsterdam                      |Beijing                           |Air France-KLM                    |[30-40]%                        |
|Amsterdam                      |Beijing                           |China Southern Airlines           |[50-60]%                        |
|Amsterdam                      |Cairo                             |Air France-KLM                    |[30-40]%                        |
|Amsterdam                      |Doha                              |Air France-KLM                    |[70-80]%                        |
|Amsterdam                      |Dubai                             |Air France-KLM                    |[20-30]%                        |
|Amsterdam                      |Hong Kong                         |Air France-KLM                    |[30-40]%                        |
|Amsterdam                      |Johannesburg                      |Air France-KLM                    |[60-70]%                        |
|Amsterdam                      |Lagos                             |Air France-KLM                    |[80-90]%                        |
|Amsterdam                      |Rio de Janeiro                    |Air France-KLM                    |[60-70]%                        |
|Amsterdam                      |São Paulo                         |Air France-KLM                    |[70-80]%                        |
|Amsterdam                      |Singapore                         |Air France-KLM                    |[40-50]%                        |
|Amsterdam                      |Tokyo-Narita                      |Air France-KLM                    |[70-80]%                        |
|Amsterdam                      |Toronto Pearson                   |Air France-KLM                    |[50-60]%                        |
|Amsterdam                      |Vancouver                         |Air France-KLM                    |[50-60]%                        |
|London Gatwick                 |Bridgetown                        |Virgin                            |[50-60]%                        |
|London Gatwick                 |Cancún                            |Virgin                            |[30-40]%                        |
|London Gatwick                 |Las Vegas                         |Virgin                            |[40-50]%                        |
|London Gatwick                 |Orlando                           |Virgin                            |[50-60]%                        |
|London Heathrow                |Boston                            |Virgin                            |[20-30]%                        |
|London Heathrow                |Calgary                           |Air Canada                        |[30-40]%                        |
|London Heathrow                |Cape Town                         |Virgin                            |[10-20]%                        |
|London Heathrow                |Chicago-O'Hare                    |Virgin                            |[10-20]%                        |
|London Heathrow                |Chicago-O'Hare                    |United                            |[20-30]%                        |
|London Heathrow                |Hong Kong                         |Virgin                            |[10-20]%                        |
|London Heathrow                |Houston                           |United                            |[40-50]%                        |
|London Heathrow                |Johannesburg                      |South African Airways             |[10-20]%                        |
|London Heathrow                |Johannesburg                      |Virgin                            |[20-30]%                        |
|London Heathrow                |Los Angeles                       |Virgin                            |[20-30]%                        |
|London Heathrow                |Los Angeles                       |United                            |[10-20]%                        |
|London Heathrow                |Los Angeles                       |Air New Zealand                   |[10-20]%                        |
|London Heathrow                |Los Angeles                       |Delta                             |[0-5]%                          |
|London Heathrow                |Miami                             |Virgin                            |[30-40]%                        |
|London Heathrow                |Montréal                          |Air Canada                        |[50-60]%                        |
|London Heathrow                |New York-JFK                      |Delta                             |[5-10]%                         |
|London Heathrow                |Newark                            |United                            |[10-20]%                        |
|London Heathrow                |Newark                            |Virgin                            |[20-30]%                        |
|London Heathrow                |Riyadh                            |Saudia                            |[40-50]%                        |
|London Heathrow                |San Francisco                     |United                            |[20-30]%                        |
|London Heathrow                |San Francisco                     |Virgin                            |[20-30]%                        |
|London Heathrow                |Seoul                             |Korean Air                        |[20-30]%                        |
|London Heathrow                |Seoul                             |Asiana Airlines                   |[30-40]%                        |
|London Heathrow                |Shanghai-Pudong                   |Virgin                            |[30-40]%                        |
|London Heathrow                |Singapore                         |Singapore Airlines                |[50-60]%                        |
|London Heathrow                |Sydney                            |Virgin                            |[5-10]%                         |
|London Heathrow                |Tel Aviv                          |El AI                             |[40-50]%                        |
|London Heathrow                |Tokyo-Narita                      |Virgin                            |[20-30]%                        |
|London Heathrow                |Tokyo-Narita                      |All Nippon Airways                |[10-20]%                        |
|London Heathrow                |Toronto Pearson                   |Air Canada                        |[40-50]%                        |
|London Heathrow                |Vancouver                         |Virgin                            |[5-10]%                         |
|London Heathrow                |Vancouver                         |Air Canada                        |[30-40]%                        |
|London Heathrow                |Washington-Dulles                 |Virgin                            |[20-30]%                        |
|London Heathrow                |Washington-Dulles                 |United                            |[20-30]%                        |
|Manchester                     |Bridgetown                        |Virgin                            |[70-80]%                        |
|Manchester                     |Las Vegas                         |Virgin                            |[20-30]%                        |
|Manchester                     |Orlando                           |Virgin                            |[70-80]%                        |
|Shannon                        |Chicago-O'Hare                    |United                            |[70-80]%                        |

Source: MIDT data provided by IAG

446) In a number of routes, the percentage of total passengers carried by competing airlines which could be potentially foreclosed by IAG  appear
    very significant, illustrating the important role played by the potentially foreclosed competitor in the competitive process on the  routes.
    In such cases, foreclosure by IAG (achieved through raising the costs of the foreclosed rival  or  reducing  the  number  of  passengers  it
    carries) is likely to weaken that competitor, lessen the competitive constraint it exerts on IAG, and eventually  bring  prices  up  on  the
    route.

447) Furthermore, Post-Transaction, a foreclosure strategy affecting such routes could result in foreclosing all rivals  on  relevant  downstream
    markets (e.g. all carriers offering indirect journeys on the Dublin–San Francisco O&D via Heathrow  could  be  foreclosed  in  view  of  the
    Parties' position on the Dublin–Heathrow route). This could result in significant price increase for such indirect journeys.

448) As concerns the situation at Heathrow, a foreclosure strategy which would  significantly  reduce  feed  traffic  (or  increasing  the  costs
    incurred to keep this feed traffic) is likely to have detrimental effects on the long-haul routes out of Heathrow, considering in particular
    the importance of the aggregate feed traffic brought by Aer Lingus alone and / or by the Parties together to certain  carriers  for  certain
    long-haul routes out of Heathrow. On some long-haul routes out of Heathrow, carriers which could be foreclosed by  IAG  appear  to  play  an
    important competitive role. If these carriers were materially affected by foreclosure achieved by IAG, the competitive constraint that  they
    would exert on other carriers active on the routes in question (including IAG) may be significantly reduced, bringing prices upwards.

5 Conclusion

449) The Transaction would likely lead IAG to engage in a foreclosure strategy consisting in restricting access to flights (or raising the  costs
    of that access) for passengers ex Dublin, Belfast, Cork, Knock and Shannon, connecting  at  Heathrow,  Gatwick,  Amsterdam,  Manchester  and
    Shannon to services operated by other carriers in competition with IAG on various long-haul routes. Such a strategy  is  likely  to  have  a
    detrimental impact on prices on these long-haul routes.

450) In light of the above and of the other available evidence, the Commission therefore considers that the Transaction raises serious doubts  as
    to its compatibility with the internal market as regards the provision of feed traffic to services operated by other carriers in competition
    with IAG on various long-haul routes out of the aforementioned connecting airports.

       COMPETITIVE ASSESSMENT Groundhandling

1 Horizontal relationships

451) On IAG's side only Iberia currently provides ground handling services to third parties at a number  of  Spanish  airports,  as  well  as  in
    Equatorial Guinea.[422]

                                     Table 34: Overview of IAG's ground handling services at Spanish airports

|Airport                                                   |2008–2015                          |2015–2022                            |
|ACE ("Arrecife Airport – Lanzarote")                      |( (via UTE)                        |X                                    |
|AGP ("Málaga International Airport")                      |(                                  |(                                    |
|ALC (" Alicante Airport")                                 |(                                  |(                                    |
|BCN ("Barcelona Airport")                                 |( (via UTE)                        |(                                    |
|BIO (" Bilbao Airport")                                   |(                                  |(                                    |
|FUE ("El Matorral Airport – Fuerteventura")               |( (via UTE)                        |X                                    |
|GRO ("Girona-Costa Brava Airport")                        |(                                  |(                                    |
|IBZ ("Ibiza Airport")                                     |(                                  |(                                    |
|LPA ("Gran Canaria International Airport")                |(                                  |(                                    |
|MAD ("Madrid–Barajas Airport")                            |(                                  |(                                    |
|MAH ("Mahon Airport")                                     |(                                  |(                                    |
|OVD ("Oviedo Airport")                                    |(                                  |(                                    |
|PMI ("Palma de Mallorca Airport")                         |(                                  |(                                    |
|REU ("Reus Airport")                                      |(                                  |(                                    |
|SCQ ("Santiago de Compostela Airport")                    |(                                  |(                                    |
|SVQ ("San Pablo Airport")                                 |(                                  |X                                    |
|TFN ("Tenerife North Airport – Los Rodeos Airport")       |(                                  |(                                    |
|TFS ("Tenerife South Airport – Reina Sofia Airport")      |(                                  |(                                    |
|VLC ("Valencia Airport")                                  |(                                  |X                                    |

    Source: Form CO, Table 6.63

452) At ACE and FUE,[423] Iberia indirectly provides ground handling services to  third  parties  via  a  Union  Temporal  de  Empresas  (UTE,  a
    temporary business structure in Spain) with CLECE (parent company of Clever Handling,  subsidiary  through  which  CLECE  provides  handling
    services at AGP, ACE and FUE),[424] and at BCN[425] Iberia is part of a UTE with Globalia Handling.

453) In Spain, suppliers of ramp services are selected for a period of seven years. A new call for tenders was launched in 2014, the  results  of
    which were announced on 13 May 2015 (and are set out in Table 6.63 below). The standard conditions of the tender establish, in principle,  a
    four month deadline for new suppliers to start operating.

454) As a result of these tenders, the UTEs referred to above will be dissolved following the implementation of  the  concession  agreements  and
    (i) Iberia will no longer supply ramp and airside cargo ground handling services to third parties at ACE and FUE;[426] and (ii) Iberia  will
    begin to supply third parties as an independent provider at BCN. In addition, Iberia will  no  longer  be  providing  services  at  SVQ  and
    VLC[427] (as different providers have been appointed); and

455) However this four month deadline has been suspended following an appeal filed by tender applicants excluded from the award.[428]  Suspension
    will last until the administrative court issues a ruling. Until the new concessions  are  implemented,  current  authorised  suppliers  will
    continue providing the ramp handling services.

456) Aer Lingus provides intra-group ground handling services at certain Irish  airports  (DUB,  ORK  and  SNN).[429]  Its  provision  of  ground
    handling services to third parties is limited to the provision of passenger and ramp ground handling services  to  Ethiad  at  DUB  and  the
    provision of airside cargo handling services to Etihad at DUB and SNN[430].

457) Accordingly, the Transaction does not lead to any horizontal overlaps between the Parties.

2 Vertical relationships

458) As regards vertical relationships, Aer Lingus does not provide any ground handling services to third parties at airports at which IAG  is  a
    purchaser of groundhanding services.

459) Aer Lingus does, however, purchase ground handling services exclusively from Iberia (or its consortia) at all airports at which  Iberia  (or
    its consortia) offers such services and Aer Lingus requires such services. That is, Iberia provides full ground  handling  services  to  Aer
    Lingus at AGP, ALC, BIO, IBZ, LPA, MAD, PMI, SCQ and TFS[431]. It also provides full ground handling services to Aer Lingus at FUE  and  ACE
    via its consortium with Clever Handling and at BCN[432] via its consortium with Globia Handling. Following the  implementation  of  the  new
    concession agreements, Iberia will no longer be active in supplying Aer Lingus at ACE and FUE[433] and therefore there  will  no  longer  be
    vertical relationships at these airports. Table 35 below sets out an overview of ground handling services provided to Aer Lingus by  IAG  in
    2014.

                                             Table 35: Overview of ground handling services provided

|Airport        |IAG's overall       |IAG's estimated market|Turnover IAG        |Turnover from Aer     |Estimated Aer Lingus    |
|               |turnover (€,        |share by volume (%)[2]|obtained from Aer   |Lingus as proportion  |demand as proportion of |
|               |thousand)[1]        |                      |Lingus (€, thousand)|of IAG turnover (%)   |total demand at airport |
|ACE            |[CONFIDENTIAL]      |[70-80]%              |[CONFIDENTIAL]      |[5-10]%               |[5-10]%                 |
|AGP            |[CONFIDENTIAL]      |[30-40]%              |[CONFIDENTIAL]      |[10-20]%              |[5-10]%                 |
|ALC            |[CONFIDENTIAL]      |[20-30]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|BCN            |[CONFIDENTIAL]      |[30-40]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|BIO            |[CONFIDENTIAL]      |[40-50]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|FUE[3]         |[CONFIDENTIAL]      |[50-60]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|IBZ            |[CONFIDENTIAL]      |[40-50]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|LPA            |[CONFIDENTIAL]      |[50-60]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|MAD            |[CONFIDENTIAL]      |[20-30]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|PMI            |[CONFIDENTIAL]      |[30-40]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |
|SCQ            |[CONFIDENTIAL]      |[90-100]%             |[CONFIDENTIAL]      |[10-20]%              |[10-20]%                |
|TFS            |[CONFIDENTIAL]      |[60-70]%              |[CONFIDENTIAL]      |[0-5]%                |[0-5]%                  |

Source: Form CO, Table 6.64

460) If the narrowest geographic market definition is considered (i.e., the  provision  of  ground  handling  services  at  individual  airports)
    vertically affected markets arise only at ACE, AGP, BCN, BIO, FUE, IBZ, LPA, PMI, SCQ and TFS[434] (as IAG's estimated market shares is over
    30% at each of those airports). Should the new concession agreements be confirmed by the administrative court (see Section  VI.1.1),  Iberia
    would no longer be active in supplying ground handling services at ACE and FUE[435] and therefore there  would  be  no  vertically  affected
    airport ground handling markets at these airports.

461) The Parties submit that as Aer Lingus already obtains all of its third-party ground handling services at  relevant  airports  from  IAG  (at
    each airport at which IAG offers such services), the Transaction should not alter IAG's ability or incentives to engage in any  hypothetical
    input foreclosure strategy. Furthermore, according to the Parties, the Transaction will simply internalise existing supply  arrangements  at
    the affected airports where IAG's incentives and ability to foreclose downstream rivals or other  ground  handling  suppliers  will  not  be
    affected by the Transaction.

462) Suppliers of ramp services are selected for a period of seven years. Following the results of the  latest  tender  process,  the  authorised
    ramp suppliers are set out in Table 36.

                                   Table 36:Authorised ramp suppliers at vertically affected airports following

|Airport (vertically affected market)                     |Handling agents                                          |
|Lanzarote (ACE)                                          |Aviapartner SAS; Swissport                               |
|Malaga (AGP)                                             |Aviapartner SAS; Globalia Handling; Iberia               |
|Barcelona (BCN)                                          |Globalia Handling; Iberia; Swissport                     |
|Bilbao (BIO)                                             |Globalia Handling; Iberia                                |
|Fuerteventura (FUE)                                      |Aviapartner SAS; Globalia Handling                       |
|Ibiza (IBZ)                                              |Globalia Handling; Iberia                                |
|Gran Canaria (LPA)                                       |Globalia Handling; Iberia                                |
|Palma de Mallorca (PMI)                                  |Acciona; Iberia; Globalia Handling                       |
|Santiago de Compostela (SCQ)                             |Iberia; WFS Servicios Aeroportuarios                     |
|Tenerife (TFS)                                           |Aviapartner SAS; Iberia                                  |

Source: Form CO, Table 6.66

463) In the Commission's market investigation, customers and competitors alike considered that the Transaction would have  a  neutral  impact  on
    the ground handling market in Spain.[436] No substantiated competition concerns were raised by any competitor or customer.

464) The Commission considers that ramp handling suppliers at Spanish airports have an obligation  to  provide  all  services  requested  by  the
    carriers which are covered by the concession agreement.[437] If a customer is not able to obtain the services from any of the suppliers at a
    given airport, AENA may impose on a supplier the obligation to provide the service at this airport.

465) In addition, at each of the vertically affected airports  (with  the  current  exception  of  SCQ[438])  there  will  remain  at  least  one
    alternative supplier of ground handling services and, following the implementation of the new concession agreement, there will be also be an
    alternative supplier at SCQ (WFS Servicios Aeroportuarios).

466) Aer Lingus accounts for a maximum of [10-20%] of purchases of ground handling services at each  Spanish  airport  at  which  it  makes  such
    purchases. Therefore, the Commission considers that the Transaction will not change  IAG's  current  incentive  to  continue  supplying  its
    downstream rivals. For SCQ, at which there is currently no alternative ground handling supplier, Aer Lingus only accounts  for  [10-20%]  of
    IAG's turnover. IAG would therefore still be incentivised to continue to supply the  other  [80-90%]  of  demand.  Moreover,  AENA  recently
    announced that WFS Servicios Aeroportuarios will start to offer ground handling services at SCQ in 2015.

467) Post-Transaction, IAG will also not have the ability to engage in customer foreclosure of other suppliers of ground handling  services.  Aer
    Lingus is a relatively small purchaser of ground handling services (a maximum of [10-20%],  irrespective  of  the  airport  considered)  and
    already obtains all of its third-party ground handling services from  IAG  (at  each  airport  at  which  IAG  offers  such  services).  The
    Transaction would, therefore, not affect the ability that IAG would have to engage in a hypothetical customer foreclosure strategy.

3 Conclusion

468) In light of the above and of the available evidence, the Commission considers that the Transaction does not raise serious doubts as  to  its
    compatibility with the internal market with respect to the market for ground handling services under any plausible market definitions.

       COMPETITIVE ASSESSMENT landside cargo handling

469) IAG supplies landside cargo handling services to third parties at BCN and MAD[439] and Aer Lingus supplies landside cargo handling  services
    to third parties at DUB and SNN[440]. Accordingly, the Transaction leads to no horizontal overlaps between the Parties.[441]

470) The only vertically affected market for landside cargo handling is at BCN where Aer Lingus currently purchases landside cargo services  from
    Swissport. IAG had an estimated share of [30-40%] of the total supply of landside cargo handling services at BCN in 2014, while  Aer  Lingus
    accounted for just [0-5%] of demand for third party landside cargo handling services. Post-Transaction,  there  will  still  be  two  strong
    suppliers of landside cargo services (Swissport and World Flight Services). These operators are part of  larger  multinational  corporations
    and are, therefore, well placed to increase supply in the hypothetical event  that,  post-Transaction,  IAG  attempted  to  foreclose  other
    airlines.

471) Further, in 2014, IAG's turnover from landside cargo handling services at BCN was [CONFIDENTIAL] and Aer Lingus  spent  just  [CONFIDENTIAL]
    on such services at BCN in 2014. The Transaction would, therefore, not affect any ability that IAG would have to engage  in  a  hypothetical
    customer foreclosure strategy.

472) In light of the above and of the available evidence, the Commission considers that the Transaction does not raise serious doubts as  to  its
    compatibility with the internal market with respect to  the  market  for  landside  cargo  handling  services  under  any  plausible  market
    definitions.

       COMPETITIVE ASSESSMENT MRO

1 Horizontal relationships

473) Table 37 provides a list of airports at which IAG provides MRO services[442] to third parties.

                                Table 37: Overview of airports at which IAG provides MRO services to third parties

|MRO activity                       |IAG                                                                            |
|                                   |British Airways                        |Iberia                                 |
|Line maintenance                   |AMS, ATH, ATL, BCN, BLR, BOM, BOS, DEL,|AMS, ACC, ACE, AGP, ALC, BCN, BIO, BRU,|
|                                   |DFW, DME, DXB, EBB, EDI, EWR, EZE, FCO,|DKR, EAS, EZE, FCO, FUE, GIG, GRU, GRX,|
|                                   |GIG, GRU, GVA, IAD, IAH, JFK, LAX, LCA,|GUA, GVA, IBZ, JFK, LCG, LEI, LHR, LIM,|
|                                   |LGW, LHR, LIN, LIS, LOS, MAA, MAD, MAN,|LOS, LPA, MAD, MAH, MEX, MIA, MJV, ORD,|
|                                   |MCO, MIA, MUC, MXP, NBO, OAK, ORD, ORY,|ORY, OVD, PMI, PNA, PTY, SCL, SCQ, SDR,|
|                                   |PHL, SEA, SFO, SYD, VCP, YYZ[443]      |SJO, SPC, SSG, SVQ, TFN, TFS, VGO, VIT,|
|                                   |                                       |VLC, VLL, XRY[444]                     |
|Heavy maintenance                  |-                                      |MAD, BCN[445]                          |
|Engine maintenance                 |-                                      |MAD                                    |
|Components maintenance             |LHR and 2 off-airport facilities in    |MAD                                    |
|                                   |South Wales                            |                                       |

    Source: Form CO, Table 6.58

474) Aer Lingus does not provide any MRO services to third parties. Therefore, the Transaction does not give rise to horizontal overlaps  in  the
    MRO market segment.

2 Vertical relationships

475) Table 38 provides IAG's estimated market shares for the provision of heavy maintenance, engine maintenance and component maintenance at  the
    national, EEA, and worldwide level.

           Table 38: IAG's estimated market shares for the provision of heavy maintenance, engine maintenance and component maintenance

|                                   |Estimated 2014 market share (%)                                                 |
|                                   |UK               |Spain             |EEA              |Worldwide                 |
|Heavy maintenance                  |[0-5]%           |[10-20]%          |[0-5]%           |[0-5]%                    |
|Engine maintenance                 |[0-5]%           |[10-20]%          |[0-5]%           |[0-5]%                    |
|Components maintenance             |[0-5]%           |[5-10]%           |[0-5]%           |[0-5]%                    |

    Source: Form CO, Table VIII.3

476) As it can be seen in the table above, when looking at the national, EEA, and  worldwide  level  IAG  achieves  its  highest  share  for  the
    provision of heavy maintenance, engine maintenance and component maintenance in Spain where it holds a share of [10-20%] for  the  provision
    of engine maintenance. Furthermore, the Parties submit that Aer Lingus' share of demand for  such  services  is  not  such  as  to  lead  to
    vertically affected markets, be it at the national, EEA, or worldwide level.

477) In addition, IAG does not provide heavy maintenance, engine maintenance or components maintenance to third parties at any airport  at  which
    Aer Lingus is a purchaser of such services. Therefore, at the individual airport level, which is the narrowest  possible  geographic  market
    for these services, there are no vertical relationships between the air transport of passengers/cargo services provided by  Aer  Lingus,  on
    the one hand, and the provision of heavy maintenance, engine maintenance, and components maintenance services provided by IAG, on the other.

478) The Parties consider therefore that there are no affected markets in heavy maintenance, engine maintenance or components maintenance.[446]

479) Table 39 lists the airports at which in 2014 (i) IAG provided line maintenance services to third parties;  and  (ii)  Aer  Lingus  purchased
    such services (whether from IAG or a third party).

                                Table 39: Overview of IAG's 2014 line maintenance activities at relevant airports

|Airport           |IAG's overall line      |IAG's estimated line    |Line maintenance        |Line maintenance        |
|                  |maintenance turnover (€,|maintenance market share|turnover IAG obtained   |turnover from Aer Lingus|
|                  |thousand)               |by volume (%)[1]        |from Aer Lingus (€,     |as proportion of IAG    |
|                  |                        |                        |thousand)               |total (%)               |
|AGP               |[CONFIDENTIAL]          |[50-60]%                |[CONFIDENTIAL]          |[0-5]%                  |
|ALC               |[CONFIDENTIAL]          |[40-50]%                |[CONFIDENTIAL]          |[60-70]%                |
|AMS               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|ATH               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|BCN               |[CONFIDENTIAL]          |[50-60]%                |[CONFIDENTIAL]          |[0-5]%                  |
|BIO               |[CONFIDENTIAL]          |[90-100]%               |[CONFIDENTIAL]          |[5-10]%                 |
|BOS               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[90-100]%               |
|BRU               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|EDI               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|FCO               |[CONFIDENTIAL]          |[5-10]%                 |[CONFIDENTIAL]          |[0-5]%                  |
|FUE               |[CONFIDENTIAL]          |[60-70]%                |[CONFIDENTIAL]          |[50-60]%                |
|GVA               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|IBZ               |[CONFIDENTIAL]          |[70-80]%                |[CONFIDENTIAL]          |[10-20]%                |
|JFK               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|LGW               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|LHR               |[CONFIDENTIAL]          |[10-20]%                |[CONFIDENTIAL]          |[0-5]%                  |
|LIN               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[90-100]%               |
|LIS               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|LPA               |[CONFIDENTIAL]          |[70-80]%                |[CONFIDENTIAL]          |[5-10]%                 |
|MAD               |[CONFIDENTIAL]          |[30-40]%                |[CONFIDENTIAL]          |[0-5]%                  |
|MAN               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|MCO               |[CONFIDENTIAL]          |[5-10]%                 |[CONFIDENTIAL]          |[0-5]%                  |
|MUC               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|MXP               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|ORD               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[20-30]%                |
|PMI               |[CONFIDENTIAL]          |[60-70]%                |[CONFIDENTIAL]          |[10-20]%                |
|SCQ               |[CONFIDENTIAL]          |[90-100]%               |[CONFIDENTIAL]          |[30-40]%                |
|SFO               |[CONFIDENTIAL]          |[0-5]%                  |[CONFIDENTIAL]          |[0-5]%                  |
|TFS               |[CONFIDENTIAL]          |[40-50]%                |[CONFIDENTIAL]          |[60-70]%                |

    Source: Form CO, Table 6.60

480) If the narrowest geographic market definition is considered (i.e., the provision of  line  maintenance  services  at  individual  airports),
    vertically affected markets arise at the following airports: AGP, ALC, BCN, BIO, FUE, IBZ, LPA, MAD, PMI, SCQ, and TFS[447].

481) The Transaction is unlikely to raise input or customer foreclosure concerns at any of the vertically affected airports.

482) The Transaction will not materially change IAG's incentives to restrict access for its competitors in the air transport sector to  its  line
    maintenance services. Aer Lingus represents only a small percentage of the demand  at  the  vertically  affected  airports  considering  the
    limited number of flights it operates at these airports. Therefore, IAG will, still have the incentive to supply line  maintenance  services
    to third parties post-Transaction.

483) Furthermore, even if IAG were to engage in input foreclosure it is unlikely that such strategy would adversely affect IAG's competitors.  As
    it can be seen in Table 40 below, there are existing alternative suppliers of line maintenance services  at  each  airport,  with  the  sole
    exception of SCQ[448], that could service IAG's competitors. In this respect, it must be noted that it is not mandatory for  an  airline  to
    contract for line maintenance services at each airport to which it flies.

484)  In addition, if the market for line maintenance were to be considered regional in scope, there will be a number  of  alternative  suppliers
    to IAG that could address the demand of its competitors for line maintenance services. Further, the existing third party providers  of  line
    maintenance services are well-placed to expand their current offering and/or to start offering services at  additional  airports  (including
    SCQ[449]).

                                      Table 40: Line maintenance competitors at vertically affected airports

|Airport             |Line maintenance provider                                                                             |
|AGP                 |Monarch Aircraft Engineering                                                                          |
|ALC                 |Hispano Lusitana de Aviación, Monarch Aircraft Engineering; Inaer Maintenance                         |
|BCN                 |Lufthansa Technik; Nayak Aircraft Services                                                            |
|BIO                 |Air France Industries KLM Engineering & Maintenance                                                   |
|FUE                 |Total Aviation Services; Brok-air Aviation Group; Hispano Lusitana de Aviación                        |
|IBZ                 |Total Aviation Services                                                                               |
|LPA                 |BinterTechnic (Mantenimiento e Ingeniería Aeronáutica del Atlántico Sur)                              |
|MAD                 |Delta TechOps; SR Technics; TAG Aviation; Jet Aircraft Services; Swiftair Maintenance                 |
|PMI                 |Brok-air Aviation Group; Hispano Lusitana de Aviación; AirBerlin Technik; Total Aviation Services; Air|
|                    |Europa; Aircraft Components Maintenance Service                                                       |
|SCQ                 |N/A                                                                                                   |
|TFS                 |Monarch Aircraft Engineering                                                                          |

    Source: Form CO, Table 6.61

485) As discussed above, Aer Lingus represents only a small percentage of the demand at the vertically affected airports therefore  any  customer
    foreclosure strategy by IAG would only have a limited impact on its competitors for the provision of line maintenance services.

486) Respondents to the market investigation did not put forward any substantiated concerns in relation to MRO services.[450]

487) In light of the above, the Commission considers that the Transaction does not  raise  serious  doubts  as  to  its  compatibility  with  the
    internal market with respect to the market for MRO services under any plausible market definitions.

       Commitments

1 PROPOSED COMMITMENTS

488) In order to render the  concentration  compatible  with  the  internal  market,  the  undertakings  concerned  have  modified  the  notified
    concentration by entering into the following commitments, which are annexed to this decision and form an integral part thereof.

489) In order to address the serious doubts raised by the Transaction on feed traffic issues as well as on unilateral  effects  concerns  on  the
    Dublin–Chicago route, IAG submitted Special Prorate Agreements ("SPA") commitments on 24 June 2015.[451] IAG submitted  revised  commitments
    on 28 June 2015. On 29 June 2015, the Commission launched a market test in order to gather the opinion of market participants.

490) On 3 July 2015, to address the serious  doubts  raised  by  the  Transaction  on  the  unilateral  effects  on  the  London–Dublin  and  the
    Belfast–London routes, IAG submitted a revised remedy package, including slot commitments.[452] On the same day, the Commission  launched  a
    market test in order to gather the opinion of market participants.

491) Following the market tests, an improved final version of the commitments, encompassing both slot and SPA commitments) was submitted  by  IAG
    on 8 July 2015 (the "Final Commitments").

492) The main aspects of the Final Commitments are summarised below.[453]

1 The slot commitments

1 Slot release on city pairs with competition concerns

493) Under the Final Commitments, IAG commits to procure that slots are made available at  London  Gatwick  to  allow  one  or  more  Prospective
    Entrant(s) to operate up to five (5) new or additional daily Frequencies on the  following  city  pairs  (the  "Relevant  London-Irish  City
    Pairs") as follows:

        a) two daily frequencies to/from Dublin; and

        b) one daily frequency to/from Belfast;

        c) with the remaining two (2) daily Frequencies to/from either Dublin or Belfast, or both.[454]

2 Conditions pertaining to the slots

494) A prospective entrant shall be eligible to obtain slots from IAG only if it can demonstrate that it has exhausted all reasonable efforts  to
    obtain the necessary slots to operate on the city pairs concerned through the normal workings of the normal slot allocation  procedure.  The
    prospective entrant shall be deemed not to have exhausted all reasonable efforts to obtain necessary slots if,  inter  alia,  (a)  slots  at
    Gatwick were available through the general slot allocation procedure within 20 minutes of the times requested but such slots have  not  been
    accepted by the prospective entrant; or (b) slots at Gatwick were obtained through the normal slot allocation procedure more than 20 minutes
    from the times requested and the prospective entrant did not give IAG the opportunity to exchange those slots for slots within 20 minutes of
    the times requested; or (c) it has not exhausted its own slot portfolio at Gatwick.

495) Slots will be released within 20 minutes (as relevant) of the time requested if IAG has such slots available. Otherwise, IAG must offer  the
    slots closest in time to the request.

496) However, IAG may refuse to offer any arrival slots at Gatwick after 23:30 (local time). If a prospective entrant requests  an  arrival  slot
    at Gatwick after 23:30, IAG may offer a slot between 22:30 and 23:30 (local time). In addition, IAG shall not be  obliged  to  release  more
    than one (1) daily departure slot at Gatwick in any hour of the day (local time), i.e. no more than one (1) daily departure slot at  Gatwick
    06:00–07:00 (local time), no more than one (1) daily departure  slot  at  Gatwick  07:00–08:00  (local  time),  etc.  As  an  exception,  in
    circumstances where no such departure slot has been granted or requested by any prospective entrant in the 06:00–08:00 (local time)  period,
    two (2) departure slots may instead be requested in either the 08:00–09:00 (local time)  period  or  the  09:00–10:00  (local  time)  period
    instead of one (1) in each of those two periods, provided that in circumstances where two (2) departure slots are so requested in  the  same
    such period: (a) the two such departure slots shall not be used on the same Relevant London-Irish City Pair; and (b) no more than one of the
    arrival slots at Gatwick released by IAG under the Final Commitments will be before 08:00 (local time).

497) In the event that a prospective entrant requests departure slot timings which  cannot  be  accommodated  IAG  shall  offer  the  prospective
    entrant the next closest slot to the time requested. In addition, the five departure slots released by IAG should be spread  throughout  the
    day, including: no more than two slots in the period up until 12:00 local time, no more than two slots in the  period  after  12:00  and  up
    until 16:00 local time, and no more than two slots in the period after 16:00 local time.

3 Grandfathering rights

498) As a general rule, the slots obtained by a prospective entrant must be operated on the city pair(s) for which they have been requested  from
    IAG and cannot be used on another city pair unless the prospective entrant has operated them during  at  least  six  full  consecutive  IATA
    seasons (the "Utilisation Period"). The prospective entrant would be deemed to have grandfathering rights for the slots once appropriate use
    of the slots has been made on the city pairs at issue, for the Utilisation Period. Once the Utilisation Period has elapsed, the  prospective
    entrant will be entitled to use the slots obtained on the basis of the Final Commitments to operate services on any route connecting  London
    with any other part of Europe (including the European Union, Iceland, Norway, Switzerland and the Channel Islands).

499) During the Utilisation Period, the prospective entrant shall not be entitled to transfer, assign, sell, swap or  charge  in  breach  of  the
    Final Commitments any slots obtained from IAG under the slot release procedure (except for changes to any such slots which are within the 20
    minutes time window and which have been agreed with the slot coordinator). Provisions on misuse of slots also  apply.  In  the  event  of  a
    misuse, the prospective entrant shall have thirty days after such notice to cure the misuse,  failure  to  which  gives  IAG  the  right  to
    terminate the agreement and obtain restitution of the slots.

4 Consideration

500) Since the slots released under the Final Commitments are at an  airport  where  secondary  trading  takes  place,  the  agreement  with  the
    prospective entrant may provide for monetary and/or other consideration, so long as such contractual provisions are  clearly  disclosed  and
    comply with the Final Commitments and all other administrative requirements set out in the applicable legislation.

2 The SPA commitments

501) IAG commits that Aer Lingus would enter into SPAs with carriers which operate or will operate a non-stop service  between  the  airports  of
    Heathrow, Gatwick, Manchester, Amsterdam Shannon and/or Dublin (the "Relevant Airport Hubs") to certain long haul destinations identified in
    the Final Commitments. The SPAs will be applied to short-haul routes between certain airports in  the  island  of  Ireland  (Belfast,  Cork,
    Dublin, Knock and/or Shannon, the "Relevant Irish Airports") on the one  hand,  and  London  Heathrow,  London  Gatwick,  Manchester  and/or
    Amsterdam on the other hand. With respect to feeder routes to/from Shannon and/or Dublin, the SPAs will  be  applied  to  short-haul  routes
    from/to airports in Europe from/to which Aer Lingus operates frequency to/from Shannon or Dublin (as relevant) at the time of an application
    for an SPA under the Final Commitments, and which continue to be so operated by Aer Lingus whilst the relevant SPA is in force.

502) The Final Commitments relating to SPA will allow carriers currently receiving significant feed from Aer Lingus to continue to  do  so  post-
    Transaction. Furthermore, they will also support new services to Chicago ex-Dublin by granting to the potential entrant(s) Aer Lingus' feed.

503) IAG commits to procure that Aer Lingus would enter into an SPA with non oneworld airlines which provide or will provide a  non-stop  service
    between the Relevant Hub Airport and the following long-haul destinations (together, the "Relevant Long-Haul Destination/Origin Cities"):

        i. from/to Heathrow to/from: Boston (BOS), Chicago (ORD), Houston (IAH), Los Angeles (LAX), Miami (MIA), New York  (EWR  and  JFK),  San
           Francisco (SFO), Washington (IAD), Calgary (YYC), Montreal (YUL), Toronto (YYZ), Vancouver  (YVR),  Hong  Kong  (HKG),  Seoul  (ICN),
           Shanghai (PVG), Singapore (SIN), Tokyo (NRT), Riyadh (RUH), Tel Aviv (TLV), Cape Town (CPT), Johannesburg (JNB) and Sydney (SYD);

       ii. from/to Gatwick to/from: Las Vegas (LAS), Orlando (MCO), Cancun (CUN) and Bridgetown (BGI);

      iii. from/to Manchester to/from: Las Vegas (LAS), Orlando (MCO) and Bridgetown (BGI);

       iv. from/to Amsterdam to/from: Abu Dhabi (AUH), Doha (DOH), Dubai (DXB), Bangkok (BKK), Beijing (PEK),  Hong  Kong  (HKG),  Tokyo  (NRT),
           Singapore (SIN), Cairo (CAI), Lagos (LOS), Johannesburg (JNB), Rio de Janeiro (GIG), São Paulo (GRU),  Toronto  (YYZ)  and  Vancouver
           (YVR);

        v. from/to Shannon to/from: Chicago (ORD);

       vi. from/to Dublin to/from: Chicago (ORD).

504) The Final Commitments define a "Hub" as an airport at which an airline, airline joint business and/or  Alliance  operates  long-haul  and/or
    short-haul air passenger transport services and where there are a material number of connections between such services. The wording captures
    in an appropriate manner airports which involve material numbers of long-haul to long-haul connections (such as are  sometimes  operated  by
    e.g. Gulf carriers) or material numbers of short-haul to short-haul connections (as are sometimes operated by e.g. US carriers).[455]

505) In addition, the SPA will apply to up to 5 Aer Lingus-operated short-haul services  between  Shannon  and  certain  points  in  Europe  (the
    "Relevant Short-Haul Origin/Destination Cities") for the requesting airline non-stop services operated to/from Shannon to/from Chicago.

506) Further, the SPA will apply to up to 20 Aer Lingus-operated short-haul services between Dublin and certain points in Europe  (the  "Relevant
    Short-Haul Origin/Destination Cities") for the requesting airline non-stop services operated to/from Dublin to/from Chicago. This commitment
    is meant to address the serious doubts of the Commission on the unilateral effects on the Dublin–Chicago route, by ensuring support for  new
    third party services on this route until they are established.

507) With respect to feeder routes to/from London Heathrow, London Gatwick, Manchester, and/or Amsterdam, the  SPA  will  apply  to  Aer  Lingus'
    frequencies operated during the winter 2014 and the summer 2015 IATA seasons. The number of frequencies shall be  increased  if,  after  the
    date of adoption of this decision, Aer Lingus operates additional frequencies on the relevant feeder route. The number of frequencies  shall
    be decreased if, after the adoption of this decision, Aer Lingus operates fewer frequencies on the relevant  feeder  route,  unless  another
    airline within IAG increases its frequencies on the same feeder route in a given timeframe set out in the Final Commitments. In  this  case,
    the SPA will apply to the increased frequencies of the other airline belonging to IAG.

508) The Final Commitments envisage certain restrictions as regards the eligibility of the requesting  carrier.  To  be  eligible,  a  requesting
    carrier should not be a member (or affiliated to a member of) of the oneworld alliance and should not  have  a  hub  at  both  ends  of  the
    Relevant Long-Haul Destination/Origin City for which it would be requesting feed.

509) The requesting airline may also select the fare class(es) to which the SPA will apply, provided that each selected fare  class  is  included
    in at least one existing special prorate agreement which Aer Lingus has agreed and applied with any other carrier for the same feeder  route
    between the Short-Haul Origin/Destination City and the Relevant Airport Hub to provide feeder traffic for the same  Long-Haul  Airport  Pair
    (subject to certain exclusions).

510) Its terms would also have to be at least as favourable as those included in any special prorate agreements that  Aer  Lingus  has  in  place
    with any other carrier for the same feeder route between the Relevant Short-Haul Origin/Destination City and the  Relevant  Airport  Hub  to
    provide feeder traffic for the same Long-Haul Airport Pair and in the same fare class (subject to certain exclusions).

511) In addition, the SPA would grant the requesting carrier equivalent inventory access to that given  by  Aer  Lingus  under  existing  special
    prorate agreement with any other carrier for the same feeder route between the Relevant Short-Haul Origin/Destination City and the  Relevant
    Airport Hub to provide feeder traffic for the same Long-Haul Airport Pair and in any event no worse than as between Aer Lingus and other IAG
    carriers.

512) Any term included in the SPA (for example, rates and interline service charge, number of fare and booking classes  included)  can  never  be
    less favourable than the corresponding term in any special prorate agreement which Aer Lingus on the one part, and the requesting airline on
    the other part, have in place at the date of adoption of this decision (subject to certain exclusions).

513) Aer Lingus may exclude any existing special prorate agreement which it has with  any  other  carrier  which  it  would  be  unreasonable  to
    include, for example because de minimis or obsolete.

514) Special provisions relate to an SPA which provides for Straight Rate Prorate terms[456].

515) The SPA shall have an effective duration of up to five years at the choice of the requesting carrier.  Thereafter,  the  requesting  carrier
    shall have the right to renew the agreement on an evergreen basis for further periods of up to two years  (i.e.  rolled  over  on  the  same
    terms) if certain conditions are met.

516) With respect to the commitments relating to the provision of feed onto Dublin–Chicago services, any SPA may be terminated by Aer  Lingus  if
    the recipient carrier is operating an effective service.

3 Other provisions

517) IAG also committed to enter, at the request of an airline which started to operate new or increased  services  on  any  of  the  city  pairs
    concerned by the slot commitments (whether or not such service uses slots released to that carrier pursuant to the  Final  Commitments),  an
    agreement that arranges for fare combinability on the Relevant London-Irish City Pair. This agreement provides for the possibility  for  the
    airline concerned, or travel agents, to offer a return trip on the Relevant London-Irish City Pair comprising a  non-stop  service  provided
    one way by IAG and a non-stop service provided the other way by the airline at issue.

518) At the request of a carrier wishing to operate new or increased services on any of the routes concerned by the slot  commitments  that  does
    not have a comparable frequent flyer program ("FFP") of its own, IAG would allow it to be hosted in its FFP for the relevant city pair(s) on
    which it has commenced or increased service. This would mean that the requesting airline may participate to IAG's  FFP  on  equal  terms  as
    compared to other members of the oneworld alliance, and the requesting carrier's customers may accrue points (but also  benefit  from  other
    services such as airport lounge access or priority bookings).

519) A Monitoring Trustee will be appointed by Aer Lingus to monitor the  correct  execution  of  the  Final  Commitments,  subject  to  previous
    approval by the Commission. The Monitoring Trustee will be independent of the Parties and all other members of the  oneworld  Alliance.  Aer
    Lingus shall provide the Monitoring Trustee with such assistance and information,  including  copies  of  all  relevant  documents,  as  the
    Monitoring Trustee may reasonably require in carrying out its mandate. In particular, the Monitoring Trustee would have  full  and  complete
    access to Aer Lingus' books, records, documents, management or other personnel facilities, sites  and  technical  information  necessary  to
    fulfil its duties under the Final Commitments.

520) The Final Commitments also contain provisions on fast-track dispute resolution according to which the new entrant can decide to  settle  any
    dispute with the Parties through arbitration.  In  the  event  of  disagreement  between  the  parties  to  the  arbitration  regarding  the
    interpretation of the Final Commitments the arbitral tribunal shall seek  the  Commission's  interpretation  and  shall  be  bound  by  that
    interpretation. Both the parties to the arbitration will then be bound by the decision of the arbitral tribunal.

2 ASSESSMENT OF THE FINAL COMMITMENTS

521) As set out in the Commission Notice on Remedies,[457] the Commission assesses  the  compatibility  of  a  notified  concentration  with  the
    internal market on the basis of its effect on the structure of competition in the European  Union.  Where  a  concentration  raises  serious
    doubts which could lead to a significant impediment to effective competition, the Parties may seek to modify  the  concentration  so  as  to
    resolve the serious doubts identified by the Commission with a view to having the concentration cleared.

522) According to the European Union Courts' case law, commitments must be likely to eliminate all competition  concerns  identified  and  ensure
    competitive market structures. The Commission enjoys a broad discretion in assessing whether  commitments  offered  before  the  opening  of
    proceedings constitute a direct and sufficient response capable of dispelling any serious doubts about the proposed merger.

523) In assessing whether or not the commitments will maintain effective competition, the Commission considers inter alia  the  type,  scale  and
    scope of the remedies offered by reference to the structure and the particular characteristics of  the  market  in  which  the  Commission's
    serious doubts as to the compatibility of the Transaction with the internal market arise. It should be emphasised, however, that commitments
    offered prior to the initiation of proceedings can only be accepted when the competition problem that the concentration  gives  rise  to  is
    readily identifiable and can easily be remedied.

524) Concerning the suitability of commitments aiming at facilitating entry of a new competitor, the Commission Notice on  Remedies  states  that
    "[o]ften, a sufficient reduction of entry barriers is not achieved by individual measures, but by […] a commitments package aimed at overall
    facilitating entry of competitors by a whole range of different measures".

525) In airline cases, commitments are acceptable to the Commission where it is sufficiently likely that actual entry  by  new  competitors  will
    occur and where such entry would eliminate any serious doubts as to the compatibility of the concentration with the internal market. In this
    respect, account must be taken of the facts existing at the time  when  the  decision  is  adopted  and  not  in  the  light  of  subsequent
    events.[458]

526) The Commission considers that the Final Commitments constitute a comprehensive package which takes into consideration past  experience  with
    commitments in merger cases in the aviation sector.

527) For the reasons set out below and on the basis of the available evidence, the Commission has concluded that the  Final  Commitments  address
    the serious doubts identified in this decision. As such, the Commission comes to the conclusion that the Final Commitments  offered  by  IAG
    are sufficient to eliminate any serious doubts as to the compatibility of the Transaction with the internal market.

1 The slot commitments

528) In airline cases, slot release commitments are acceptable to the Commission where  it  is  sufficiently  clear  that  actual  entry  by  new
    competitors that would eliminate any significant impediment to effective competition will occur. For such commitments to be acceptable,  the
    notifying party need not identify a precise new entrant if competitors express an interest during the administrative procedure  in  entering
    the markets concerned in view of the proposed commitments.

529) The Final Commitments relating to slots are based on the fact that the severely limited slot availability at Gatwick is an  important  entry
    barrier on the routes where competition concerns have been identified. Therefore, the Final Commitments are designed to remove (or at  least
    reduce significantly) this barrier and foster sufficient, timely, and likely entries on the above-mentioned routes.

530) It is important to note first that, given the significant level of congestion at Gatwick, slots are intrinsically attractive.  In  addition,
    the Final Commitments make entry interesting due to the prospect of acquiring grandfathering rights after six IATA seasons.

531) The total number of five daily frequencies offered for both the Relevant London-Irish City Pairs was considered sufficient by a majority  of
    all respondents to the market test. [459].The earmarked frequencies per route and the flexible frequencies that may be allocated between the
    two routes, were also considered sufficient to enable effective entry on  the  Relevant  London-Irish  City  Pairs  by  a  majority  of  all
    respondents to the market investigation.[460] One competitor that did not manifest its interest in entering noted however  that  "5  flights
    per day are around 14% of the total flights from IAG and Aer Lingus which should be sufficient".[461]

532) A majority of all respondents expressing an opinion also thought that the fare combinability commitment on the  Relevant  London-Irish  City
    Pairs increases the likelihood that entry will take place on both the London–Dublin  and  Belfast–London  routes.[462]  A  majority  of  all
    respondents expressing an opinion also stated that they thought that the frequent flyer programmes commitment on the  Relevant  London-Irish
    City Pairs increases the likelihood that entry will take place on both the London–Dublin and Belfast–London routes.[463]

533) Overall a majority of all respondents expressing an opinion  considered  that  the  commitments  proposed  by  IAG  clearly  eliminated  the
    competition concerns raised by the proposed Transaction on the London–Dublin route.[464] In the same vein, a  majority  of  all  respondents
    expressing an opinion considered that the commitments proposed by IAG clearly eliminated the competition concerns  raised  by  the  proposed
    Transaction on the Belfast–London route.[465]

534) Some competitors stated that the number of frequencies would be sufficient provided however that slots are secured at convenient  times.  In
    this respect, some criticism was expressed as regards the fact that initially, IAG was not obliged to release more than one  departure  slot
    in any hour of the day.[466] These concerns have been appropriately addressed in the Final Commitments, where a greater flexibility has been
    introduced as regards the release of departure slots in the early morning,  through  Clauses  2.7  and  2.8.  In  this  respect,  the  Final
    Commitments respond to evidence from the market investigation that, to enable a prospective new entrant to mount a competitive schedule,  in
    particular as regards time sensitive passengers, early departure flights are crucial.

535) Respondents to the market investigation confirmed that Gatwick is a very congested airport, specifically for movements at peak  times  which
    are very useful for carriers also wishing to address  the  needs  of  time-sensitive  passengers.[467]  Consequently,  given  the  level  of
    congestion, the slot commitments offered by the Final Commitments appear particularly suitable to appeal prospective new entrants.

536) Indeed, it appears unlikely that (absent the possibilities afforded by the Final Commitments) any prospective new entrant could  obtain  all
    the slots necessary to operate the above-mentioned routes to/from Gatwick with a sufficient  number  of  frequencies  from  the  first  IATA
    season. In addition, a new entrant at Gatwick would have no guarantee of obtaining the slots at the most appropriate times, allowing for  an
    optimised level of rotation of aircraft. By contrast, the slot allocation mechanism in the Final Commitments ensures  that  the  prospective
    new entrant will be likely to receive the requested slots in a time window of +/−20 minutes.

537) In this context and as also argued by the Parties,[468] limiting the departures to  no  more  than  one  an  hour  does  not  undermine  any
    prospective entrant's ability to operate a viable new or expanded schedule from Gatwick: in the summer 2015 IATA season, Aer Lingus does not
    operate more than one departure in any given hour from Gatwick to Dublin or Belfast. [469] In the  summer  2015  IATA  season,  Aer  Lingus'
    departures from Gatwick are typically approximately 2–4 hours apart for Dublin and Belfast. Both Ryanair's departures from Gatwick to Dublin
    and easyJet's departures from Gatwick to Belfast are never less than 2 hours apart.

538) As an exception to the general position of no more than one slot per hour, Clause 2.7 of  the  Final  Commitments  provides  that  where  no
    departure Slot has been granted or requested by any Prospective Entrant in the 06:00–08:00 (local time)  period,  two  departure  slots  may
    instead be requested in either the 08:00–09:00 (local time) period or the 09:00–10:00 (local time) period instead of one in  each  of  those
    two periods. This exception is subject to two conditions: (a) the two such departure slots shall not be used on the  same  Relevant  London-
    Irish City Pair; and (b) no more than one of the arrival slots at Gatwick released by IAG under the Final Commitments will be  before  08:00
    (local time).

539) The exception ensures that there is enough flexibility to accommodate the needs of competitors' desiring to  enter  with  a  morning  flight
    from Gatwick to either Dublin or London while maintaining an overall balanced approach in terms of availability and flexibility of slots.

540) It is also appropriate, as submitted by the Parties,[470] to limit arrival slot requests to before 23:30.  At  present,  only  BA  lands  at
    Gatwick after 23:30. However, these services are never from the island of Ireland and are an important  feature  of  BA's  overall  aircraft
    rotation at Gatwick. In the summer 2015 IATA season, the latest arrival from either Dublin or Belfast to LGW is 21:45 (easyJet on  BFS–LGW).
    Looking across all London airports, in the summer 2015 IATA season the latest arrival was at  23:05  (EasyJet  on  BFS–LTN  and  Ryanair  on
    DUB–LTN).

541) Moreover, Clause 2.28 of the Final Commitments ensures that departure slots to be released at Gatwick are spread throughout  the  day.  This
    provision applies to each of London–Dublin and Belfast–London separately, so that sufficient time slots would be available for both  routes.
    A majority of all respondents to the market test expressing an opinion stated that this clause did not  constitute  a  material  barrier  to
    entry for both routes.[471]

542) The possibility for carriers to pay a consideration for the slots offered by IAG  does  not  reduce  the  attractiveness  of  the  slots  or
    preclude their award to the best applicants. Indeed, the possibility to offer consideration for the slots is not an obligation,  but  rather
    an option that carriers may use in order to have a chance to obtain the slots in the event  that,  following  the  Commission's  evaluation,
    several applicants are deemed to provide similarly effective competitive constraints on services from/to Gatwick.

543) In responding to the market test, some carriers expressed their interest to take the slots offered by IAG to operate  air  services  on  the
    London–Dublin and Belfast–London routes in a timely manner (i.e. within the next 4–6 IATA seasons). Some  conditions  to  their  entry  were
    expressed. However, a significant portion of these conditions have been included in the Final Commitments, when relevant. In particular, the
    need for some flexibility relating to early morning slots at London Gatwick has been appropriately addressed.

544) Aer Lingus' Strategy Document relating to the Ireland to London Market 2013-2015 describes Gatwick as follows: "Gatwick is  London’s  second
    busiest airport and in the World’s top ten busiest airports, with almost 34 million passengers passing through  the  airport  in  2012.  The
    airport hosts both short haul point-to-point carriers such as easyJet and Ryanair and leisure  long  haul  services  primarily  operated  by
    British Airways and Virgin Atlantic. Recent years have reported growth in long haul services with the entry of additional carriers including
    Emirates, Vietnam Airlines and Air China."[472]

545) Gatwick (and also London City airport which is not generally slot-constrained) exerts a competitive constraint on Heathrow[473]. On the  two
    routes where remedies are proposed, a significant share of time-sensitive passengers also embark at Gatwick airport.[474] Both airports have
    a large overlap in terms of catchment area and are well connected to London's city centre (see Sections IV.2.4. and V.5).

546) Especially for time-sensitive passengers, the Final Commitments will allow entrants to offer services from Belfast  and  Dublin  to  Gatwick
    that will be a suitable alternative: competitors will be able to offer competing services to Gatwick, including in the early morning and the
    evening peak hours on both of these routes, which are especially important for time-sensitive passengers.

547) Given that in recent years, time-sensitive passengers have increasingly  elected  to  fly  with  low  cost  carriers,  which  in  turn  have
    complemented their offering by packages tailored to the needs of time-sensitive passengers, the Final Commitments could potentially be taken
    up by low cost carriers as well as by full-service carriers.

548) Therefore, the Commission is of the view that the slot commitments will be likely to  lead  to  the  provision  of  additional  services  by
    independent carriers on Dublin–Gatwick and Belfast–Gatwick.

549) Considering the specific characteristics of the routes, and the nature of the  likely  entrants,  the  existing  services  on  each  of  the
    Dublin–London 3[475] and Belfast–London 3[476] routes, as significantly reinforced by these additional services, will be likely  to  provide
    sufficient competition to prevent the Parties from increasing fares on their own services on the two routes at stake post Transaction.

550) In light of the above, and on the basis of the information available to the Commission, in particular considering the interest  demonstrated
    by competitors, it is concluded that the slot commitments (which are further strengthened by the other provisions of the Final  Commitments)
    lead to likely entry by one or more airlines on the London–Dublin and Belfast–London routes in a timely manner, and that this entry is of  a
    sufficient magnitude to dispel the serious doubts identified on these routes.

2 The SPA commitments

551) Overall, a majority of respondents to the market test agreed that that the SPA commitments – in the version that has been  market  tested  –
    appropriately address the risk that IAG might provide significantly less feeder  traffic  following  the  Transaction,  thus  affecting  the
    competitive constraint exerted on it by competitors on certain long-haul routes.

552) However, several competitors questioned the effectiveness and ability of  the  SPA  commitments  to  address  the  concerns  raised  by  the
    Commission in a full and comprehensive manner.

1 Routes and hubs covered by the SPA commitments

553) Some competitors considered that the scope of the SPA commitments should be broadened to include  additional  long-haul  routes,  short-haul
    "feeder" routes, and connecting hubs.

554) The Commission considers that the scope of the SPA commitments is sufficient to address the serious doubts  raised  by  the  Transaction  as
    regards a possible foreclosure strategy undertaken by IAG post-Transaction in relation to feeder traffic. Indeed, as a consequence  of  this
    commitment, IAG would have to enter into SPAs with competing carriers in relation to the long-haul routes for which a  risk  of  foreclosure
    has been identified.

555) Pursuant to the SPA commitments, IAG commits to procure that Aer Lingus shall carry connecting passengers  on  all  routes  from/to  Dublin,
    Belfast, Cork Shannon and Knock for passengers connecting at Heathrow, Gatwick, Manchester and Amsterdam, as well as on up to 20 routes  for
    passengers connecting at Dublin, and up to 5 routes for passengers connecting at Shannon, among those routes operated by Aer Lingus  at  the
    time of the application for an SPA under the Final Commitments. These routes are all those for which a foreclosure risk was identified.

556) Moreover, the fare classes included in the SPA would, at the applicant's request, cover all the fare classes included  in  any  commercially
    negotiated SPAs entered into by Aer Lingus with any other carrier to provide feed to the Relevant long haul Destination/Origin Cities  prior
    to the Transaction. This would allow the applicants to benefit from feeder traffic arrangements with the  same  scope  as  those  previously
    entered into with Aer Lingus, and will prevent IAG from reducing the feeder traffic previously provided to the applicants by Aer Lingus  for
    its services on the long-haul routes of concern.

557) Moreover, the terms of the SPA would have to be at least as favourable as the terms of any similar agreement  between  Aer  Lingus  and  any
    other carrier at the date of the request and the terms of any similar agreement between Aer Lingus and any other  carrier  existing  at  the
    date of adoption of the present decision, subject to reasonable indexation. This would prevent IAG from unduly raising the cost of access to
    its flights on the routes previously operated by Aer Lingus for passengers  connecting  at  Heathrow,  Gatwick,  Manchester,  Amsterdam  and
    Shannon onto flights operated by the carriers that could potentially be targeted by foreclosure on the long-haul routes of concern.

558) As regards the list of long-haul routes included in the scope of the SPA commitments, some competitors  that  replied  to  the  market  test
    called for the inclusion of additional routes or for open-scope commitments. In particular, competitors that replied to the market test also
    asked for the inclusion of long-haul routes ex-Amsterdam. Some of these long-haul routes have been added by IAG in  the  Final  Commitments,
    including routes ex-Amsterdam, which has been added to the list of connecting hubs to which the SPAs commitments apply. For the other routes
    that have not been included, the Commission verified that they did not meet the passenger feed thresholds  above  which  it  considers  that
    foreclosure concerns might arise.[477]

559) As concerns the request for open-scope commitments, following the market test, Aer Lingus provided additional  information  indicating  that
    its SPAs and interline relationships are constantly reviewed to determine whether they benefit Aer Lingus as a  result  of  the  reciprocity
    inherent in commercially negotiated SPAs. In particular, partnerships are evaluated at the time Aer Lingus enters into an SPA but  are  also
    under review each year as SPAs are generally renegotiated on a yearly basis. [Aer Lingus business strategy].

560) Moreover, the Parties argued that the SPA commitments are designed to address the merger-specific effects of the  current  Transaction.  The
    SPA commitments therefore provide for feed on the Relevant Long-Haul Destination/Origin Cities on the basis described above. It  would  move
    beyond the merger-specific effects of the Transaction if the SPA commitments allowed Eligible Air Services Providers (including those  which
    may already have an SPA relationship with Aer Lingus) to cover feed onto any long-haul service they may choose to commence from  a  Relevant
    Airport Hub (i.e., one not affected by the Transaction).

561) The Parties also described Aer Lingus' open network architecture as follows: "Aer  Lingus  does  not  currently,  and  has  not  previously,
    operated a freely open SPA structure. The concept of open network architecture reflects its current policy  as  an  independent  carrier  to
    partner across the various alliances with a diverse range of partners offering connectivity through major hubs to worldwide destinations. It
    is however still selective in its partnerships and decides on a case-by-case basis whether an agreement is or continues to  be  commercially
    viable. Whilst there is some logic (and precedent) for requiring Aer Lingus to conclude SPAs with respect  to  feed  for  identified  routes
    which have, prior to the Transaction, received (albeit often low levels) of feed from Aer Lingus, it is a significant extension  to  require
    Aer Lingus to conclude – in perpetuity – SPA arrangements for any services which a competitor may launch from a Relevant Airport  Hub.  This
    is particularly concerning where Aer Lingus may wish – and as part of realising the transaction synergies for the first time be  able  –  to
    grow its own network but instead be forced to feed third party services."[478]

562) In light of the above and of all other available evidence, the Commission considers that it is not appropriate  to  provide  for  open-scope
    commitments, as this would not be consistent with Aer Lingus'  current  policy  towards  such  agreements  and  therefore  with  the  likely
    competitive situation absent the Transaction.

563) As regards the list of short-haul routes included in the scope of the SPA commitments, various competitors that replied to the  market  test
    called for the inclusion of additional routes. Routes from Knock airport have been included by IAG in the scope of  the  Final  Commitments.
    The list of "feeder routes" has otherwise been considered appropriate by a majority of respondents to the market test. The limitation of the
    SPA commitment to 20 and 5 "feeder routes" to/from Dublin and Shannon respectively was also considered  as  appropriate  by  a  majority  of
    respondents to the market test.

564) Finally, as regards the choice of connecting airports, some competitors asked for  the  SPA  commitments  not  to  be  limited  to  specific
    connecting airports. However, the SPA commitments aim at addressing a risk of foreclosure of access to flights to/from  specific  connecting
    hubs, and not serious doubts on direct/indirect or indirect/indirect overlap routes (which have  been  separately  assessed  and  ultimately
    excluded by the Commission). Furthermore, contrary to the claims of certain competitors who responded  to  the  market  test,  the  risk  of
    switching by IAG of certain long-haul routes from Heathrow to Gatwick, or vice versa, would not lead to possible circumvention  of  the  SPA
    commitments, as the list of long-haul routes receiving feed is based on the operations of third party services from these airports, and  not
    on IAG's operations.

565) Some competitors that replied to the market test also requested that the SPA commitments should apply across the operations of  the  Parties
    (and their joint venture partners, including IAG) so as to deter attempts at circumventing the commitments by IAG. However,  the  Commission
    is of the view that the extension of the SPA commitments to IAG would not be justified in the present case, as the Transaction leads  to  no
    material merger-specific effects when considering IAG's current agreements. The only instance where IAG's operations  have  been  considered
    relevant for the SPA commitments relates to the number of frequencies of the feeder routes to which the SPA would apply.

566) With respect to the feeder routes to/from Heathrow, Gatwick, Manchester and/or Amsterdam, the  SPA  commitments  apply  to  the  frequencies
    operated by Aer Lingus during the winter 2014/2015 and the summer 2015 IATA season. The number of frequencies in a given IATA season  should
    be increased if after the adoption of this Decision Aer Lingus increased its frequencies on the relevant feeder route. The same would  apply
    in case of reduced frequencies by Aer Lingus, unless another IAG-owned carrier increases its frequencies on the relevant feeder  route  less
    than two IATA seasons before or after Aer Lingus reduces its frequencies.  In  this  case,  the  SPA  commitments  apply  to  the  increased
    frequencies of the IAG-owned carrier. In the Final Commitments the relevant time to consider IAG's frequencies increase  as  linked  to  Aer
    Lingus's frequencies reduction has been increased from one to two years to address the concerns expressed  by  some  competitor  during  the
    market test.

567) In addition, some competitors argued that this provision would not cover the risk of reduction in capacity by Aer  Lingus,  which  may  also
    lead to circumvention of the SPA commitments by the Parties. Aer Lingus has fleet commonality with IAG, with  a  short-haul  fleet  of  A320
    aircraft and a long-haul fleet primarily of A330 aircraft.[479] Hence, the Commission is of the view that the  impact  of  such  a  risk  of
    circumvention through capacity changes on short-haul routes would be insignificant. In  addition,  maintaining  flexibility  when  adjusting
    capacity to respond to fluctuations in demand is common in the industry.[480]

568) Finally, the Commission notes that pursuant to the SPA commitments, an SPA is concluded for up to 5 years and can be  renewed  upon  request
    of the requesting carrier on an evergreen basis for further periods of up to two years. It can thus address the risks of  foreclosure  on  a
    long-lasting basis.

569) Overall, the Commission considers that the above-mentioned concerns relating to the scope of the routes and connecting hubs included in  the
    SPA commitments have been comprehensively addressed by IAG in the Final Commitments, insofar as the SPA commitments apply to  all  long-haul
    and feeder routes that have been identified as potentially causing foreclosure concerns.

2 Exclusion of codeshare terms

570) Aer Lingus may exclude, inter alia, "any codeshare or interline terms within an existing codeshare  related  agreement"  from  the  relevant
    basket of agreements to be benchmarked in order to grant the requesting carrier terms which are at least as favourable as the  terms  agreed
    and applied by Aer Lingus under an existing SPA with  any  other  carrier  for  the  same  feeder  route  between  the  Relevant  Short-Haul
    Origin/Destination City and the Relevant Airport Hub to provide feeder traffic for the same Long-Haul Airport Pair.

571) A majority of the respondents to the market test who expressed a view agreed that the exclusion above is appropriate.[481]

572) During the market test, several competitors also argued that the Commission should impose on the Parties  the  maintenance  of  Aer  Lingus'
    current codeshare agreements which have a broader scope and allow for  more  flexibility  in  terms  of  routes  covered.  Furthermore,  one
    competitor claimed that the use of the terms in the codeshares currently existing between BA and Aer Lingus would be appropriate.

573)  However, the Commission is of the view that these competitors' demands regarding the maintenance of codeshare agreements would lock in  Aer
    Lingus in a situation that is unlikely to prevail absent the Transaction. Moreover, the SPA commitments are designed to compensate  for  the
    merger-specific loss of competition, not to lock in Aer Lingus in commercial agreements that may soon need  to  be  overhauled  in  a  fast-
    changing business environment.

574) Considering the above, the Commission is of the view that it is appropriate to exclude the conditions, and specifically the  rates,  offered
    by Aer Lingus to its codeshare partners under codeshare agreements from the relevant basket of agreements to be benchmarked  under  the  SPA
    commitments. These agreements are indeed based on deeper commercial partnership and offer  more  beneficial  terms  than  a  normal  special
    prorate agreement and thus it would be unreasonable and disproportionate to include them in the basket.

3 Inventory access and other issues

575) In its assessment of feed traffic issues, the Commission has identified possible risks of restriction of access to feeder  traffic  even  if
    an SPA is in place, in particular though punctual restrictions to seat inventories via revenue management systems.

576) During the market test, one competitor argued that the SPA commitments lack clarity regarding group rates  and  booking  numbers  and  terms
    which are unwritten but agreed in practice. However, Aer Lingus does not currently have any provisions for group bookings in its  SPAs  with
    third party airlines.[482] Therefore, the Commission considers that it is adequate that no provision is made for group bookings in the Final
    Commitments. As regards ticketing terms, the Parties argue that practices concerning Ticketing Time Limits ("TTLs") are universally  applied
    by carriers for their and SPA partners bookings and there is not,  therefore,  any  discrimination  between  carriers.  In  any  event,  the
    Commission notes that the SPA commitments provide that any TTL applied to bookings made under any SPA  entered  into  pursuant  to  the  SPA
    commitments shall be no less favourable than the TTLs applied by Aer Lingus to any other bookings made on the applicable Aer Lingus-operated
    routes.

577) Two competitors also emphasized the need for a mechanism aimed at ensuring that commitments on equivalent inventory access are adhered to.

578) The Commission considers that the Final Commitments address this concern to a sufficient extent. First of all, Aer  Lingus  is  obliged,  in
    the context of an SPA entered into pursuant to the Final Commitments, to grant the applicant  equivalent  inventory  access  to  that  given
    within IAG. In addition, it shall not deconcur the other party to a SPA from routes and  fare  classes  covered  by  that  agreement.  Undue
    restriction or discriminatory access to its seat inventory would thus be a breach of the Final Commitments on the part of Aer Lingus.

579) Moreover, the Monitoring Trustee, whose role was considered adequate to ensure the effective implementation of the Final  Commitments  by  a
    large majority of respondents to the market test[483], will have full  and  complete  access  to  Aer  Lingus'  books,  records,  documents,
    management or other personnel facilities, sites and technical information necessary to fulfill its duties. The Monitoring Trustee will  thus
    be in a position to detect conduct such as discriminatory access to seat inventories, if it receives reasoned complaints by any third  party
    carrier. The detection of such non-compliance would expose Aer Lingus to sanctions.

580) In addition, while the SPA commitments are largely similar to a commitment made legally binding on  IAG  in  2012  in  the  context  of  the
    IAG/bmi decision, the Final Commitments would apply to Aer Lingus' inventory access and not to BA's. The Parties note  that  the  rates  and
    inventory access contained in the existing SPAs which Aer Lingus has negotiated with third party carriers  pre-merger  reflect  Aer  Lingus’
    commercial requirements particularly the need to prioritise traffic on its  own  long-haul  network.  As  such,  the  commercial  terms  and
    inventory access are differentiated to take account of the long-haul routes to which the third party carrier  operates.  The  Parties  argue
    that the Final Commitments in particular allow competitors who have pre-existing SPAs with Aer Lingus to retain those rates  and  conditions
    which they have negotiated at arm’s length pre-Transaction.[484]

581) Furthermore, Aer Lingus will ensure equivalent inventory access as it does today within the fare class  structure.  [Aer  Lingus'  inventory
    access].[[485]] [Aer Lingus' inventory access].[[486]]

582) In light of the above, the Commission is of the view that the SPA commitments ensure to an appropriate extent  that  the  Transaction  would
    not have an adverse impact on the terms and inventory access conditions on which third party carriers would obtain  feed  traffic  from  Aer
    Lingus.

4 Dublin–Chicago

583) A majority of respondents to the market test that expressed an opinion (as an aggregate of all categories of respondents)  stated  that  SPA
    commitments is suitable to dispel the serious doubts identified as  regards  the  Parties'  operations  on  the  Dublin–Chicago  route.[487]
    Responses of competitors were however split on the issue.

584) Following the market test, IAG restricted the possibility to terminate the SPA relating to the Dublin–Chicago route, by lowering  (from  10%
    to 5%) one of the two thresholds to which termination is subject, thus enhancing the SPA commitments ability to better  address  competition
    concerns on this route.[488]

585) The SPA commitments relating to Dublin–Chicago grant access to the significant Aer Lingus customer base. Furthermore,  they  may  strengthen
    existing third-party service on the route or foster new entries by allowing third parties to benefit from passengers  and  connections  made
    available by Aer Lingus.

586) Therefore, the Commission considers that the Final Commitments adequately address the serious doubts on the Dublin–Chicago route.

5 Conclusion

587) In light of the above, and on the basis of the information available to the Commission, it  is  concluded  that  the  SPA  commitments  will
    suffice to resolve the serious doubts identified with respect to the availability of feed traffic to other airlines  flying  from  Heathrow,
    Gatwick, Amsterdam, Manchester and Shannon to specific long-haul destinations and with respect to the Dublin–Chicago route.

3 Overall conclusion on the Final Commitments

588) For the reasons outlined above, the commitments entered into by the undertakings concerned are sufficient to eliminate  the  serious  doubts
    identified during the Phase I investigation as to the compatibility of the Transaction with the internal market.

589) Under the first sentence of the second subparagraph of Article 6(2) of the Merger Regulation, the Commission  may  attach  to  its  decision
    conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered  into  vis-à-vis
    the Commission with a view to rendering the concentration compatible with the internal market.

590) The achievement of the measure that gives rise to the structural change of the market is a condition, whereas the implementing  steps  which
    are necessary to achieve this result are generally obligations on the Parties. Where a condition is not fulfilled, the Commission’s decision
    declaring the concentration compatible with the internal market no longer stands. Where the undertakings concerned commit  a  breach  of  an
    obligation, the Commission may revoke the clearance decision in accordance with Article 8(6) of  the  Merger  Regulation.  The  undertakings
    concerned may also be subject to fines and periodic penalty payments under Articles 14(2) and 15(1) of the Merger Regulation.

591) The commitments in sections 2, 3, 4 and 5 of the Final Commitments constitute conditions attached to this decision,  as  only  through  full
    compliance therewith can the structural changes in the relevant markets be achieved. The other sections in the Final Commitments  constitute
    obligations, as they concern the implementing steps which are necessary to achieve the modifications sought in a manner compatible with  the
    internal market.

X.    CONCLUSION

592) For the above reasons, the Commission has decided not to oppose the Transaction as modified by the  Final  Commitments  and  to  declare  it
    compatible with the internal market and with the EEA Agreement, subject to full compliance with the conditions and obligations laid down  in
    the Final Commitments annexed to the present decision. This decision is adopted in  application  of  Article  6(1)(b)  in  conjunction  with
    Article 6(2) of the Merger Regulation.

For the Commission
(Signed)
Margrethe VESTAGER
Member of the Commission
                                                            M.7541 – IAG / AER LINGUS

                                                      COMMITMENTS TO THE EUROPEAN COMMISSION

Pursuant to Article 6(2) of Council Regulation (EEC) No. 139/2004 (the “Merger Regulation”),  International  Consolidated  Airlines  Group,  S.A.
(“IAG”) hereby provides the following Commitments (the “Commitments”) in order to enable the European Commission (the  “Commission”)  to  declare
the proposed acquisition by IAG of Aer Lingus Group plc (“Aer Lingus” or “EI”) compatible with the internal market and the  EEA  Agreement  by  a
decision pursuant to Article 6(1)(b) of the Merger Regulation (the “Decision”).

The Commitments shall take effect upon the date of adoption of the Decision.

This text shall be interpreted in the light of the Decision to the extent that the Commitments are attached as  conditions  and  obligations,  in
the general framework of European Union law, in particular in the light of the Merger Regulation, and by reference to the  Commission  Notice  on
remedies acceptable under Council Regulation (EEC) No. 139/2004 and under Commission Regulation (EC) No. 802/2004.

       DEFINITIONS

      For the purpose of the Commitments, the terms below shall have the following meaning:

|Aer Lingus                             |Aer Lingus Group plc, its subsidiaries, and any successor airline(s)       |
|Affiliated                             |An airline will be considered to be affiliated with another airline where  |
|                                       |it is controlled by, the controller of, or under common control with that  |
|                                       |other airline.  The notion of control for these for these purposes shall be|
|                                       |interpreted pursuant to Article 3 of the Merger Regulation and in the light|
|                                       |of the Commission’s Consolidated Jurisdictional Notice under Council       |
|                                       |Regulation (EC) No. 802/2004                                               |
|Alliance                               |The Star Alliance, the SkyTeam Alliance, the oneworld Alliance, or any     |
|                                       |other similar airline alliance that may be developed                       |
|Applicant                              |Any airline interested in obtaining Slots from IAG in accordance with these|
|                                       |Commitments                                                                |
|Commitment(s)                          |The Slot commitment for each Relevant London-Irish City Pair and/or, as    |
|                                       |relevant, the commitment granting the Prospective Entrant access to one of |
|                                       |IAG’s Frequent Flyer Programmes and/or, as relevant, the commitment        |
|                                       |relating to fare combinability and/or, as relevant, the commitment relating|
|                                       |to Special Prorate Agreement(s)                                            |
|Competitive Air Service                |A non-stop scheduled passenger air transport service operated on one or    |
|                                       |more of the Relevant City Pairs                                            |
|Effective Date                         |The date of adoption of the Decision                                       |
|Eligible Air Services Provider         |An airline that is not a member of the oneworld Alliance or affiliated with|
|                                       |any member of that alliance and which:                                     |
|                                       |operates new or increased Competitive Air Service on a Relevant            |
|                                       |London-Irish City Pair (in the case of an airline requesting IAG to enter  |
|                                       |into a fare combinability agreement under these Commitments; or            |
|                                       |operates or will operate a non-stop service between the Relevant Hub       |
|                                       |Airport and the Relevant Long-Haul Destination/Origin City/ies (in the case|
|                                       |of an airline requesting Aer Lingus to enter into a Special Prorate        |
|                                       |Agreement  under these Commitments)                                        |
|EU Slot Regulation                     |Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for   |
|                                       |the allocation of slots at EU airports (OJ L 14 of 22.01.1993), as amended |
|Europe                                 |The European Union, Iceland, Norway, Switzerland and the Channel Islands   |
|European Short-Haul City Pair          |Any route connecting London with any other part of Europe (which shall, for|
|                                       |the avoidance of doubt, include the Relevant London-Irish City Pairs)      |
|Feeder Routes Operated By Aer Lingus   |With respect to feeder routes to/from Shannon and/or Dublin means          |
|                                       |Frequencies operated by Aer Lingus from/to Shannon or Dublin (as relevant) |
|                                       |to/from the Relevant Short-Haul Origin/Destination City                    |
|                                       |With respect to feeder routes to/from London Heathrow, London Gatwick,     |
|                                       |Manchester, and/or Amsterdam means the average number of non-stop daily    |
|                                       |Frequencies which were operated by Aer Lingus during the IATA seasons      |
|                                       |winter 2014/15 or summer 2015 (as relevant) on the feeder routes between   |
|                                       |the Relevant Irish Airport and the Relevant Airport Hub                    |
|                                       |The number of Frequencies in a given IATA season shall be increased if,    |
|                                       |after the Effective Date, Aer Lingus operates additional Frequencies on the|
|                                       |relevant feeder route in the corresponding IATA season                     |
|                                       |The number of Frequencies in a given IATA season shall be decreased if,    |
|                                       |after the Effective Date, Aer Lingus operates fewer Frequencies on the     |
|                                       |relevant feeder route in the corresponding IATA season.  The number of     |
|                                       |Frequencies shall not, however, be decreased insofar as another IAG-owned  |
|                                       |operating company increases Frequency on the relevant feeder route less    |
|                                       |than two IATA seasons before or after Aer Lingus reduces Frequency on the  |
|                                       |same feeder route, in which case the Special Prorate Agreement shall apply |
|                                       |to those increased IAG Frequencies                                         |
|FFP Agreement                          |An agreement by which an airline operating a frequent flyer programme      |
|                                       |allows another airline to participate in that FFP                          |
|Frequency                              |A round-trip between two airports                                          |
|Frequent Flyer Programme (or FFP)      |A programme offered by an airline to reward customer loyalty under which   |
|                                       |members of the programme accrue points for travel on that airline which can|
|                                       |be redeemed for free air travel and other products or services, as well as |
|                                       |allowing other benefits such as airport lounge access or priority bookings |
|General Slot Allocation Procedure      |The Slot allocation procedure as set out in the EU Slot Regulation and IATA|
|                                       |Worldwide Slot Guidelines (including participation at the IATA Slot        |
|                                       |Conference to try to improve slots and allocation by the slot coordinator  |
|                                       |from the waitlist following the Slot Handback Deadline)                    |
|Grandfathering                         |This term has the meaning given in Clause 2.11                             |
|Hub                                    |An airport at which an airline, airline joint business and/or Alliance     |
|                                       |operates long-haul and/or short-haul air passenger transport services and  |
|                                       |where there are a material number of connections between such services     |
|IATA                                   |The International Air Transport Association                                |
|IATA Season                            |The IATA Summer Season begins on the last Sunday of March and ends on the  |
|                                       |Saturday before the last Sunday of October. The IATA Winter Season begins  |
|                                       |on the last Sunday of October and ends on the Saturday before the last     |
|                                       |Sunday of March                                                            |
|IATA Slot Conference                   |The industry conference of airlines and airport coordinators worldwide to  |
|                                       |solve scheduling issues where there are discrepancies between the slots    |
|                                       |requested by the airlines and allocated by the airport coordinators. The   |
|                                       |IATA slot conference for the Winter Season takes place in June, and the one|
|                                       |for the Summer Season in November                                          |
|Key Terms                              |The following terms that shall be included in the Applicant’s formal bid   |
|                                       |for Slots: timing of the Slot, number of daily and weekly Frequencies, and |
|                                       |IATA Seasons to be operated (year-round service or seasonal)               |
|Long-Haul Airport Pair                 |This term has the meaning given in Clause 4.1                              |
|Miles                                  |The credits awarded by an airline to members of its FFP. Such credits      |
|                                       |include standard reward points only and do not include tier or status      |
|                                       |points                                                                     |
|Misuse                                 |This term has the meaning given in Clause 2.14                             |
|MITA                                   |Multilateral Interline Traffic Agreements Manual published by IATA         |
|Monitoring Trustee                     |An individual or institution, independent of IAG, who is approved by the   |
|                                       |Commission and appointed by Aer Lingus and who has the duty to monitor     |
|                                       |IAG’s compliance with the conditions and obligations attached to the       |
|                                       |Decision                                                                   |
|New Air Services Provider              |An airline that is not a member of the oneworld Alliance or affiliated with|
|                                       |any member of that alliance and which commences a new non-stop service on a|
|                                       |Relevant London-Irish City Pair or which increases the number of non-stop  |
|                                       |Frequencies it operates on a Relevant London-Irish City Pair in accordance |
|                                       |with a Slot Release Agreement agreed with IAG pursuant to these Commitments|
|Prospective Entrant                    |Any Applicant that is able to offer a Competitive Air Service individually |
|                                       |or collectively by codeshare and needing a Slot or Slots to be made        |
|                                       |available by IAG in accordance with the Commitments in order to operate a  |
|                                       |Competitive Air Service.  For the avoidance of doubt, the Prospective      |
|                                       |Entrant shall comply with the following requirements:                      |
|                                       |(a) It must be independent of and unconnected with IAG.  For the purpose of|
|                                       |these Commitments, an airline shall not be deemed to be independent of and |
|                                       |unconnected to IAG when, in particular:                                    |
|                                       |(i) It is an associated carrier belonging to the same group as IAG; or     |
|                                       |(ii) It co-operates with IAG on the Relevant London-Irish City Pair        |
|                                       |concerned in the provision of passenger air transport services, except if  |
|                                       |this co-operation is limited to agreements concerning servicing,           |
|                                       |deliveries, lounge usage or other secondary activities entered into on an  |
|                                       |arm’s length basis;                                                        |
|                                       |(b) It must have the intention to begin or increase regular operations on  |
|                                       |one or both of the London-Irish City Pairs; and                            |
|                                       |(c) To that effect, it needs a Slot or several Slots for the operation of a|
|                                       |Competitive Air Service which competes with those of IAG                   |
|Published Fares                        |Fares published by the relevant IAG carrier in ATPCo in relevant           |
|                                       |reservation booking designators (or selling classes) Y and J               |
|Q/YQ/YR Surcharge                      |Charges paid in addition to the base fare amount of a ticket which are     |
|                                       |allocated to the Q, YQ, or YR IATA ticket coding and which are used in     |
|                                       |particular to recover fuel, insurance and/or security charges.             |
|Relevant Airport Hubs                  |For the purpose of these commitments the following airports shall be deemed|
|                                       |to be the relevant hubs:                                                   |
|                                       |London Heathrow (LHR)                                                      |
|                                       |London Gatwick (LGW)                                                       |
|                                       |Manchester Airport (MAN)                                                   |
|                                       |Amsterdam (AMS)                                                            |
|                                       |Shannon (SNN)                                                              |
|                                       |Dublin (DUB)                                                               |
|Relevant Irish Airports                |Airports in the following cities on the island of Ireland:                 |
|                                       |Belfast                                                                    |
|                                       |Cork                                                                       |
|                                       |Dublin                                                                     |
|                                       |Knock                                                                      |
|                                       |Shannon                                                                    |
|Relevant London-Irish City Pair(s)     |London-Belfast and/or London-Dublin                                        |
|Relevant Long-Haul Destination/Origin  |With respect to air services operated by the Requesting Air Services       |
|Cities                                 |Provider at London Heathrow: Boston (BOS), Chicago (ORD), Houston (IAH),   |
|                                       |Los Angeles (LAX), Miami (MIA), New York (EWR and JFK), San Francisco      |
|                                       |(SFO), Washington (IAD), Calgary (YYC), Montreal (YUL), Toronto (YYZ),     |
|                                       |Vancouver (YVR), Hong Kong (HKG), Seoul (ICN), Shanghai (PVG), Singapore   |
|                                       |(SIN), Tokyo (NRT), Riyadh (RUH), Tel Aviv (TLV), Cape Town (CPT),         |
|                                       |Johannesburg (JNB) and Sydney (SYD)                                        |
|                                       |With respect to air services operated by the Requesting Air Services       |
|                                       |Provider at London Gatwick: Las Vegas (LAS), Orlando (MCO), Cancun (CUN)   |
|                                       |and Bridgetown (BGI)                                                       |
|                                       |With respect to air services operated by the Requesting Air Services       |
|                                       |Provider at Manchester: Las Vegas (LAS), Orlando (MCO) and Bridgetown (BGI)|
|                                       |With respect to air services operated by the  Requesting Air Services      |
|                                       |Provider at Amsterdam: Abu Dhabi (AUH), Doha (DOH), Dubai (DXB), Bangkok   |
|                                       |(BKK), Beijing (PEK), Hong Kong (HKG), Tokyo (NRT), Singapore (SIN), Cairo |
|                                       |(CAI), Lagos (LOS), Johannesburg (JNB), Rio de Janeiro (GIG), São Paulo    |
|                                       |(GRU), Toronto (YYZ) and Vancouver (YVR)                                   |
|                                       |With respect to air services operated by the Requesting Air Services       |
|                                       |Provider at Shannon: Chicago (ORD)                                         |
|                                       |With respect to air services operated by the Requesting Air Services       |
|                                       |Provider at Dublin: Chicago (ORD)                                          |
|Relevant Short-Haul Origin/Destination |With respect to feeder routes to/from London Heathrow, London Gatwick,     |
|Cities                                 |Manchester and/or Amsterdam means the Relevant Irish Airports              |
|                                       |With respect to feeder routes to/from Shannon and/or Dublin means airports |
|                                       |in Europe from/to which Aer Lingus operates Frequency to/from Shannon or   |
|                                       |Dublin (as relevant) at the time that the Requesting Air Services Provider |
|                                       |applies for a Special Prorate Agreement pursuant to these Commitments and  |
|                                       |which continue to be so operated by Aer Lingus whilst the relevant Special |
|                                       |Prorate Agreement is in force                                              |
|Requesting Air Services Provider       |This term has the meaning given in Clause 4.1                              |
|SAL                                    |Slot Allocation List                                                       |
|Slot Handback Deadline                 |15 January for the IATA Summer Season and 15 August for the IATA Winter    |
|                                       |Season                                                                     |
|Slot Release Agreement                 |An agreement between IAG and a Prospective Entrant that provides for the   |
|                                       |exchange of Slot(s) with the Prospective Entrant according to the          |
|                                       |principles laid down in Clause 2 of these Commitments.  For the avoidance  |
|                                       |of doubt, the Slot Release Agreement shall abide by the EU Slot Regulation |
|                                       |and any exchange pursuant to this agreement shall be confirmed by the slot |
|                                       |coordinator                                                                |
|Slot Release Procedure                 |This term has the meaning given in Clause 2.2                              |
|Slot Request Submission Deadline       |The final date for the request for Slots to the slot coordinator as set out|
|                                       |in the IATA Worldwide Slot Guidelines                                      |
|Slot(s)                                |The permission (as defined by Article 2(a) of the EU Slot Regulation) for  |
|                                       |an aircraft operator to land and take-off on a specific date and time in   |
|                                       |order to operate an air service at the airport, to be used in combination  |
|                                       |with the full range of airport infrastructure parking and access to gates  |
|                                       |at the airport that are necessary to operate such service                  |
|Special Prorate Agreement              |An agreement entered into pursuant to these Commitments between two or more|
|                                       |airlines on the apportionment of through-fares on journeys with two or more|
|                                       |legs operated by different airlines                                        |
|Straight Rate Prorate                  |Method of allocating fares between airlines participating in a connecting  |
|                                       |passenger itinerary under which fares are allocated between the airlines in|
|                                       |proportion to their shares of the prorate mileage for the entire journey   |
|Time Window                            |The period of twenty (20) minutes either side of the Slot time requested by|
|                                       |the Prospective Entrant                                                    |
|Utilisation Period                     |This term has the meaning given in Clause 2.10 and shall be six (6)        |
|                                       |consecutive IATA Seasons                                                   |

SLOTS

      Slots At London Gatwick

1 IAG undertakes to procure that Slots are made available at London Gatwick to allow one or more Prospective Entrant(s) to  operate  up  to  five
      (5) new or additional daily Frequencies on the Relevant London-Irish City Pairs as follows:

1 Two (2) daily Frequencies to/from Dublin; and

2 One (1) daily Frequency to/from Belfast;

      with the remaining two (2) daily Frequencies to/from either Dublin or Belfast, or both.

      Conditions Pertaining To Slots

2 Each Prospective Entrant shall comply with the following procedure to obtain Slots from IAG (“Slot Release Procedure”).

3 The Prospective Entrant wishing to commence/increase a Competitive Air Service on one or both of the Relevant London-Irish City Pairs shall:

1 Apply to the slot coordinator for the necessary Slots through the General Slot Allocation Procedure; and

2 Notify its request for Slots to the Monitoring Trustee, within the period foreseen in Clause 2.20.

      The Prospective Entrant shall be eligible to obtain Slots from IAG pursuant to these Commitments only if it can  demonstrate  that  it  has
      exhausted all reasonable efforts to obtain the necessary Slots to operate on the  Relevant  London-Irish  City  Pairs  through  the  normal
      workings of the General Slot Allocation Procedure.

4 The Prospective Entrant shall be deemed not to have exhausted all reasonable efforts to obtain necessary Slots if:

1 Slots at the same airport were available through the General Slot Allocation Procedure within the Time Window but  such  Slots  have  not  been
           accepted by the Prospective Entrant; or

2 Slots at the same airport (for use to operate a Competitive Air Service on the Relevant London-Irish  City  Pair)  were  obtained  through  the
           General Slot Allocation Procedure outwith the Time Window and the Prospective Entrant did not give IAG the  opportunity  to  exchange
           those Slots for Slots within the Time Window; or

3 It has not exhausted its own Slot portfolio at the airport.  For these purposes, a carrier will be deemed not to have exhausted  its  own  Slot
           portfolio:

1 If the carrier has Slots at the airport within the Time Window which are being leased-out to or exchanged  with  other  carriers  (unless  that
                 lease or exchange was concluded before the Effective Date  or  the  carrier  can  provide  reasonable  evidence  satisfying  the
                 Commission (following consultation with the Monitoring Trustee) that there are bona fide reasons for this being done rather than
           its being a pretext to enable the carrier to present itself as needing Slots to operate a  Competitive  Air  Service  on  a  Relevant
                 London-Irish City Pair); or

2 If the carrier has Slots at the airport which are outwith the Time Window and which are  leased-out  to  other  carriers,  in  which  case  the
                 Prospective Entrant shall be entitled to apply for Slots from IAG, but only if:

                 •     That lease was concluded before the Effective Date; or

                 •     It can provide reasonable evidence satisfying the Commission (following consultation with  the  Monitoring  Trustee)  that
                      there are bona fide reasons for leasing the Slot out in this way rather than using it itself; or

                 •     It gives IAG an option to become the lessee of the leased-out Slot  at  the  earliest  possible  time  allowed  under  the
                      applicable lease (on terms substantially the same as that lease and for a duration that runs in  parallel  with  the  Slot
                      Release Agreement).  If  the  Slot  Release  Agreement  with  the  Prospective  Entrant  does  not  provide  for  monetary
                      compensation, then the lease to IAG will likewise not provide for monetary compensation.

      For the purposes of Clause 2.4(c)(i) and 2.4(c)(ii), the bona fide reasons for leasing out (or,  as  relevant,  exchanging)  Slots  by  the
      Applicant shall include, but shall not be limited to, a situation where the Applicant can provide clear evidence of an intention to operate
      those Slots on a specific route and clear and substantiated evidence of its reasons for not currently doing so.

5 If the Prospective Entrant obtains Slots through the General Slot Allocation Procedure but after the IATA Slot Conference:

1 Which are within the Time Window; or

2 Which (in the case of Slots obtained at both ends of the route) are not  compatible  with  the  planned  flight  duration  of  the  Applicant's
           operation on the route,

      the Prospective Entrant shall remain eligible to obtain Slots from IAG provided that it gives an option to IAG to use the obtained Slots on
      terms substantially the same as the terms of the Slot Release Agreement, and for a duration that runs in parallel  with  the  Slot  Release
      Agreement (provided that such use by IAG is compatible with Article 8a(3) of the EU Slot Regulation).

6 Without prejudice to these Commitments (and, particularly, to this Clause 2) IAG  shall  not  be  obliged  to  honour  any  agreement  to  make
      available the Slots to the Prospective Entrant if:

1 The Prospective Entrant has not exhausted all reasonable efforts in the General Slot Allocation Procedure to  obtain  the  necessary  Slots  to
           operate a new or increased service on the Relevant City Pair; or

2 The Prospective Entrant has been found to be in a situation of Misuse (as described in Clause 2.14 below).

7 Subject to the provisions of Clauses 2.8 and 2.9, IAG undertakes to make available Slots within the Time Window (if it  has  such  Slots).   In
      the event that IAG does not have Slots within the Time Window, it shall offer to release the Slots  closest  in  time  to  the  Prospective
      Entrant’s request.  IAG does not have to offer Slots if the Slots which the Prospective Entrant could have  obtained  through  the  General
      Slot Allocation Procedure are closer in time to the Prospective Entrant’s request than the Slots that IAG has.  The arrival  and  departure
      Slot times shall be such as to allow for reasonable aircraft rotation, taking into account the Prospective  Entrant's  business  model  and
      aircraft utilisation constraints.

8 IAG may refuse to offer any arrival Slots at Gatwick after 23:30 (local time).  If a Prospective Entrant requests an arrival  Slot  at  Gatwick
      after 23:30, IAG may offer a Slot between 22:30 and 23:30 (local time).  In addition, IAG shall not be obliged to release more than one (1)
daily departure Slot at Gatwick in any hour of the day (local time), i.e. no more than one (1)  daily  departure  Slot  at  Gatwick  06:00-07:00
      (local time), no more than one (1) daily departure Slot at Gatwick 07:00-08:00 (local time), etc.  As an exception, in circumstances  where
      no such departure Slot has been granted or requested by any Prospective Entrant in the 06:00-08:00 (local time) period, two  (2)  departure
      Slots may instead be requested in either the 08:00-09:00 (local time) period or the 09:00-10:00 (local time) period instead of one  (1)  in
      each of those two periods, provided that in circumstances where two (2) departure Slots are so requested in the same such period:

1 The two such departure Slots shall not be used on the same Relevant London-Irish City Pair; and

2 No more than one of the arrival Slots at Gatwick released by IAG under these Commitments will be before 08:00 (local time).

9 In the event that a Prospective Entrant requests departure Slot timings which cannot be accommodated within the parameters of Clause  2.8,  IAG
      shall offer the Prospective Entrant the next closest Slot to the time requested in accordance with Clause 2.2.  In the event that different
Prospective Entrants make such requests for different Relevant London-Irish City Pairs which cannot all be accommodated within the parameters of
      Clause 2.8, IAG shall give priority to the Prospective Entrant proposing to operate multiple daily  Frequencies  (where  relevant)  on  the
      Relevant London-Irish City Pair and shall, in accordance with Clause 2.2, offer the next  closest  Slot  to  the  time  requested  to  each
      Prospective Entrant whose request cannot be accommodated within the parameters of Clause 2.8.

      Grandfathering Of Slots

10 As a general rule, the Slots obtained by the Prospective Entrant from IAG as a result of the Slot Release Procedure  shall  be  used  only  to
      provide a Competitive Air Service on the Relevant London-Irish City Pair for which the Prospective Entrant  has  requested  them  from  IAG
      through the Slot Release Procedure.  These Slots cannot be used on another city pair  unless  the  Prospective  Entrant  has  operated  the
      Relevant London-Irish City Pair for which these Slots have been transferred for a number of full  consecutive  IATA  Seasons  (“Utilisation
      Period”).

11 The Prospective Entrant will be deemed to have grandfathering rights for the Slots once appropriate use of the Slots  has  been  made  on  the
      Relevant London-Irish City Pair for the Utilisation Period.  In this regard, once the  Utilisation  Period  has  elapsed,  the  Prospective
      Entrant will be entitled to use the Slots obtained on the basis of these Commitments exclusively to operate services on any European Short-
      Haul City Pair (“Grandfathering”).

12 Grandfathering is subject to approval of the Commission (advised by the Monitoring Trustee).  The Commission’s approval shall  be  conditional
      on the Prospective Entrant committing that if it ceases to use the Slots in question for the purposes described in  Clause  2.11,  it  will
      return the Slots in question to IAG or, if IAG does not want the return of the Slots, to the slot coordinator.

13 During the Utilisation Period, the Prospective Entrant shall not be entitled to transfer, assign, sell, swap or  charge  in  breach  of  these
      Commitments any Slots obtained from IAG under the Slot Release Procedure, except for changes to any such Slots which are  within  the  Time
      Window and which have been agreed with the slot coordinator.

14 During the Utilisation Period, Misuse shall be deemed to arise where a Prospective Entrant which has obtained Slots released by IAG decides:

1 Not to commence services on the Relevant London-Irish City Pair(s);

2 To operate fewer daily Frequencies than those to which it committed in the bid in accordance with Clause 2.26 on a Relevant  London-Irish  City
           Pair(s) or to cease operating on a Relevant London-Irish City Pair(s) unless such a decision is consistent with the “use it  or  lose
           it” principle in Article 10(2) of the EU Slot Regulation (or any suspension thereof);

3 To transfer, assign, sell, swap, sublease or charge any Slot released by IAG on the basis of the Slot Release Procedure, except for changes  to
      the Slot which are within the Time Window and which have been agreed with the slot coordinator;

4 Not to use the Slots on a Relevant London-Irish City Pair(s), as proposed in the bid in accordance with Clause 2.26; or

5 Not to use the Slots properly: this situation shall be deemed to exist where the Prospective Entrant (i) loses  the  series  of  Slots  at  the
           airport as a consequence of the principle of “use it or lose it” in Article 10(2) of the EU Slot Regulation or (ii) misuses the Slots
      at the airport as described and interpreted in Article 14(4) of the EU Slot Regulation.

15 If IAG or the Prospective Entrant which has obtained Slots under the Slot Release Procedure become aware of or reasonably foresee  any  Misuse
      by the Prospective Entrant during the Utilisation Period,  it  shall  immediately  inform  the  other  and  the  Monitoring  Trustee.   The
      Prospective Entrant shall have 30 days after such notice to cure the actual or potential Misuse.  If the Misuse is  not  cured,  IAG  shall
      have the right to terminate the Slot Release Agreement and the Slots shall be returned to IAG.  In cases (a) and (b) of  Clause  2.14,  IAG
      shall then use its best efforts to redeploy the Slots in order to safeguard the historic precedents.  If despite its best efforts,  IAG  is
      not able to retain the historic precedent for these Slots, or in case of a Misuse as defined in cases (c), (d) or (e) of Clause  2.14,  the
      Prospective Entrant shall provide reasonable compensation to IAG as provided for in the Slot Release Agreement.

16 For the avoidance of doubt, the Slot Release Agreement may:

1 Contain prohibitions on the Prospective Entrant transferring its rights to the Slots to a third party, making the Slots available  in  any  way
           to a third party for the use of that third party, or releasing, surrendering, giving up or otherwise disposing of any rights  to  the
           Slots; and/or

2 Provide for reasonable compensation to IAG in case of Misuse during  the  Utilisation  Period.  If  for  any  reason  (including,  but  without
           limitation, the insolvency of the Prospective Entrant) IAG is unable to receive reasonable compensation for the  Slots  being  either
           lost or not returned within sufficient time for IAG to preserve its grandfathering rights, such Slots shall be  counted  against  the
           maximum number of Slots to be released in accordance with the Commitments.

17 In view of the Commission's Communication of 30 April 2008, which stated that: “The text of the current Regulation is silent on  the  question
      of exchanges with monetary and other consideration” and that the Commission would therefore “not intend to pursue infringement  proceedings
      against Member States where such exchanges take place in a transparent manner, respecting all the other administrative requirements for the
allocation of slots set out in the applicable legislation”, and to the extent that the Slots released under the Slot Release Procedure are at an
      airport where secondary trading takes place, the Slot Release Agreement with the Prospective Entrant may provide for monetary and/or  other
      consideration, so long as such Slot Release provisions are clearly disclosed and comply with these Commitments and all other administrative
      requirements set out in the applicable legislation.

18 The Slot Release Agreement shall provide that the Prospective Entrant will be able to terminate the agreement at the end of each  IATA  Season
      without penalty, provided the Prospective Entrant notifies the termination of the agreement to IAG in writing no later than two  (2)  weeks
      after the IATA Slot Conference.

19 Selection Procedure, Role Of Monitoring Trustee And Approval By Commission

20 At least seven (7) weeks before the Slot Request Submission Deadline, any airline wishing to obtain  Slots  from  IAG  pursuant  to  the  Slot
      Release Procedure shall:

1 Inform the Monitoring Trustee of its proposed Slot request (indicating the arrival and departure times);

2 Submit to the Monitoring Trustee the list of its leased out or exchanged Slots at the airport, along with the  date  at  which  the  leases  or
           exchanges were concluded.  The Monitoring Trustee or the Commission may also request additional information  from  the  Applicant  to
           enable assessment of its eligibility pursuant to Clause 2.4(c) and Clause 2.23;

3 Indicate to the Monitoring Trustee if it has any confidentiality concerns which would justify keeping its identity anonymous vis-à-vis IAG,  in
      which case it must provide a reasoned explanation of those concerns together with its request for anonymity.  In  the  event  that  such  a
           request is made, the Monitoring Trustee shall:

1 Immediately inform the Commission of that request;

2 Within one (1) week of that request advise the Commission whether or not that request should be granted; and

3 Within three (3) weeks of the request, in consultation with the Commission, determine whether or  not  the  Applicant’s  Slot  request  may  be
                 treated anonymously (and, if so, to what extent, subject to what conditions and for what period).

21 At least six (6) weeks before the Slot Request Submission Deadline, the Monitoring Trustee shall forward the  Slot  request  to  IAG  and  the
      Commission.  Until the beginning of the IATA Slot Conference, the Monitoring Trustee shall not disclose to IAG  the  Relevant  London-Irish
      City Pair for which the Slot is requested.  Once informed of the Slot request, IAG may discuss with the Applicant the timing of  the  Slots
      to be released and the types of compensation which could be offered.  IAG shall copy the Monitoring Trustee on all  correspondence  between
      it and the Applicant which relates to the Slot Release Procedure.  IAG shall not share any information about such  discussions  with  other
      Applicants and may require the Applicant not to share any such information with other Applicants.  At least six (6) weeks before  the  Slot
      Request Submission Deadline, the Monitoring Trustee shall also inform the manager of the airport and  the  slot  coordinator  of  the  Slot
      request and, subject to the Applicant’s consent, disclose to them any relevant information regarding  the  Slot  request.   The  Monitoring
      Trustee shall ask the manager of the airport and the slot coordinator to inform it of any likely impediments to  the  satisfaction  of  the
      request, in particular due to the availability of terminal facilities and infrastructure.

22 If the Applicant has made a request for anonymity in accordance with Clause 2.20(c), the Monitoring Trustee shall  not  disclose  to  IAG  the
      identity of the Applicant for so long as that request is pending or has been granted.  In such a case, the procedure set  down  in  Clauses
      2.22-2.33 shall apply, save that, until the beginning of the IATA Slot Conference, any communication or correspondence between IAG and  the
      Applicant shall go through the Monitoring Trustee, who shall ensure the protection of the anonymity of the Applicant.

23 After being informed of the Slot request in accordance with Clause 2.21, the Commission (advised  by  the  Monitoring  Trustee)  shall  assess
      whether the Applicant meets the following criteria:

1 The Applicant is independent of and unconnected to IAG; and

2 The Applicant has exhausted its own Slot portfolio at the airport.

      If the Commission decides that the Applicant does not fulfil the above criteria, the Commission shall inform the Applicant and IAG of  that
      decision at least two (2) weeks before the Slot Request Submission Deadline.

24 At least one (1) week before the Slot Request Submission Deadline, IAG shall indicate to the  Monitoring  Trustee  and  each  Applicant  which
      Slots at the airport they would release, if necessary, during the Time Window.

25 By the Slot Request Submission Deadline, each Applicant shall send its request for Slots (at the same time(s) as those requested  through  the
      Slot Release Procedure) to the slot coordinator in accordance with the General Slot Allocation Procedure.

26 By the Slot Request Submission Deadline, each Applicant shall also submit its formal bid for the Slots to the Monitoring Trustee.  The  formal
bid shall include at least:

1 The Key Terms (i.e. timing of the Slots and number of daily Frequencies to be operated on a year-round service); and

2 A detailed business plan.  This plan shall contain a general presentation of the company including its history, its legal status, the list  and
      a description of its shareholders and the two most recent yearly audited financial reports.   The  detailed  business  plan  shall  provide
           information on the plans that the company has in terms of access to capital, development of its  network,  fleet  etc.  and  detailed
           information on its plans for the Relevant London-Irish City Pair(s) on which it wants to  operate.   The  latter  should  specify  in
           detail planned operations on the Relevant London-Irish City Pair(s) over a period of at least two (2) consecutive lATA Seasons  (size
           of aircrafts, seat configuration, total capacity and capacity by each class, number of daily Frequencies operated, pricing structure,
           service offerings, planned time-schedule of the flights) and expected financial results (expected traffic, revenues, profits, average
           fare by cabin class).  The Monitoring Trustee and/or the Commission may also request any additional information  and  documents  from
           the Applicant required for their assessment, including a copy of all  cooperation  agreements  the  Applicant  may  have  with  other
           airlines.  Business secrets and confidential information will be kept confidential by the Commission and the Monitoring  Trustee  and
           will not become accessible IAG, other undertakings or the public.

27 In parallel, if an Applicant is offering compensation for the Slot(s) it has requested pursuant  to  these  Commitments,  it  will  send  IAG,
      copying the Monitoring Trustee, a detailed description of the compensation which it is willing to offer in exchange for the release of  the
      Slots for which it has submitted bids.  Within three (3) weeks, IAG shall provide the Monitoring Trustee with a ranking of these offers.

28 Having received the formal bid(s), the Commission (advised by the Monitoring Trustee) shall:

1 Assess whether each Applicant is a viable existing or potential competitor, with the ability, resources and commitment to operate  services  on
           the Relevant London-Irish City Pair(s) in the long term as a viable and active competitive force; and

2 Evaluate the formal bids of each Applicant that meets (a) above, and rank these Applicants in order of preference.

29 In conducting its evaluation in accordance with Clause 2.28, the Commission  shall  give  preference  to  the  Applicant  (or  combination  of
      Applicants) which will provide the most effective overall competitive constraint on the Relevant London-Irish City Pair(s), without  regard
      to the country in which the Applicant(s) is licensed or has its principal place of business.  For these purposes, the Commission shall take
into account the strength of the Applicant’s business plan and in particular give preference to Applicants meeting one or more of the  following
      criteria:

1 A pricing structure, capacity (measured in seats), and service offerings that would provide the most effective competitive  constraint  on  the
           Relevant London-Irish City Pair(s); and

2 Plans to offer feed to third party carriers operating services from London Gatwick to one or more of the Relevant Long-Haul  Destination/Origin
      Cities.

30 The Commission (advised by the Monitoring Trustee) shall also ensure that the departure Slots at Gatwick to be  made  available  under  Clause
      2.1 for the same Relevant London-Irish City Pair are spread throughout the day, including: no more than two (2)  Slots  in  the  period  up
      until 12:00 local time, no more than two (2) Slots in the period after 12:00 and up until 16:00 local time, and no more than two (2)  Slots
      in the period after 16:00 local time.

31 In advance of the beginning of the lATA Slot Conference, the Monitoring Trustee shall inform each Applicant (if the  latter  did  not  receive
      slots within the Time Window as indicated through the SAL) and the slot coordinator:

1 Whether the Applicant qualifies for the Slots Commitment; and

2 The Applicant’s ranking.

      In any case, the Applicant shall attend the lATA Slot Conference and try to improve its Slots.  Following confirmation of the  Commission’s
      approval pursuant to Clause 2.28), the Applicants and IAG shall be deemed to have agreed the Key Terms of the Slot  Release  Agreement,  as
      well as any compensation which was offered by the Applicant to IAG under Clause 2.27.  The Key Terms may only be changed after such date by
      mutual agreement between the Applicant and IAG if the Monitoring Trustee confirms that the changes are not material or  if  the  Commission
      (advised by the Monitoring Trustee) approves the changes.

32 Within two (2) weeks of the end of the lATA Slot Conference, each Applicant shall inform the  Monitoring  Trustee  and  IAG  whether  it  will
      commit to operate the Slots offered eventually by IAG in case it has not obtained them through the General Slot Allocation Procedure.

33 Within three (3) weeks of the end of the lATA Slot Conference, the Monitoring Trustee shall confirm to the highest  ranked  Applicant(s)  that
      has provided the confirmation in accordance with Clause 2.32 that it is entitled to receive Slots from IAG.  IAG shall offer the  dedicated
      Slots for release to such Applicant.  The Slot Release Agreement shall be subject to review by the Monitoring Trustee and approval  of  the
      Commission.  Unless both IAG and the relevant Applicant agree to an extension and subject to Clause 2.5, the Slot Release  Agreement  shall
      be signed and the Slot release completed within six (6) weeks after the lATA Slot Conference, and the slot coordinator shall be informed of
the Slot exchange in order to obtain the required confirmation.

FARE COMBINABILITY

1 At the request of an Eligible Air Services Provider which, after the Effective Date, has started to operate new or  increased  Competitive  Air
      Service on a Relevant London-Irish City Pair (whether or  not  such  service  uses  Slots  released  to  that  carrier  pursuant  to  these
      Commitments), IAG shall enter into an agreement that arranges for fare  combinability  on  that  Relevant  London-Irish  City  Pair.   This
      agreement will provide for the possibility for the Eligible Air Services Provider, or travel agents, to offer a return trip on the Relevant
London-Irish City Pair comprising a non-stop service provided one way by an IAG carrier and a non-stop service provided the  other  way  by  the
      Eligible Air Services Provider.  At the request of the Eligible Air Services Provider, the agreement shall apply in relation to all of  the
      Eligible Air Services Provider’s services on the Relevant London-Irish City Pair.

2 Any such agreement shall be subject to the following restrictions:

1 It shall provide for fare combinability on the basis of IAG’s Published Fares.  Where this provides for a published round-trip fare,  the  fare
           can be comprised of half the round-trip fare of IAG and half the round-trip fare of the Eligible Air Services Provider;

2 It shall provide for the appropriate division or recovery of any applicable Q/YQ/YR Surcharges;

3 It shall be limited to true origin and destination traffic on the Relevant London-Irish  City  Pair  operated  by  the  Eligible  Air  Services
           Provider; and

4 It shall be subject to the MITA rules.

3 Subject to Clause 3.7, any term included in the agreement (for example, interline service charge,  number  of  booking  classes  included)  can
      never be less favourable than the corresponding term in any fare combinability agreement which IAG and the Eligible Air  Services  Provider
      have in place as at the Effective Date.

4 Subject to seat availability in the relevant fare category, IAG shall carry a passenger holding a coupon issued by  an  Eligible  Air  Services
      Provider for travel on a Relevant London-Irish City Pair.  IAG may require that the Eligible Air Services Provider or the passenger,  where
      appropriate, pay the (positive) difference between the fare charged by IAG and the fare charged by the Eligible Air  Services  Provider  if
      IAG was not the original ticketed carrier on the Relevant London-Irish City Pair.  In cases where the Eligible Air Services Provider’s fare
is lower than the value of the coupon issued by it, IAG may endorse its coupon only up to the value of the fare  charged  by  the  Eligible  Air
      Services Provider.  An Eligible Air Services Provider shall enjoy the same protection in cases where IAG’s fare is lower than the value  of
      the coupon issued by it.

5 A fare combinability agreement entered into pursuant to this Clause 3 for a particular Relevant London-Irish City Pair shall have an  effective
duration of up to five (5) years at the choice of the Eligible Air Services Provider, or if it elects to have a shorter  initial  duration  than
      that to which it is entitled pursuant to this Clause 3.5, the Eligible Air Services Provider shall have a right to renew the  agreement  on
      an evergreen basis for further periods of one (1) year (i.e. rolled over on the same terms) as long as  these  Commitments  are  in  force,
      provided it exercises its right of extension by informing IAG in writing no later than thirty (30) days before the expiry of the agreement.
       The Eligible Air Services Provider also has a right to terminate the agreement, at any time during the initial  term  or  the  extensions,
      upon thirty (30) days’ written notice.

6 All agreements entered into pursuant to this Clause 3 for a particular Relevant London-Irish City Pair shall lapse automatically in  the  event
      that the Eligible Air Services Provider ceases to operate the new or increased service on that Relevant London-Irish City Pair.

7 The conclusion of the fare combinability agreement shall be subject to the approval of the Commission, as advised by  the  Monitoring  Trustee,
      in particular as to whether its terms are reasonable.

SPECIAL PRORATE AGREEMENTS

1 At the request of an Eligible Air Service Provider, Aer Lingus shall enter into a Special Prorate Agreement with such airline (the  “Requesting
Air Services Provider”), for  traffic  with  a  true  origin/destination  at  the  Relevant  Short-Haul  Origin/Destination  City,  and  a  true
      destination/origin in one or more of the Relevant Long-Haul Destination/Origin Cities.  At the  request  of  the  Requesting  Air  Services
      Provider, the Special Prorate Agreement shall apply to all of the non-stop air services operated by the Requesting  Air  Services  Provider
      between a Relevant Airport Hub and a Relevant Long-Haul Destination/Origin City (the “Long-Haul Airport Pair”).

2 In order to be eligible for a Special Prorate Agreement, the Requesting Air Services Provider must not, alone or in combination  with  carriers
      who are members of the same Alliance (or who are Affiliated with members of the same Alliance) as the  Requesting  Air  Services  Provider,
      have Hubs at both ends of the Long-Haul Airport Pair.

3 Subject to Clause 4.1, for each Relevant Long-Haul Destination/Origin City for which it proposes to enter  into  a  Special  Prorate  Agreement
      with Aer Lingus pursuant to these Commitments, the Requesting Air Services Provider may request a Special Prorate Agreement to/from one  or
      more of the Relevant Short-Haul Origin/Destination Cities to one or more of  the  Relevant  Long-Haul  Destination/Origin  Cities  via  the
      Relevant Airport Hub(s).  In the case of travel via Heathrow, Gatwick, Manchester and/or Amsterdam, this is limited to the  Relevant  Irish
      Airports, in the case of travel via Shannon, this is limited to up to five (5) Relevant Short-Haul Origin/Destination  Cities  and  in  the
      case of travel via Dublin, this is limited to up to twenty (20) Relevant Short-Haul Origin/Destination Cities.  It is understood  that  the
      Special Prorate Agreement shall only apply to Frequencies on the Feeder Routes Operated By Aer Lingus (as defined).

4 The Requesting Air Services Provider may also select the fare class(es) to which the Special Prorate Agreement will apply, provided  that  each
      selected fare class is included in at least one existing special prorate agreement which Aer Lingus has agreed and applied with  any  other
      carrier for the same feeder route between the Relevant Short-Haul Origin/Destination City and the Relevant Airport Hub  to  provide  feeder
      traffic for the same Long-Haul Airport Pair, excluding any agreements (or terms  therein)  which  are  excluded  pursuant  to  Clause  4.8.
      Subject to the previous sentence of this Clause 4.4, the number of fare classes that the Requesting Air Services Provider may select  shall
      be up to the maximum number of fare classes that is granted by Aer Lingus under an existing special prorate arrangement of  the  same  type
      (Straight Rate Prorate or fixed rate as the case may be) to any other carrier.

5 If the Special Prorate Agreement provides for Straight Rate Prorate terms:

1 Straight rate proration shall apply only to published fares;

2 It shall include arrangements for the proration or remittance of any applicable Q/YQ/YR Surcharges;

3 It shall include conditions or provisos (such as minimum rates) at least as favourable as those granted to any other carrier under an  existing
      special prorate agreement which Aer Lingus has agreed and applied with any other carrier for the same feeder  route  between  the  Relevant
           Short-Haul Origin/Destination City and the Relevant Airport Hub to provide feeder traffic for the same Long-Haul Airport-Pair  (other
           than if the terms are excluded by virtue of Clause 4.8); and

4 It shall not prohibit Aer Lingus from making adjustments to ATPCo chart 2 in accordance with normal business  practices  in  managing  Straight
           Rate Prorate agreements.  Any such adjustments to ATPCo chart 2 shall be communicated by Aer Lingus to the Requesting Air Services no
      fewer than 30 days prior to the adjustment being put into effect. Should the Requesting Air Services Provider believe that Aer  Lingus  has
           made adjustments to ATPCo chart 2 which are not in accordance with normal business practices but rather an attempt by Aer  Lingus  to
           restrict the Requesting Air Services Provider's inventory access, it may ask the Monitoring Trustee to  verify  whether  Aer  Lingus’
           adjustments comply with these Commitments.

6 Subject to the provisions of the rest of this Clause 4, the Special Prorate Agreement shall:

1 Be on terms (e.g. rates and interline service charges) which are at least as favourable as the terms agreed and applied by Aer Lingus under  an
      existing special prorate agreement with any other carrier for the same feeder route between the Relevant Short-Haul Origin/Destination City
           and the Relevant Airport Hub to provide feeder traffic for the same Long-Haul Airport Pair and in the same fare class (excluding  any
           codeshare or interline terms within an existing codeshare-related agreement and any other terms excluded by virtue  of  Clause  4.8).
           If Aer Lingus does not have an equivalent rate with any other carrier, the rate shall be determined in accordance with Clause 4.9;

2 Grant the Requesting Air Services Provider equivalent inventory access to that given by Aer Lingus under  existing  special  prorate  agreement
           with any other carrier for the same feeder route between the Relevant Short-Haul Origin/Destination City and the Relevant Airport Hub
      to provide feeder traffic for the same Long-Haul Airport Pair and in any event no worse than as between Aer Lingus and other  IAG  carriers
           (other than, in each case, if the terms are excluded by virtue of Clause 4.8); and

3 Ensure minimum connection times which are based on standard practices at the airport and terminal in question, and which are reasonable.

7 Subject to Clause 4.17, any term included in the Special Prorate Agreement (for example, rates and interline service  charge,  number  of  fare
      and booking classes included) can never be less favourable than the corresponding term in any existing special prorate agreement which  Aer
      Lingus has in place with the Requesting Air Services Provider on the Effective Date, other than any terms excluded by virtue of Clause 4.8.
 To take account of adjustments in fare class usage, for the purposes of Clause 4.4  and  Clause  4.6(a),  the  fare  classes  selected  by  the
      Requesting Air Services Provider need not be the same fare classes as those specified in any special prorate agreement which is in place as
      at the Effective Date provided that the requested fare classes reasonably correspond to such specified fare classes.

8 For the purposes of Clause 4.4, Clause 4.5 and Clause 4.6(a) and 4.5(b) and Clause 4.7, Aer Lingus may exclude  any  existing  special  prorate
      agreement which Aer Lingus has with any other carrier where:

1 The agreement is de minimis (in that fewer than 1,000 sectors were flown on the relevant airline’s metal pursuant  to  that  agreement  in  the
           last two IATA seasons); and/or

2 The agreement is obsolete or has expired.

      In addition, the Monitoring Trustee shall exclude any existing special prorate agreements or any individual terms of such agreements  which
      Aer Lingus has demonstrated, to the satisfaction of the Monitoring Trustee, that it would  be  unreasonable  to  include  because,  due  to
      exceptional circumstances, the relevant agreements or terms are exceedingly favourable.

9 For the purposes of Clause 4.6(a):

1 Where at least one existing special prorate agreement which Aer Lingus has agreed and applied with another carrier for the  same  feeder  route
           between the Relevant Short-Haul Origin/Destination City and the Relevant Airport Hub to provide feeder traffic for the same Long-Haul
      Airport Pair and which has not been excluded pursuant to Clause 4.8, but is included in a different fare class to the one selected  by  the
           Requesting Air Services Provider, the terms will be calculated by applying a ratio of the average difference in fares as between  the
           fare class selected by the Requesting Air Services Provider and the fare class on which terms with another carrier are available;

2 Where any existing special prorate agreements which Aer Lingus has agreed and applied with other carriers do not include the same feeder  route
      and/or are not or have not been used for providing feeder traffic for the relevant Long-Haul Airport Pair, the rate  for  providing  feeder
           traffic for the relevant Long-Haul Airport Pair will be either the rate agreed by Aer Lingus and the Requesting Air Services Provider
           or the most favourable rate (considering factors such as yield and length of haul) which is included in an existing  special  prorate
           agreement of Aer Lingus and is used for feed on the most comparable Long-Haul Airport Pair from/to the same Relevant Airport Hub.  In
           the event that Aer Lingus can establish that clear and material differences exist between the selected Long-Haul Airport Pair and the
           most comparable Long-Haul Airport Pair, the Monitoring Trustee may make appropriate adjustments to the rate.

10 Clauses 4.4 and 4.7 in conjunction with Clauses 4.8 and 4.9, shall, subject to Clause 4.18, be applied on the basis  of  the  more  favourable
      (to the Requesting Air Services Provider) of the following:

1 Special prorate agreements (and the terms therein) between Aer Lingus and any other carrier as existing  on  the  Effective  Date,  subject  to
           reasonable indexation that takes account of standard industry practices; and

2 Special prorate agreements (and the terms therein) between Aer Lingus and any other carrier  as  existing  at  the  date  of  the  request  for
           negotiation or renegotiating of the Special Prorate Agreement.

11 Subject to Clause 4.16 the Special Prorate Agreement shall have an effective duration of up to five (5) years at the choice of the  Requesting
Air Services Provider.  Thereafter, or if it elects to have a shorter initial duration than that to which it is entitled pursuant to this Clause
      4.11, the Requesting Air Services Provider shall have a right to renew the agreement on an evergreen basis for further periods of up to two
      (2) years (i.e. rolled over on the same terms) as long as these Commitments are in force, provided it exercises its right of  extension  by
      informing Aer Lingus in writing no later than thirty (30) days before the expiry of the agreement.  The Requesting  Air  Services  Provider
      also has a right to terminate the agreement, at any time during the initial term or the extensions, upon thirty (30) days’ written notice.

12 Within four (4) weeks of the date of the request for a Special Prorate Agreement by a Requesting  Air  Services  Provider,  Aer  Lingus  shall
      propose a draft Special Prorate Agreement to the Monitoring Trustee in compliance with this Clause 4.  At the same time, Aer  Lingus  shall
      submit supporting evidence, as necessary, in particular with regard to Clauses 4.6, 4.8, 4.9 and 4.10.

13 Considering the comments of the Requesting Air Service Provider and after having consulted the Commission, the Monitoring Trustee may  request
clarification and further evidence from Aer Lingus.  Aer Lingus shall provide the requested clarification and evidence within two (2)  weeks  of
      the request from the Monitoring Trustee, unless Aer Lingus presents bona fide reasons for the Commission to extend this deadline.

14 If the Monitoring Trustee confirms that the provided clarification and evidence are sufficient, Aer Lingus  shall  revise  the  draft  Special
      Prorate Agreement, as necessary, within two (2) weeks of the confirmation from the Monitoring Trustee.  If the Monitoring Trustee  requests
      further clarification and evidence, Aer Lingus shall proceed in accordance with Clause 4.13.

15 Upon the request of the Requesting Air Service Provider, the draft Special Prorate Agreement proposed by Aer Lingus under Clause 4.12  may  be
      applied provisionally without prejudice to subsequent negotiations on the Special Prorate Agreement.

16 All Special Prorate Agreements entered into pursuant to this Clause 4:

1 Shall lapse automatically with respect to the relevant Long-Haul Airport Pair in the event that the Requesting Air  Services  Provider:  ceases
           to operate a service on the relevant Long-Haul Airport Pair; or joins an  Alliance,  or  becomes  Affiliated  with  a  member  of  an
           Alliance, with Hubs at both the Relevant Airport Hub and at the Relevant Long-Haul Destination/Origin City.

2 In the case of any Special Prorate Agreement entered into pursuant to these Commitments in order to provide  feeder  traffic  for  the  Dublin-
           Chicago Relevant Long-Haul Airport Pair, such an agreement may also be terminated on 30 days’ notice in the event that the Requesting
      Air Services Provider’s service(s) account(s) for 30% or more of all passengers (including connecting passengers) travelling on the Dublin-
           Chicago Relevant Long-Haul Airport Pair in two consecutive IATA seasons (calculated by using Amadeus Marketing Information Data Tapes
           (MIDT) data).  This is subject to the proviso that, in each relevant IATA season, feeder traffic provided by Aer Lingus  pursuant  to
           the Special Prorate Agreement did not account for more than 5% of the total number of passengers travelling  on  the  Requesting  Air
           Services Provider’s Dublin-Chicago service(s) (calculated by reference to the Requesting Air  Services  Provider’s  actual  passenger
           number data).  For the avoidance of doubt:

1 Where the Requesting Air Services Provider’s is seasonal, consecutive means a summer or winter IATA season  followed  by  the  next  summer  or
                 winter IATA season;

2 Any bookings made under the terms of the Special Prorate Agreement prior to the date of service of the notice of termination will be honoured.

3 May with the agreement of the Monitoring Trustee, be subject to annual renegotiation. Clause  4.10  (in  conjunction  with  the  other  Clauses
           referred to therein) shall be applicable to each annual re-negotiation.

17 Should the Requesting Air Services Provider believe that the terms proposed by Aer Lingus do not comply with this Clause 4,  it  may  ask  the
      Monitoring Trustee to verify whether those terms comply with these Commitments.

18 The conclusion of the Special Prorate Agreement shall be subject to the approval of the Commission, as advised by the Monitoring  Trustee,  in
      particular as to whether its terms are reasonable.

19 For the avoidance of doubt:

1 Aer Lingus shall not deconcur the Requesting Air Services Provider from routes and fare classes covered by the Special Prorate Agreement.

2 Aer Lingus shall also not deconcur the Requesting Air Services Provider from particular fare classes or  routes  which  it  currently  prorates
           under the IATA MPA where the Requesting Air Services Provider’s rates cover Aer Lingus’ marginal costs of carriage.

3 Any Ticketing Time limits (“TTLs”) applied to bookings made under any Special Prorate Agreement entered  into  pursuant  to  these  Commitments
           shall be no less favourable than the TTLs applied by Aer Lingus to any other bookings made  on  the  applicable  Aer  Lingus-operated
           routes.

FREQUENT FLYER PROGRAMMES

1 At the request of a New Air Services Provider that does not have a comparable FFP of its own, IAG shall allow it to be hosted in  its  FFP  for
      the Relevant London-Irish City Pair(s) on which the New Air Services Provider has commenced or increased service.  The FFP  Agreement  with
      the New Air Services Provider shall be on terms such that the New Air Services Provider shall have equal treatment  vis-à-vis  the  accrual
      and redemption of Miles on the particular Relevant London-Irish City Pair as compared with other members of the oneworld Alliance.

2 Any agreement relating to a particular Relevant London-Irish City Pair and entered into pursuant to this Clause 5 shall:

1 Lapse automatically in the event that the New Air Services Provider ceases to operate the new or increased service on that Relevant City  Pair;
      and

2 Have an effective duration of up to five (5) years at the choice of the New Air Services Provider.  Thereafter, or  if  it  elects  to  have  a
           shorter initial duration than that to which it is entitled pursuant to this Clause 5.2, the New Air Services Provider  shall  have  a
           right to renew the agreement on an evergreen basis for further periods of one (1) year (i.e. rolled over on the same terms)  as  long
           as these Commitments are in force, provided it exercises its right of extension by informing IAG in writing no  later  than  two  (2)
           weeks after the IATA Slot Conference preceding the requested extension.  The New Air Services Provider also has a right to  terminate
           the agreement, at any time during the initial term or the extensions, upon thirty (30) days' written notice.

3 Subject to Clause 5.4, any term included in the frequent flyer agreement entered into pursuant to this Clause 5 can never  be  less  favourable
      than the corresponding term in any FFP agreement which IAG and the New Air Services Provider have in place as at the Effective Date.

4 The conclusion of the FFP agreement shall be subject to the approval of the Commission, as advised by the Monitoring Trustee, in particular  as
to whether its terms are reasonable.

MONITORING TRUSTEE

      Appointment Of Monitoring Trustee

1 A Monitoring Trustee shall be appointed by Aer Lingus on the terms and in accordance with the procedure described below and, once  approved  by
      the Commission, shall perform the functions of monitoring Aer Lingus’ fulfilment of the Commitments and further  obligations  that  may  be
      contained in the Decision.

2 The Monitoring Trustee shall be independent of Aer Lingus and all other members of the oneworld Alliance, must be  familiar  with  the  airline
      industry, and have the experience and competence necessary for this appointment (e.g. investment bank, consultant specialised  in  the  air
      transport sector, or auditor, provided in all cases that they are able to demonstrate sufficient  industry  expertise).   In  addition,  it
      shall not be exposed to any conflict of interest and shall not have had any direct or indirect work, consulting or other relationship  with
      Aer Lingus or IAG in the last three (3) years and shall not have a similar relationship with Aer Lingus or IAG for three  (3)  years  after
      completing its mandate.  For the avoidance of doubt, the performance of the role of monitoring  trustee  in  other  Commission  proceedings
      shall not be an obstacle to the appointment as Monitoring Trustee.

3 Aer Lingus shall ensure that the Monitoring Trustee’s remuneration shall be sufficient to guarantee the effective  and  independent  compliance
      of its mandate.

4 Within one (1) week of the  Effective Date, Aer Lingus shall submit to the Commission for approval a list of  one  or  more  persons  whom  Aer
      Lingus considers adequate to fulfil the duties of the Monitoring Trustee.  The  proposal  shall  contain  sufficient  information  for  the
      Commission to verify that the proposed Monitoring Trustee fulfils the requirements set out above and shall include:

1 The full terms of the proposed mandate, which shall include all provisions necessary to enable the Monitoring  Trustee  to  fulfil  its  duties
           under these Commitments; and

2 The outline of a work plan which describes how the Monitoring Trustee intends to carry out the tasks assigned to it.

5 The Commission shall have the discretion to approve or reject the proposed Monitoring Trustee and to approve the proposed  mandate  subject  to
      any modifications it deems necessary for the Monitoring Trustee to fulfil its obligations.  If only one name is approved, Aer Lingus  shall
      appoint the individual or institution concerned as Monitoring Trustee.  If more than one name is approved by  the  Commission,  Aer  Lingus
      shall be free to choose the Trustee to be appointed from among the names approved.  The Monitoring Trustee should be appointed  within  one
      (1) week of the Commission’s approval, in accordance with the mandate approved by the Commission.

6 If all the proposed Monitoring Trustees are rejected by the Commission, Aer Lingus shall submit the names of at least two more  individuals  or
      institutions within one (1) week of being formally informed of the rejection by the Commission.

7 If all further proposed Monitoring Trustees are rejected by the Commission, the Commission  shall  nominate  a  Monitoring  Trustee,  whom  Aer
      Lingus shall appoint in accordance with the mandate approved by the Commission.

      Monitoring Trustee’s Mandate

8 The Monitoring Trustee’s mandate shall include, in particular, the following obligations and responsibilities:

1 To monitor the satisfactory discharge by Aer Lingus of the obligations entered into these Commitments in so far as they fall within  the  scope
           of these Commitments;

2 To propose to Aer Lingus such measures as the Monitoring Trustee considers necessary to ensure Aer Lingus’ compliance with the  conditions  and
           obligations attached to the Decision;

3 To advise and make a written recommendation to the Commission as to the suitability of the Special Prorate Agreement submitted for approval  to
      the Commission under Clause 4;

4 To provide written reports to the Commission on Aer Lingus’  compliance with these Commitments  and  the  progress  of  the  discharge  of  its
           mandate, identifying any respects in which Aer Lingus has failed to comply with these Commitments or the Monitoring Trustee has  been
           unable to discharge its mandate; and

5 At any time, to provide to the Commission, at its request, a written or oral report on matters falling within the scope of these Commitments.

9 For the avoidance of doubt, subject to Clause 6.8, there is no requirement for  the  Monitoring  Trustee  to  be  involved  in  the  commercial
      negotiations between Aer Lingus and a third party carrier entering into any of the agreements under the Commitments.  Any  such  agreements
      however remain subject to the Commission’s approval.

10 Any request made by a third party carrier for the Monitoring Trustee  to  verify  Aer  Lingus’  compliance  with  these  Commitments  must  be
      reasonable.  In particular, the Monitoring Trustee may refuse to conduct such a verification where the third party carrier fails to produce
any evidence of a suspected breach of the Commitments and/or appears to be making a vexatious request.

11 Aer Lingus shall receive a non-confidential version of any recommendation made by the Monitoring Trustee to the Commission  (as  provided  for
      in Clause 6.8(b)).

12 The reports provided for in Clauses 6.8(b) to 6.8(d) shall be prepared in English.  The reports provided for in Clause 6.8(c)  shall  be  sent
      by the Monitoring Trustee to the Commission within ten (10) working days from the  end  of  every  IATA  Season  following  the  Monitoring
      Trustee’s appointment or at such other time(s) as the Commission may specify and shall cover developments in the immediately preceding lATA
Season.  Aer Lingus shall receive a non-confidential copy of each Monitoring Trustee report.

13 Aer Lingus shall provide the Monitoring Trustee with such assistance and information, including copies  of  all  relevant  documents,  as  the
      Monitoring Trustee may reasonably require in carrying out its mandate.  Aer Lingus shall pay reasonable remuneration for  the  services  of
      the Monitoring Trustee as agreed in the mandate.

14 The Monitoring Trustee shall have full and  complete  access  to  Aer  Lingus’  books,  records,  documents,  management  or  other  personnel
      facilities, sites and technical information necessary to fulfil its duties under these Commitments.

15 Aer Lingus shall indemnify the Monitoring Trustee (and, where appropriate, its employees, agents and advisors) (each an  “Indemnified  Party”)
      and hold each Indemnified Party harmless, and hereby agrees that an Indemnified Party shall  have  no  liability  to  Aer  Lingus  for  any
      liabilities arising out of the performance of the Monitoring Trustee’s duties under  the  Commitments,  except  to  the  extent  that  such
      liabilities result from the wilful default, recklessness, gross negligence or bad faith of the Monitoring Trustee (or,  where  appropriate,
      its employees, agents and advisors).

16 At Aer Lingus’ expense, the Monitoring Trustee may appoint advisors, subject to the Commission’s prior approval,  if  the  Monitoring  Trustee
      reasonably considers the appointment of such advisors necessary for the performance of its duties under the mandate, provided that any fees
incurred are reasonable and upon which Aer Lingus has been consulted.

17 If the Monitoring Trustee ceases to perform its functions under the Commitments or for any other good cause, including  the  exposure  of  the
      Monitoring Trustee to a conflict of interest:

1 The Commission may, after hearing the Monitoring Trustee, require Aer Lingus to replace the  Monitoring Trustee; or

2 With the prior written approval of the Commission, Aer Lingus may replace the Monitoring Trustee.

18 If the Monitoring Trustee is removed, it may be required to continue its functions until a new Monitoring Trustee is  in  place  to  whom  the
      Monitoring Trustee has effected a full hand-over of all relevant information.  The new Monitoring Trustee shall be appointed in  accordance
      with the procedure referred to in Clause 6.17.

19 Aside from being removed in accordance with Clause 6.17, the Monitoring Trustee shall cease to  act  as  Monitoring  Trustee  only  after  the
      Commission has discharged it from its duties.  However, the Commission may at any time require the reappointment of the Monitoring  Trustee
      if it subsequently appears that the Commitments have not been fully and properly implemented.

FAST-TRACK DISPUTE RESOLUTION PROCEDURE

1 The agreements concluded to implement the Commitments in accordance with Clause 1 to 6  shall  provide  for  a  Fast-Track  Dispute  Resolution
      procedure (the “Fast-Track Dispute Resolution Procedure”) described in this Clause 7.  In the event that an Eligible Air Services  Provider
      or a Requesting Air Services Provider, as relevant, has reason to believe that Aer Lingus is failing to comply with the requirements of the
Commitments vis à-vis that party, this Fast-Track Dispute Resolution Procedure will apply.

2 Any Eligible Air Services Provider or Requesting Air Services Provider, which wishes to avail  itself  of  the  Fast-Track  Dispute  Resolution
      Procedure (the “Requesting Party”) shall send a written request to Aer Lingus (with a copy to the Monitoring Trustee) setting out in detail
the reasons leading that party to believe that Aer Lingus is failing to comply with the requirements of the Commitments  (the  “Request”).   The
      Requesting Party and Aer Lingus will use their best efforts to resolve all differences of opinion and settle all disputes  that  may  arise
      through cooperation and consultation within a reasonable period of time not to exceed fifteen  (15)  working  days  after  receipt  of  the
      Request.

3 The Monitoring Trustee shall present its own proposal (the “Trustee Proposal”) for  resolving  the  dispute  within  eight  (8)  working  days,
      specifying in writing the action, if any, to be taken by Aer Lingus in order to  ensure  compliance  with  the  Commitments  vis-à-vis  the
      Requesting Party, and be prepared, if requested, to facilitate the settlement of the dispute.

4 Should the Requesting Party and Aer Lingus fail to resolve their differences of opinion through cooperation and consultation  as  provided  for
      in Clauses 7.2 and 7.3, the Requesting Party shall serve a notice (the “Notice”), in the  sense  of  a  request  for  arbitration,  to  the
      International Chamber of Commerce (the “ICC”) (the “Arbitral Institution”), with a copy of such Notice and request for arbitration  to  Aer
      Lingus.

5 The Notice shall set out in detail the dispute, difference or claim (the “Dispute”) and shall contain, inter alia, all issues of both fact  and
law, including any suggestions as to the procedure, and all documents relied upon shall be attached, e.g. documents, agreements, expert reports,
      and witness statements.  The Notice shall also contain a detailed description of the action to be undertaken by Aer Lingus  (including,  if
      appropriate, a draft contract comprising all relevant terms and conditions) and the  Trustee  Proposal,  including  a  comment  as  to  its
      appropriateness.

6 Aer Lingus shall, within ten (10) working days from receipt of the Notice, submit its answer  (the  “Answer”),  which  shall  provide  detailed
      reasons for its conduct and set out, inter alia, all issues of both fact and law, including any suggestions as to the  procedure,  and  all
      documents relied upon, e.g. documents, agreements, expert reports, and witness statements.  The Answer shall,  if  appropriate,  contain  a
      detailed description of the action which Aer Lingus proposes to undertake vis-à-vis the Requesting  Party  (including,  if  appropriate,  a
      draft contract comprising all relevant terms and conditions)and the Trustee Proposal (if not already submitted), including a comment as  to
      its appropriateness.

      Appointment Of The Arbitrators

7 The Arbitral Tribunal shall consist of three persons.  The Requesting Party shall nominate its arbitrator  in  the  Notice;  Aer  Lingus  shall
      nominate its arbitrator in the Answer.

8 The arbitrators nominated by the Requesting Party and Aer Lingus shall, within five (5) working days of the nomination of the latter,  nominate
the chairman, making such nomination known to the parties and the Arbitral Institution which shall forthwith  confirm  the  appointment  of  all
      three arbitrators.  Should the Requesting Party wish to have the Dispute decided by a sole arbitrator it shall indicate this in the Notice.
       In this case, the Requesting Party and Aer Lingus shall agree on the nomination of a sole arbitrator within five (5) working days from the
      communication of the Answer, communicating this to the Arbitral Institution.  Should Aer Lingus fail to nominate an arbitrator, or  if  the
      two arbitrators fail to agree on the chairman, or should the parties to the Arbitration fail to agree on a  sole  arbitrator,  the  default
      appointment(s) shall be made by the Arbitral Institution.  The three-person arbitral tribunal or, as the case may be, the sole  arbitrator,
      are herein referred to as the “Arbitral Tribunal”.

      Arbitration Procedure

10 The Dispute shall be finally resolved by arbitration under the ICC rules, with  such  modifications  or  adaptations  as  foreseen  herein  or
      necessary under the circumstances (the “Rules”).  The arbitration shall be conducted in London, England in the English language.

11 The procedure shall be a fast-track procedure.  For this purpose, the Arbitral Tribunal shall shorten all  applicable  procedural  time-limits
      under the Rules as far as admissible and appropriate in the circumstances.  The parties to the Arbitration shall consent to the use  of  e-
      mail for the exchange of documents.

12 The Arbitral Tribunal shall, as soon as practical after the confirmation of the  Arbitral  Tribunal,  hold  an  organisational  conference  to
      discuss any procedural issues with the parties to the Arbitration.  Terms of Reference shall be drawn up and signed by the parties  to  the
      Arbitration and the Arbitral Tribunal at the organisational meeting or thereafter and a procedural time-table shall be established  by  the
      Arbitral Tribunal.  An oral hearing shall, as a rule, be established within two (2) months of the confirmation of the Arbitral Tribunal.

13 In order to enable the Arbitral Tribunal to reach a decision, it shall be entitled to request any relevant information  from  the  parties  to
      the Arbitration, to appoint experts and to examine them at the hearing, and to establish the facts by all appropriate means.  The  Arbitral
      Tribunal is also entitled to ask for assistance by the Trustee in all stages of the procedure if the parties to the Arbitration agree.

14 The Arbitral Tribunal shall not disclose confidential information and apply the standards attributable to confidential information  under  the
      Merger Regulation.  The Arbitral Tribunal may take the  measures  necessary  for  protecting  confidential  information  in  particular  by
      restricting access to confidential information to the Arbitral Tribunal, the Trustee, the Commission and outside counsel and experts of the
opposing party.

15 The burden of proof in any dispute under these Rules shall be borne as follows: (i) the Requesting Party must  produce  evidence  of  a  prima
      facie case and (ii) if the Requesting Party produces evidence of a prima facie case, the Arbitral Tribunal  must  find  in  favour  of  the
      Requesting Party unless Aer Lingus can produce evidence to the contrary.

      Involvement Of The Commission

16 The Commission shall be allowed and enabled to participate in all stages of the procedure by:

1 Receiving all written submissions (including documents and reports, etc.) made by the parties to the Arbitration;

2 Receiving all orders, interim and final awards and other documents exchanged by the Arbitral Tribunal  with  the  parties  to  the  Arbitration
           (including Terms of Reference and procedural time-table);

3 Giving the Commission the opportunity to file amicus curiae briefs; and

4 Being present at the hearing(s) and being allowed to ask questions to parties, witnesses and experts.

      The Arbitral Tribunal shall forward, or shall order the parties to the Arbitration to forward, the documents mentioned  to  the  Commission
      without delay.  In the event of disagreement between the parties to the Arbitration regarding the interpretation of  the  Commitments,  the
      Arbitral Tribunal shall seek the Commission’s interpretation of the Commitments before finding in favour of any party  to  the  Arbitration
      and shall be bound by the interpretation.

      Decisions Of The Arbitral Tribunal

17 The Arbitral Tribunal shall decide the dispute on the basis of the Commitments and  the  Decision.  The  Commitments  shall  be  construed  in
      accordance with Merger Regulation, EU law and general principles of law common  to  the  legal  orders  of  the  Member  States  without  a
      requirement to apply a particular national legal system.  Issues not covered by the Commitments and the Decision shall be decided  (in  the
      order a stated) by reference to the Merger Regulation, EU law and general principles of law common to the legal orders of the Member States
without a requirement to apply a particular national system.  The Arbitral Tribunal shall take all decisions by majority vote.

18 Upon request of the Requesting Party, the Arbitral Tribunal may make a preliminary ruling on the Dispute.  The  preliminary  ruling  shall  be
      rendered within one (1) month of the confirmation of the Arbitral Tribunal.  The preliminary ruling shall be applicable immediately and, as
a rule, remain in force until the final decision is issued.

19 The final award shall, as a rule, be rendered by the arbitrators within six (6) months after the confirmation of the Arbitral  Tribunal.   The
      time-frame shall, in any case, be extended by the time the Commission takes to submit an interpretation of the Commitment if asked  by  the
      Arbitral Tribunal.

20 The Arbitral Tribunal shall, in their preliminary ruling as well as the final award, specify the action, if any, to be taken by Aer Lingus  in
order to comply with the Commitments vis-à-vis the Requesting Party (e.g. specify a contract including all relevant terms and conditions).   The
      final award shall be final and binding on the parties to the Arbitration and shall resolve the Dispute and determine any  and  all  claims,
      motions or requests submitted to the Arbitral Tribunal.

21 The arbitral award shall also determine the reimbursement of the costs of the successful party and the allocation of  the  arbitration  costs.
      In case of granting a preliminary ruling or if otherwise appropriate, the  Arbitral  Tribunal  shall  specify  that  terms  and  conditions
      determined in the final award apply retroactively.

22 The parties to the Arbitration shall prepare a non-confidential version of the final award, without  business  secrets.   The  Commission  may
      publish the non-confidential version of the award.

23 Nothing in the arbitration procedure shall affect the powers of the Commission to take decisions in relation to the Commitments in  accordance
with its powers under the Merger Regulation and the TFEU.

GENERAL PROVISIONS

1 The Commitments shall take effect on the Effective Date.  However, no IAG carrier shall be required to enter into  any  agreement  pursuant  to
      these Commitments prior to the completion of IAG’s acquisition of Aer Lingus.

2 IAG shall promptly report to the Commission once IAG’s acquisition of Aer Lingus has completed.

REVIEW CLAUSE

1 The Commission may, where appropriate, in response to a request from IAG showing good cause and accompanied by a  report  from  the  Monitoring
      Trustee:

1 Grant an extension of the time periods foreseen in the Commitments; or

2 Waive, modify or substitute, in exceptional circumstances, one or more of the undertakings in these Commitments.

2 Where IAG seeks an extension of a time period, it shall submit a request to the Commission no later than one month before the  expiry  of  that
      period, showing good cause.  Only in exceptional circumstances shall IAG be entitled to request an extension within the last month  of  any
      period.

Date: 8 July 2015

Signed

_________________________

-----------------------
[1]   OJ L 24, 29.1.2004, p. 1 (the "Merger Regulation"). With effect from 1 December 2009, the Treaty on the Functioning of the  European  Union
("TFEU") has introduced certain changes, such as the replacement of 'Community'  by  'Union'  and  "common  market"  by  "internal  market".  The
terminology of the TFEU will be used throughout this decision.

[2]   OJ L 1, 3.1.1994, p.3 (the "EEA Agreement").

[3]   The IATA airline code of Iberia is "BA".

[4]   The IATA airline code of Iberia is "IB".

[5]   The IATA airline code of Vueling is "VY".

[6]   IAG also includes Openskies (the IATA airline code of Openskies is "EC")  a  full-service  airline  owned  by  BA  operating  transatlantic
services from Paris–Orly to New York (Newark and JFK). It has a fleet of three Boeing 757-200 aircraft configured in a "Business,  Economy  Plus,
and Economy class" configuration.

[7]   Gatwick will stop functioning as an Aer Lingus base in summer 2015. Aer Lingus does not operate a base at LHR in the sense  that  crew  are
not based there but are Irish based crew who overnight at LHR. Aer Lingus has two aircraft which overnight at LHR in order to operate  the  early
departures to Dublin and in that sense LHR can be described as an "operational base". However, it is  not  a  base  where  crew  are  permanently
stationed (Form CO, Annex 18.1 and email of Aer Lingus representatives of 26 May 2015).

[8]   The codeshare with Flybe is due to terminate on 24 October 2015.

[9]   Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the  Commission  Consolidated  Jurisdictional  Notice  (OJ
C95, 16.04.2008, p1).

[10]  The methodologies used by IAG to calculate its turnover are the Point of Sale methodology, the  Point  of  Departure  methodology  and  the
50/50 methodology. The thresholds are met under the three methods. Aer Lingus only used the Point of Departure and the 50/50 methodologies as  it
proved very difficult for Aer Lingus to accurately calculate its turnover under the Point of Sale methodology due to the  vast  majority  of  Aer
Lingus' sales being made online. The thresholds are met however under all methodologies.

[11]  The overlap between the Parties' activities in the provision of cargo air transport services does not lead to  any  affected  market  under
any plausible definition and will, therefore, not be discussed any further in this Decision.

[12]  Case No M.7333 – Alitalia/Etihad, paragraphs 63  and  following;  Case  No  M.7270  –  Cesky  Aeroholding/Travel  Service/Ceske  Aerolinie,
paragraph 16; Case No M.6663 – Ryanair/Aer Lingus III, recital 50; Case No M.6447 – IAG/bmi, paragraph 31; Case No M.6607 –  US  Airways/American
Airlines, paragraph 8; Case No M.5889 – United Air Lines/Continental Airlines,  paragraph  9;  Case  No  M.5440  –  Lufthansa/Austrian  Airlines,
paragraph 11; Case No M.5335 – Lufthansa/SN Airholding, paragraph 12.

[13]  The O&D approach to market definition has recently been reconfirmed by the General Court in its judgment T-162/10 – Niki Luftfahrt  GmbH  v
European Commission, recitals 140 and following.

[14]  Form CO, paragraphs 1.14 and 6.2.

[15]  Replies to Q1 – Questionnaire to corporate customers, question 3; Replies to Q2 – Questionnaire to competitors –  air  transport,  question
5; Replies to Q4 – Questionnaire to travel agents, question 3; Replies to Q5 – Questionnaire to consumer associations, question 3; Replies to  Q6
– Questionnaire to airport managers, question 5; Replies to Q7 – Questionnaire to civil aviation authorities, question 1.

[16]  Case No M.6607 – US Airways/American Airlines, paragraph 10; Case No M.6447 – IAG/bmi, paragraph 31.

[17]  Replies to Q2 – Questionnaire to competitors, question 5.

[18]  Case No M.7333 – Alitalia/Etihad, paragraphs 67  and  following;  Case  No  M.7270  –  Cesky  Aeroholding/Travel  Service/Ceske  Aerolinie,
paragraph 18; Case No M.6663 – Ryanair/Aer Lingus III, recital 50; Case No M.6447 – IAG/bmi, paragraph 31; Case No M.6607 –  US  Airways/American
Airlines, paragraph 8; Case No M.5889 – United Air Lines/Continental Airlines,  paragraph  9;  Case  No  M.5440  –  Lufthansa/Austrian  Airlines,
paragraph 11; Case No M.5335 – Lufthansa/SN Airholding, paragraph 12.

[19]  Case No M.7333 – Alitalia/Etihad, paragraphs 70  and  following;  Case  No  M.7270  –  Cesky  Aeroholding/Travel  Service/Ceske  Aerolinie,
paragraph 20 and following; Case No M.6663 – Ryanair/Aer Lingus III, recital 382; Case No M.6607 – US  Airways/American  Airlines,  paragraph  8;
Case No M.6447 – IAG/bmi, paragraph 36; Case No M.6607 – US Airways/American Airlines, paragraph 8.

[20]  Form CO, Section 6.8.

[21]  Form CO, Section 6.4.

[22]  Form CO, Section 6.5.

[23]  Replies Q1 – Questionnaire to corporate customers, question 4; Replies to Q2 – Questionnaire to competitors, question 6; Replies  to  Q4  –
Questionnaire to travel agents, question 4; Replies to Q5 – Questionnaire to consumer associations, question 4; Replies to Q6 – Questionnaire  to
airport managers, question 6; Replies to Q7 – Questionnaire to civil aviation authorities, question 2.

[24]  Replies to Q1 – Questionnaire to corporate customers, question 4.1; Replies to Q2 – Questionnaire to competitors – air transport,  question
6.1; replies to Q4 – Questionnaire to travel agents, question 4.1; Replies to Q5  –  Questionnaire  to  consumer  associations,  question  4.1  ;
replies to Q6 – Questionnaire airport managers, question 6.1; Replies to Q7 – Questionnaire to civil aviation authorities, question 2.1.

[25]  Replies to Q2 – Questionnaire to competitors – air transport, question 6.1; replies to Q5 – Questionnaire consumer  associations,  question
4.1.; replies to Q7 – Questionnaire to civil aviation authorities, question 2.1.

[26]  Replies to Q2 – Questionnaire to competitors – air transport, question 6.1.; replies to Q4 – Questionnaire to travel agents, question  4.1;
replies to Q5 – Questionnaire consumer associations, question 4.1.

[27]  Replies to Q1 – Questionnaire to corporate customers, question 4.1.; replies  to  Q2  –  Questionnaire  to  competitors  –  air  transport,
question 6.1.; replies to Q4 – Questionnaire to travel agents, question 4.1.

[28]  Replies to Q1 – Questionnaire to corporate customers, questions 8 and 9; Replies to Q2 – Questionnaire to competitors, questions 7 and 8.

[29]  Replies to Q1 – Questionnaire to corporate customers, question 6; replies to Q2 – Questionnaire to competitors, questions 6.1.; Replies  to
Q4 – Questionnaire to travel agents, questions 6; replies to Q4 – Questionnaire to travel agents, questions 4.1.1.

[30]  Replies to Q1 – Questionnaire to corporate customers, question 5.1.

[31]  Replies to Q1 – Questionnaire to corporate customers, questions 4.1, 12 and 14;  replies  to  Q2  –  Questionnaire  to  competitors  –  air
transport, questions 6.1, 11 and 13; replies to Q4 – Questionnaire to travel agents, questions 4.1, 9 and 11.

[32]  "Non-stop" flights are flights that take off at airport A and land at airport B where  they  load  off  passengers  without  any  stops  in
between. By contrast, "direct" flights may entail a refuelling stop and/or a disembarking/re-embarking stop, but  are  marketed  under  a  single
flight code and are flown with a single aircraft. "One-stop" flights include direct flights that  do  not  qualify  as  "non-stop",  as  well  as
indirect flights which are journeys that require a change of aircraft or a change of flight code.

[33]  Case No M.6663 – Ryanair/Aer Lingus III, recital 373.

[34]  Case No M.6663 – Ryanair/Aer Lingus III, recital 374; Case No M.6447 – IAG/bmi, paragraph 68.

[35]  Case No M.7333 – Alitalia/Etihad, paragraphs 75 and following; Case No M.6663 – Ryanair/Aer Lingus III,  recital  375;  Case  No  M.5440  –
Lufthansa/Austrian Airlines, paragraph 25 and following; Case No M.5403 – Lufthansa/bmi, paragraph 17; Case No M.5335 – Lufthansa/SN  Airholding,
paragraph 37 and following.

[36]  Case No M.6607 – US Airways/American Airlines, paragraph 19; Case No M.5440 – Lufthansa/Austrian Airlines, paragraph 27.

[37]  Form CO, Section 6.16.

[38]  Replies to Q1 – Questionnaire to corporate customers, questions 10 and 11; Replies to Q2 – Questionnaire to competitors,  questions  9  and
10; Replies to Q4 – Questionnaire to travel agents, questions 7 and 8; Replies to Q5 – Questionnaire to consumer associations,  questions  5  and
6; Replies to Q6 – Questionnaire to airport managers, questions 7 and 8; Replies to Q7 – Questionnaire to civil aviation  authorities,  questions
3 and 4.

[39]  Replies to Q1 – Questionnaire to corporate customers, questions 10 and 11; Replies to Q2 – Questionnaire to competitors  –  air  transport,
questions 9 and 10; Replies to Q4 – Questionnaire to travel agents, questions 7 and 8; Replies to Q5 – Questionnaire  to  consumer  associations,
questions 5 and 6; Replies to Q6 – Questionnaire to airport managers, questions 7 and  8;  Replies  to  Q7  –  Questionnaire  to  civil  aviation
authorities, questions 3 and 4.

[40]  Replies to Q1 – Questionnaire to corporate customers, questions 12 and 13; Replies to Q2 – Questionnaire to competitors  –  air  transport,
questions 11 and 12; Replies to Q4 – Questionnaire to travel agents, questions 9 and 10; Replies to Q5 – Questionnaire to consumer  associations,
questions 7 and 8; Replies to Q6 – Questionnaire to airport managers, questions 9 and 10;  Replies  to  Q7  –  Questionnaire  to  civil  aviation
authorities, questions 5 and 6.

[41]  M.7333 – Alitalia/Etihad, paragraphs 82 and following; M.6663 – Ryanair/Aer Lingus III, recital 65  and  following;  M.4439  –  Ryanair/Aer
Lingus, recital 73 and following.

[42]  M.7333 – Alitalia/Etihad, paragraphs 85; M.6663 – Ryanair/Aer Lingus III, recital 56.

[43]  Case No M.5889 – United Air Lines / Continental Airlines; Case No M.6447 – IAG/bmi.

[44]  Case No M.5747 – Iberia/British Airways, paragraph 30.

[45]  Case No M.5830 – Olympic/Aegean Airlines, paragraph 1644.

[46]  The Commission, however, considered that London airports are not substitutable from a supply side point  of  view  (in  particular  due  to
network aspects) and that a different conclusion might be reached if account were taken of connecting  traffic  rather  than  O&D  point-to-point
traffic. See case M. 4439 – Ryanair/Aer Lingus, paragraphs 109-125.

[47]  Case No M.6447 – IAG/bmi.

[48]  Case No M.6663 – Ryanair/Aer Lingus III recital 212 and following.  This  conclusion  was  reached  on  the  basis  of  a  possible  market
encompassing all passengers. See also Case No M.4439 – Ryanair/Aer Lingus, paragraph 109 and following.

[49]  Case No M.6828 – Delta Airlines/Virgin Group/Virgin Atlantic Airlines; Case No M.6607 – US Airways/American Airlines

[50]  The documents referred to by the Parties are (i) Civil Aviation Authority, "Airport market power  assessments,  Catchment  area  analysis",
Working Paper, October 2011 and (ii) "Heathrow, Gatwick and Stansted – market power assessments", summary of the CAA's initial  views  –  January
2012.The 2011 paper analyses the catchment areas of Heathrow, Gatwick, Luton and Stansted (due to its  small  size,  narrow  catchment  area  and
focus on business passengers, City has been omitted from the analysis in the working paper) under three different  angles:  (i)  it  defined  the
airports' catchment areas in function of surface travel time to the airport; (ii) it looked at data about the  districts  from  which  passengers
originated and (iii) it looked at the geographic distribution of  actual  airport  usage.  All  three  approaches  suggested  that  there  was  a
considerable extent of catchment area overlap between Heathrow, Gatwick, Luton and Stansted. The 2012  report  indicates  that  "when  attracting
passengers, Heathrow operates in two different markets. First, for passengers travelling on direct services, Heathrow  appears  to  be  competing
over a relatively broad geographic area, extending to include the South East and Greater London regions,  and  extending  towards  the  west  and
north, particularly when attracting passengers to long-haul services.  Consequently,  there  are  very  significant  overlaps  in  the  airport's
catchment area with Gatwick, Stansted and Luton (amongst other smaller airports), although many passengers appear to  have  a  strong  preference
for using services at Heathrow".

[51]  Competition Commission's report on the completed acquisition by Ryanair Holdings plc of a minority shareholding in Aer Lingus Group plc  at
Appendix D pages 2 and 3. Southampton airport, which is situated at 105 km and drive-time of 65 minutes from Heathrow and 87 minutes by car  from
central London, has also been considered as potentially substitutable with the others London airports.

[52]  Form CO, Annex 6, Airport Substitutability, Section 2.

[53]  Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, paragraph 11.8.

[54]        Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, Figure 11.2.

[55]  Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, paragraphs 11.10-11.12.

[56]  http://www.ryanair.com/en/flights-to-london/; Case No M.6663 – Ryanair/Aer Lingus III, recital 222.

[57]  Case No M.6447 – IAG/bmi, paragraphs 51 and 52; Case No M.6663 – Ryanair/Aer Lingus III, recital 86.

[58]  In its working paper of October 2011 on catchment area analysis, the CAA itself indicated that while catchment  areas  can  provide  useful
evidence, they should not be taken as establishing which airports are within the same geographic market and supplementary  evidence  (notably  on
switching) would need to be considered when defining the relevant geographic market. It indicated in this respect that "Catchment  area  analysis
is a way of estimating the geographic area from which a large proportion of an airport's outbound passengers  originate,  or  inbound  passengers
travel to, and their geographic distribution within this area. The size of catchment areas and overlaps between catchment areas  of  neighbouring
airports could provide useful evidence of the potential for, and strength of, competition between there airports.  (…)  By  contrast,  geographic
market definition analyses the area over which passengers would substitute to other airports in light of a small but  significant  non-transitory
increase in price of 5 to 10% above the competitive price level at the original airport".

[59]  IAG's internal document. Attachment D to the Form CO.

[60]  IAG's internal documents, Attachment D to the Form CO.

[61]  See replies to questions 17 of Q.1 – Questionnaire to corporate customers,  16  of  Q.2  –  Questionnaire  to  Competitors,  14  of  Q.4  –
Questionnaire to travel agents, 12 of Q.5 – Questionnaire to Consumer Associations, 13 of Q.6 – Questionnaire to Airport Managers and 9 of Q.7  –
Questionnaire to Civil Aviation Authorities.

[62]  DAA's reply to question 12 of Q.6 – Questionnaire to Airport Managers.

[63]  Ryanair's reply to question 16.2 of Q.2 – Questionnaire to Competitors.

[64]  UK Civil Aviation Authority's reply to questions 12.1 and 13.1 of  Q.5  –  Questionnaire  to  Consumer  Associations.  The  same  was  also
acknowledged by Ryanair "The Commission should pay particular attention to the fact that  in  the  case  of  short  haul  routes  passengers  are
typically willing to only make short land journeys to reach airports" (Ryanair's reply to question 16.2 of Q.2 – Questionnaire to Competitors).

[65]  Due to data limitation it was possible to analyse only the competitive constraints exerted by Gatwick and City.

[66]  The analysis focused on three events to assess the competitive constraint on Heathrow: (i)  the  exit  of  bmi  from  the  Heathrow-Glasgow
route, which left BA as a monopolist on the airport pair since April 2011; (ii) the merger between IAG and bmi, which left BA as a monopolist  on
Heathrow-Aberdeen, Heathrow-Edinburgh and Heathrow-Manchester from April 2012 to April  2013,  when  VS  entered  the  airport-pairs;  (iii)  the
increase in competition in the Heathrow-Dublin route after the merger IAG/bmi, as substantiated by Aer  Lingus'  internal  documents.  (See,  for
example, Form CO, Attachment E_13, Strategy Document – Ireland to London Market 2013-2015.)

[67]  The Parties submitted various arguments to rebut the Commission's  analysis.  However,  overall,  the  Commission  does  not  consider  the
Parties' submissions to carry sufficient evidence to fully contradict the results of the Commission's analysis. For  instance,  the  Parties  did
not provide sufficient evidence indicating that the city-pairs included in the analysis (particularly London-Edinburgh and London-Glasgow)  would
be substantially different than London–Dublin and Belfast–London. The Parties also submitted a price correlation analysis to argue in  particular
that at least five of the London airports belong to the same market (Heathrow, Gatwick, City, Luton, and Stansted) and that  Luton  and  Stansted
would be significant constraints on operations ex Heathrow, Gatwick and  City.  The  Commission  found  several  flaws  in  the  Parties'  study.
Importantly, the Parties' correlation study  did  not  account  for  common  factors  affecting  the  fare  series  simultaneously  (e.g.  common
seasonality), and did not correct the non-stationary nature of the fare series.  The Commission considers that the Parties' correlation  analysis
is inconclusive and uninformative for its purposes in the present case.

[68]  Response to RFI of 11 June 2015, Exhibit 2.

[69]  For this reason, the Commission considered the city-pair London-Madrid as not problematic in its competitive assessment  of  Iberia/British
Airways. See Commission Decision M.5747 – Iberia/British Airways.

[70]  "Case Study: London – Glasgow" submitted on 21 June 2015.

[71]  Case No M.6663 – Ryanair/Aer Lingus III, recital 146. See also recitals 226–233 of Case No M.4439 – Ryanair/Aer Lingus I.

[72]  Form CO, Annex 6, Airport Substitutability, Section 4.

[73]  Aena S.A. non-confidential response to question 15.1 of Q6 – Questionnaire to airport managers.

[74]  Belfast International has one terminal, which provides capacity for six million passengers a year, and two runways.

[75]  George Best Belfast City has one terminal, which provides capacity for six million passengers a year, and one runway.

[76]  Form CO, Annex 6, Airport Substitutability, Section 3.

[77]  MCC report: Belfast International Airport Limited and Belfast City Airport Limited: A  report  on  the  merger  contemplation  Cm  3068  (9
January 1996) and OFT decision on the acquisition of BA Connect by Flybe dated 15 February 2007 at paragraph 24.

[78]  There are some indirect flights from Dublin to New York La Guardia  the  inclusion  of  which  would  not  change  the  assessment  of  the
Transaction.

[79]  Form CO, Annex 6, Section 5.

[80]  Case No AT.39595 – Continental/United/Lufthansa/Air Canada, 4.2.4 (30); Case No M.5889 – United/Continental, paragraph 14.

[81]  Replies to Q1 – Questionnaire to corporate customers, question 16.1; Replies to Q2 – Questionnaire to competitors, question  15.1;  Replies
to Q4 – Questionnaire to travel agents, question 13.1; Replies to Q5 – Questionnaire to consumer associations, question 11.1;  Replies  to  Q6  –
Questionnaire to airport managers, question 12.1; Replies to Q7 – Questionnaire to civil aviation authorities, question 8.1.

[82]  Form CO, Section 6, paragraph 6.40.

[83]  Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.5.

[84]  Case No M.6447 – IAG/bmi, paragraph 78.

[85]  Form CO, Section 6, paragraph 6.38.

[86]  Although MITA has a very large airline membership, being party to the agreement does not automatically mean that a carrier will take  other
members' issued tickets. The agreement to interline requires bilateral agreement between each pair of airlines. This means that  airlines  retain
the ability to agree or to refuse to interline with any other airline.

[87]  There may also be Bilateral Interline Traffic Agreements (BITA), which give more freedom to the parties to agree specific terms.

[88]  They may be so-called "straight rate prorates", whereby the fare paid by the customer is typically allocated  pro  rata  according  to  the
proportion of the total journey distance carried on each carrier's metal (with an Interline Service Charge (ISC) also typically being payable  to
the ticketing carrier to cover agency selling costs). Alternatively, it may be a "net SPA", whereby a specified amount is payable for carrying  a
passenger in a particular ticket class on a particular sector (and, in some cases, an ISC is also payable to the marketing  carrier).  In  either
case there may also be separate codeshare commissions to pay if the SPA is attached to a codeshare agreement.

[89]  See Guidelines on the assessment of non-horizontal  mergers  under  the  Council  Regulation  on  the  control  of  concentrations  between
undertakings (OJ C 265, 18.10.2008, p. 6) (“Non Horizontal Merger Guidelines"), paragraph 91.

[90]  When a ticket for an indirect journey is sold by a third party rather by one of the two carriers, the theory of harm would  take  the  form
of foreclosure through tying. It refers to a situation where IAG would avoid selling one leg of  the  indirect  journey  in  isolation  from  the
second one, thereby preventing the sale of indirect journeys combining a leg operated by IAG and one of its competitors on a given route.

[91]  Replies to Q1 – Questionnaire to corporate customers, questions 31.1 and 31.2; Replies to Q4 – Questionnaire to  travel  agents,  questions
27.1 and 27.2; Replies to Q5 – Questionnaire to consumer associations, questions 22.1  and  22.2;  Replies  to  Q6  –  Questionnaire  to  airport
managers, question 24.1; Replies to Q7 – Questionnaire to Civil aviation authorities, question 18.1.

[92]  Case No M.3280 –  Air  France/KLM,  paragraph  39;  Case  No  M.5440  –  Lufthansa/Austrian  Airlines,  paragraph  37;  Case  No  M.5830  –
Olympic/Aegean, recital 320.

[93]  Replies to Q11 – Questionnaire to competitors, question 5; Q12 – Questionnaire to customers, question 4.

[94]  Replies to Q11 – Questionnaire to competitors, question 6; Q12 – Questionnaire to customers, question 5.

[95]  Case No M.3374 – SR Technics/FLS Aerospace, paragraph 12.

[96]  Case No M.3280 – Air France/KLM, paragraph 40.

[97]  Case No JV.19 – KLM/Alitalia, paragraph 57.

[98]  Case No M.5440 – Lufthansa/Austrian Airlines, paragraph 39; Case No M.5747 – Iberia/British Airways at paragraph 49.

[99]  Case No M.7021 – Swissport/Servisair.

[100]       Replies to Q9 – Questionnaire to ground handling – competitors, question 5; Q10 –  Questionnaire  to  ground  handling  –  customers,
question 4.

[101]       Case No M.7021 – Swissport/Servisair at paragraph 44; Case No M5747 – Iberia/British Airways  at  paragraph  46;  Case  No  M.5830  –
Olympic/Aegean at recital 314 and following.

[102] Replies to Q9 – Questionnaire to competitors, question 6; Q10 – Questionnaire to customers, question 5.

[103]       Ground Handling Directive, OJ L 272, 25.10.1996, p. 36, Annex. See also the IATA Standard Ground Handling Agreement  ("SGHA"),  Annex
A, Section 5.

[104]       Case No M.7021 – Swissport/Servisair, paragraph 32.

[105]       Case No M.1165 – Lufthansa/Menzies/LCC, paragraphs 10-11.

[106]       Case No M.7021 – Swissport/Servisair, paragraph 52.

[107]       IATA considers that BSP is a system designed to facilitate and simplify the selling,  reporting  and  remitting  procedures  of  IATA
Accredited Passenger Sales Agents, as well as improve financial control and cash flow for BSP Airlines.

[108]       Case No M.6447 – IAG/bmi; Case No M.5889 – United Airlines/ Continental Airlines; Case No M.5747 – Iberia/ British Airways.

[109]       Case No M.7333 – Alitalia/Etihad, paragraphs 135 and following.

[110]       CAA surveys generally operate for twelve month periods with anywhere from 3,000 to 70,000 interviews  being  achieved,  depending  on
airport size. The surveys usually follow a stratified sampling design (stratified by carrier, route and quarter), with  interviews  taking  place
in the gaterooms. The interviews are then weighted to actual traffic levels. (Less often, a random sample is obtained by interviewing  at  points
in the lounge – in this instance a further level of weighting is required to account for the sampling  proportion  obtained  during  the  shift).
Further information is available at https://www.caa.co.uk/default.aspx?catid=1279&pagetype=90&pageid=7629

[111]       All of the Parties' competitors on the relevant transatlantic routes replied to this market reconstruction.

[112]       Form CO, Annex 18.4, paragraph 5.2.

[113]       The members of oneworld cooperate in various areas such as check-in, lounges, boarding experience, cabin crew, meals,  seat  comfort,
punctuality, in-flight entertainment, aircraft cleanliness and baggage handling. They have  combined  ticket  offices,  check-in  facilities  and
provide almost 550 lounges worldwide. Some members, including BA and IB, also codeshare with each  other  on  certain  routes  and  cooperate  in
relation to frequent flyer programmes; Form CO, paragraph 8.41.

[114]       Case No M.6607 – US Airways/  American  Airlines,  paragraph  28;  Case  No  M.6828 – Delta  Airlines/Virgin  Group/Virgin  Atlantic,
paragraph 84; Case No M.5747 Iberia/British Airways, paragraphs 54–56; Case No M.5830 Olympic/Aegean I, recital 486.

[115]       Merger approved by the Commission on 5 August 2013 in Case No M.6607 – US Airways/American Airlines.

[116]       See e.g. Case No M.6828 – Delta/Virgin Atlantic.

[117]       Form CO, paragraph 6.52.

[118]       Form CO, paragraphs 6.53 and 6.54.

[119]       Guidelines on the assessment  of  horizontal  mergers  under  the  Council  Regulation  on  the  control  of  concentrations  between
undertakings ("Horizontal Merger Guidelines"), paragraph 9 (OJ C 31, 5.2.2004, p.5).

[120]       Case No M.7333 – Alitalia/Etihad, paragraphs 171 and following; Case No M.6828 – Delta/Virgin, footnote  77;  Case  No  M.6607  –  US
Airways/American Airlines, paragraph 32; Case No M.5889 – United/Continental, footnote 25; Case No M.5830 – Aegean/Olympic I, footnote 365;  Case
No M.5747 – BA/Iberia, paragraph 117; Case No M.5335 – LH/SN Airholding, footnote 302.

[121]       Winter 2012/13, summer 2013, winter 2013/14, and summer 2014 IATA seasons.

[122]       See also Form CO, paragraph 6.16(ii).

[123]       Case No M.5335 – BA/Iberia, paragraph 117; Case No M.6828 – Delta/Virgin, footnote 77.

[124]       Case No M.6607 – US Airways/American Airlines, paragraph 32.

[125]       See also Form CO, paragraph 6.16(iii).

[126]       Case No M.6607 – US Airways/American Airlines, paragraph 32.

[127]       Form CO, paragraph 6.16(i).

[128]       Form CO, paragraphs 6.146 and following.

[129] See paragraphs 28-30 of the Horizontal Merger Guidelines.

[130]       See the UK Civil Aviation Authority's response to Q7 – Questionnaire to civil aviation  authorities,  question  10.4;  see  also  the
Dublin Airport Authority's response to Q6 – Questionnaire to airport managers, question 9.1.

[131]       Case No M.6663 – Ryanair/Aer Lingus III, section 7.1.

[132] Paragraph 90 and ff. of the Ryanair I 2010 Judgement.

[133]       Form CO, Annex 10, Aer Lingus' Interline Strategy.

[134]       Form CO, Annex 18.1, Exhibit 6, Part I; Form CO, Annex 18.6, Exhibit 2.

[135]       Form CO, Annex 18.1, Exhibit 7, paragraph 1.1.

[136]       Form CO, Section 8, IAG service proposition, Table 8.5; Aer Lingus service proposition, Table 8.6.

[137]       [EI passenger figures]; Form CO, Section 8, paragraph 8.20.

[138]       Form CO, Form CO, annex 18.1, Exhibit 6 Part IV, BA short haul strategy 2015-2019, p.17.

[139]       Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, paragraph 11.6 and following.

[140]       Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, paragraph 11.12.

[141]       Form CO, Annex 18.1, Response to RFI 1 of 13 February 2015, Figure 11.4.

[142]       Form CO, Annex 12, Overview of competitors, paragraph 1.2(iv).

[143]       Form CO, Annex 19.94.

[144]       See e.g. Form CO, Attachments E_46 and E_47, Aer Lingus Updated 5 Year Plans: [Business Secrets].

[145]       Form CO, Annex 12, Overview of competitors, paragraph 1.12; and http://www.easyjet.com/en/business .

[146]            Form CO, Annex 12, Overview of competitors, paragraph 1.15.

[147]       Form CO, Section 6, paragraph 6.87.

[148]       [BA business and marketing information].

[149]       [BA business and marketing information].

[150]            Replies to Q2 – Questionnaire to competitors – air transport, question 1.3.

[151]       Council Regulation (EEC) No 95/93 of 18 January 1993 on common rules for the allocation of slots at  Community  airports,  OJ  L  14,
22.1.1993, p. 1–6 and Regulation (EC) No 793/2004 of the European Parliament and of the Council of 21  April  2004  amending  Council  Regulation
(EEC) No 95/93 on common rules for the allocation of slots at Community airports.

[152]       The Lufthansa group leases slot pairs totalling 16 movements per week at Heathrow in summer to Aer Lingus.  These  leased  slots  are
excluded from Lufthansa's overall slot holding.

[153]       With the return of the slots currently operated by Little Red to BA or another IAG carrier, IAG's share of LHR slots  would  increase
by 1.31% in summer and 1.36% in winter seasons (unless taken up by another carrier for the following season).

[154] ACL, non-confidential reply to Q8 – Questionnaire to slot coordinators, question 5.1.

[155]       HAL non-confidential reply to Q. 6 – Questionnaire to airport managers, questions 16.1, and 16.3.

[156]       Among Heathrow's terminals, Terminal 5, opened in 2008 at a cost of £4 billion, is the largest  of  Heathrow's  terminals.  In  2014,
31.6 million passengers flew from Terminal 5 on 207,859 flights – more than from any other Heathrow terminal. Terminal 5 is capacity  restricted,
such that some BA flights leave from other terminals (for instance, BA flights to Amman and to Baku depart from T1; flights to  Barcelona  depart
from T3).

[157]       Form CO, Annex 18.5, response to RFI 12 of 21 April 2015, paragraphs 4.2 and following.

[158]       Terminal 2 was opened in 2014 and is home to 26 airlines, 23 of which are members of the Star Alliance group of  carriers,  including
Air China, Lufthansa and Turkish Airlines.

[159]       Form CO, Annex 10.

[160]       For instance, Virgin claimed that this limited access to infrastructure "affects the viability of remedies" and  that  "for  carriers
seeking to offer connecting services through LHR this acts as a significant impediment to  competition".  Non-confidential  version  of  Virgin's
submission of 2 April 2015.

[161] ACL, Reply to Q8 – Questionnaire to slot coordinators, question 6.

[162]       HAL non-confidential reply to Q. 6 – Questionnaire to airport managers, questions 16.2, 17.2 and 17.3.

[163]       HAL non-confidential reply to Q. 6 – Questionnaire to airport managers, question 19.1.

[164]       While there is a common ownership interest between IAG and Heathrow  Airport  Limited  (HAL),  there  would  not  be  merger-specific
effects relevant for the assessment of the Transaction.

[165]       Form CO, Annex 13, Airport barriers to entry, paragraph 5.3.

[166]       Form CO, Annex 13, Airport barriers to entry, paragraph 5.2.

[167] ACL, Reply to Q8 – Questionnaire to slot coordinators, question 6.

[168]       HAL non-confidential reply to Q. 6 – Questionnaire to airport managers, question 19.1

[169]       The Parties mention also the announcement of CityJet to fly 18 times weekly between Cork and London City from  1  October,  with  the
1st scheduled flight to depart at 7.40 am.

[170]       ACL, LCY S15 Start of Season report, available at:
http://www.acl-uk.org/reportsStatistics.aspx?id=98&subjectId=39.

[171]       Form CO, Annex 13, Airport barriers to entry, paragraph 6.2.

[172]       Form CO, Annex 13, Airport barriers to entry, paragraph 7.3.

[173]       ACL, LTN S15 Start of Season report, available at:
http://www.acl-uk.org/UserFiles/File/LTN%20S15%20Seasonal%20Report_v3.pdf .

[174]       Replies to questionnaire Q6 – Airport managers, question16.1.1 and 16.1.2.

[175]       Form CO, Annex 13, Airport barriers to entry, paragraph 7.2.

[176]       ACL, LCY S15 Start of Season report, available at:
http://www.acl-uk.org/reportsStatistics.aspx?id=98&subjectId=39.

[177]       Form CO, Annex 13, Airport barriers to entry, paragraph 8.2.

[178]       Form CO, Annex 13, Airport barriers to entry, paragraph 9.2.

[179]       Form CO, Annex 13, Airport barriers to entry, paragraph 2.1.

[180]       Form CO, Annex 13, Airport barriers to entry, paragraph 2.2.

[181]       Case No M.6663 – Ryanair/Aer Lingus III, recital 788 and following.

[182]       Form CO, Annex 13, Airport barriers to entry, paragraph 2.5.

[183]       Form CO, Annex 18.1, paragraph 50.1.

[184]       DAA non-confidential reply to Q. 6 – Questionnaire to airport managers, questions 16.1, and 17.1.

[185]       DAA non-confidential reply to Q. 6 – Questionnaire to airport managers, questions 16.3, 17.2 and 17.3.

[186]       IAG's response to RFI 3 of 9 June 2015, and, Annex 7.1 to the Form CO.
[187]       Form CO, Annex 7.1.
[188]       Form CO, paragraph 6.74.

[189]       The sales region of Ireland includes Northern Ireland.
[190]       Sales of point-to point traffic split by point of sale on a country basis. The point of sale is based on booking  address.  Form  CO,
Annex 18.4, paragraphs 6.1 and 6.2.

[191]       BA started operating the London–Dublin route in March 2012, following the acquisition of bmi,  which  was  operating  on  the  route.
Before being acquired by BA, bmi, an independent competitor controlled since 2009 by Lufthansa, operated from Dublin to LHR and LGW  before  2004
and to LCY since June 2008. bmi exited LGW and LCY in March 2009. (Case No M. 6663 Ryanair/Aer Lingus III, recital 1119).

[192]       The negotiations between BA and Aer Lingus started at least in July 2014 and are not linked to the Transaction.

[193]       Air France sold CityJet to German owners Intro Aviation in May 2014. CityJet operates a combined fleet  of  30+  aircraft  comprising
Avro RJ85 and Fokker 50 aircraft. The airline operates a total of more than 680 weekly flights all over Europe throughout its entire network.

[194]       According to the Parties, Aer Lingus monitors and reacts to Ryanair's prices, whereas when assessing short-haul  competitors,  [IAG's
      business stragey]. See Form CO, paragraphs 6.86 and 6.87.

[195]       Flybe has stopped operating the route since the end of May 2015.

[196]       Flybe ceased operations on the route in May 2015. Flybe operated from Dublin to Southend.

[197]       Form CO, Annex 18.3. See also See IAG's response to preliminary concerns raised at the State of  Play  meeting  regarding  unilateral
effects on London–Dublin and London Belfast of 26 June 2015.

[198]       Form CO, Annex 18.3, paragraph 3.4.

[199]       Form CO, Annex 18.3, Exhibit 8.

[200]       IAG's response to preliminary concerns raised at the State of Play meeting regarding unilateral effects on London-Dublin and  London-
Belfast, paragraph 3.10.

[201]       Form CO, Attachment E_13, Strategy Document – Ireland to London Market 2013-2015.

[202]       IAG submission of 8 July 2015, Further observations on LON-DUB and LON-BFS,  paragraph  5.4  [EI  business  strategy  and  monitoring
activities]

[203]       Form CO, paragraph 11.7 and Figure 11.2 "Advertisements for BA's Dublin/Belfast – London services".

[204]       IAG's destination page on London, available at: http://www.britishairways.com/en-be/destinations/london/flights-to-london.

[205]       Form CO, Annex 18.1, Exhibit 22, "Brand Equity Pyramids H1 2014 UK and US" and Form CO, Annex 18.3, paragraph 16.1.

[206]       Replies to of Q.1 – Questionnaire to corporate customers, question 23.1; replies to Q.2 –  Questionnaire  to  competitors,  questions
22.1; and replies to Q.4 – Questionnaire to travel agents, questions 20.1.

[207]       Form CO, paragraph 6.86.

[208]       Form CO, paragraph 6.86 and footnote 134.

[209]       See Form CO, paragraph 2.26 and Exhibit 2 to Annex 18.3 to the Form CO. The introduction of this  lower  fare  on  the  London–Dublin
route was perceived as an important threat by Aer Lingus, in particular as regards services  offered  by  IAG  from  Heathrow.  See  Aer  Lingus'
internal document "BA entry to DUBLHR Market June 2012 – Impact" provided as Annex E.14 to the Form CO.

[210]       See UK CAA's reply to Q.5– Questionnaire to consumer associations, question 3.1. This  would  be  consistent  with  the  Commission's
quantitative analysis of competitive interactions across airports (see section IV.2.4.2).

[211]       Replies to Q.1 – Questionnaire to corporate customers, questions 24.1.

[212]       Replies to Q.2 – Questionnaire to competitors, questions 23.1.

[213]       Replies to Q.4 – Questionnaire to travel agents, questions 21.1.

[214]       Replies to of Q.1 – Questionnaire to corporate customers, questions 25.1; replies to Q.2 – Questionnaire  to  competitors,  questions
24.1; and replies to Q.4 – Questionnaire to travel agents, questions 22.1.

[215]       Replies to of Q.1 – Questionnaire to corporate customers, questions 17.1; replies to Q.2 – Questionnaire  to  competitors,  questions
16.1; replies to Q.4 – Questionnaire to travel agents, questions 14.1; replies to Q. 5 – Questionnaire to consumer associations,  question  12.1;
replies to Q. 6 – Questionnaire to airport managers, questions 13.1; and replies to Q.7 – Questionnaire to civil aviation authorities,  questions
9.1.

[216]       It should also be taken into account that some business passengers may consider Heathrow as being differentiated  in  so  far  as  it
offers unequalled connectivity opportunities. However, connectivity considerations are not relevant to assess the competitive constraint  exerted
on the Parties' operations by other carriers on this route, as the reference market comprises only point-to-point passengers.

[217]       Replies to of Q.1 – Questionnaire to corporate customers, questions 17.1; replies to Q.2 – Questionnaire  to  competitors,  questions
16.1; replies to Q.4 – Questionnaire to travel agents, questions 14.1; replies to Q. 5 – Questionnaire to consumer associations,  question  12.1;
replies to Q. 6 – Questionnaire to airport managers, questions 13.1; and replies to Q.7 – Questionnaire to civil aviation authorities,  questions
9.1. Respondents to the market investigation indicated also that operations from Luton, Stansted and Southend to  Dublin  exert  a  more  limited
constraint on operations from Heathrow to the same destination than flights from Gatwick and City do,  irrespective  of  any  possible  passenger
differentiation

[218]       Replies to Q1 – Questionnaire to corporate customers, questions 8 and 9; Replies to Q2 – Questionnaire to  competitors,  questions  7
and 8.

[219]       IAG's response to RFI 7, "BA, DOMs Performance and outlook, March 15", slide 11, on the London-Glasgow route.

[220]       See “Aer Lingus' observations on London–Dublin and London-Belfast” of 26 June 2015.

[221]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[222]       CityJet has increased its seasonal capacity on the London–Dublin route from City by [5-10%] from the summer 2014 to the  summer  2015
IATA seasons.

[223]       From 2013 to 2014, Ryanair expanded its overall operations at Dublin by 1 million seats. It will also increase its seasonal  capacity
by 10% from the summer 2014 to the summer 2015 IATA seasons. See Form CO, paragraph 6.89.

[224]       Replies to Q.2 – Questionnaire to Competitors, question 30.

[225]       Replies to Q.2 – Questionnaire to Competitors, question 30.

[226]       Respondents to the market investigation did not raise material issues as regards the level of congestion at City.

[227]       Form CO, paragraph 6.105.

[228]       IAG's response to RFI 3 of 9 June 2015 and Annex 7.01 to the Form CO.

[229]       Less than 100 passengers travelled for business purposes on this route in the winter 2013/2014 IATA season. See Form CO, Annex 7.1.

[230]       Form Co, Annex 7.1.

[231]       Form Co, paragraph 6.105.

[232]       The sales region of Ireland includes Northern Ireland.
[233]       Sales of point-to point traffic split by point of sale on a country basis. The point of sale is based on booking  address.  Form  CO,
Annex 18.4, paragraphs 6.1 and 6.2.

[234]       The Parties refer to Case No M. 6663 – Ryanair/Aer Lingus III, where at recital 628 it is stated that "[…]  Aer  Lingus  and  Ryanair
      are very close competitors, if not each other's closest competitor, on all routes subject to this Decision".

[235]       According to the Parties, Aer Lingus monitors and reacts to Ryanair's prices, whereas when  assessing  short-haul  competitors,  [IAG
      business strategy and marketing information] . See Form CO, paragraph 6.119.

[236]       Flybe has relocated its London operations from Gatwick to City since summer 2014.

[237]       Form CO, Annex 18.3.

[238]       Form CO, Annex 18.3, Exhibits 6 and 8.

[239]       IAG's response to preliminary concerns raised at the State of Play meeting regarding unilateral effects on London-Dublin and  London-
Belfast, paragraph 3.9.

[240]       See also the assessment made about internal documents in Section V.6.1. In Aer Lingus' Strategy Document  relating  to  the  Ireland,
Ireland seems to refer to the Island of Ireland as it includes also the assessment of the Belfast–London route.

[241]       Form CO, Annex 18.1, paragraph 11.7 and Figure 11.2 "Advertisements for BA's Dublin/Belfast – London services".

[242]       Form CO, Annex 18.1, Exhibit 22, "Brand Equity Pyramids H1 2014 UK and US" and Form CO, Annex 18.3, paragraph 16.1.

[243]       Replies to of Q.1 – Questionnaire to corporate customers, question 23.3; replies to Q.2  –  Questionnaire  to  competitors,  question
22.3; and replies to Q.4 – Questionnaire to travel agents, questions 20.3.

[244]       See IAG's short haul strategy, December 2014, Exhibit 6 to Annex 18.1 of the Form CO and BA's short haul strategy 2014-2019  provided
as Exhibit 6 to Annex 18.1 to the Form CO.

[245]       See UK CAA's reply to Q.5– Questionnaire to consumer associations, question 3.1.

[246]       Replies to Q.1 – Questionnaire to corporate customers, questions 24.3.

[247]       Replies to Q.4 – Questionnaire to travel agents, questions 21.3.

[248]       Replies to Q.2 – Questionnaire to competitors, questions 23.3.

[249]       Replies to of Q.1 – Questionnaire to corporate customers, questions 25.3; replies to Q.2 – Questionnaire  to  competitors,  questions
24.3; and replies to Q.4 – Questionnaire to travel agents, questions 22.3.

[250]       Replies to of Q.1 – Questionnaire to corporate customers, question 18.1; to Q.2 – Questionnaire to  competitors,  question  17.1;  to
Q.4 – Questionnaire to travel agents, question 15.1; to Q.5 – Questionnaire to consumer associations, question 13.1; to Q. 6 –  Questionnaire  to
airport managers, question 14.1; and to Q.7 – Questionnaire to civil aviation authorities, question 10.1.

[251]       It should also be taken into account that some business travel may consider Heathrow as being differentiated in so far as  it  offers
unequalled connectivity opportunities. However, connectivity considerations are not relevant to assess the competitive constraint exerted on  the
Parties' operations by other carriers on this route, as the market of reference includes point-to-point passengers.

[252]       Replies to of Q.1 – Questionnaire to corporate customers, question 18.1; to Q.2 – Questionnaire to  competitors,  question  17.1;  to
Q.4 – Questionnaire to travel agents, question 15.1; to Q.5 – Questionnaire to consumer associations, question 13.1; to Q. 6 –  Questionnaire  to
airport managers, question 14.1; and  to  Q.7  –  Questionnaire  to  civil  aviation  authorities,  question  10.1.  Respondents  to  the  market
investigation indicated that operations from Luton, Stansted and Southend to Belfast exert a more limited constraint on operations from  Heathrow
to the same destination than flights from Gatwick and City do, irrespective of any possible passenger differentiation.

[253]       Replies to Q1 – Questionnaire to corporate customers, questions 8 and 9; Replies to Q2 – Questionnaire to  competitors,  questions  7
and 8.

[254]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[255]       Form CO, Annex 13, Airport barriers to entry, paragraphs 3.2 and 4.3

[256]       Replies to Q.6 – Questionnaire to Airport Managers, question 16.3.

[257]       See  Annex  19.22  to  the  Form  CO,  also  available  at  http://www.Flybe.com/corporate/media/news/1404/Flybe-london-city-airport-
deal.htm/.

[258]       See Annex 19.23, also available at http://www.belfastairport.com/en/news/1/374/jet2com-announces-four-new-routes.html.

[259]       See Annex  19.24,  also  available  at  http://www.belfastairport.com/en/news/1/380/wizz-air-announces-second-new-route-from-belfast-
international-airport.html.

[260]       See http://www.bbc.com/news/uk-northern-ireland-32133110.

[261]       Replies to Q.2 – Questionnaire to Competitors, question 30.

[262]       IAG Response to RFI 3 of 9 June 2015, Form CO, Annex 7.1.

[263]       In summer 2014, [10 000–20 000] TS passengers, travelled on the O&D route, whereas only [Â[264]1000] TS passengers travelled  on  the
route in winter 2013/2014 IATA season. Form CO, Annex 7.1.

[265] Form CO, Section 6, paragraph 6.94.

[266]       Form CO, Section 6[˂1000] TS passengers travelled on the route in winter 2013/2014 IATA season. Form CO, Annex 7.1.

[267] Form CO, Section 6, paragraph 6.94.

[268]       Form CO, Section 6, paragraph 6.94.

[269] Form CO, Annex 18.4, paragraph 6.2. Point of sale is based on the booking address for Aer Lingus.

[270]       Form CO, Section 6, paragraph 6.99.

[271]       Case No M.6663 – Ryanair/Aer Lingus III, recital 1196.

[272]       Flybe has stopped to operate the route since the end of May 2015.  Flybe's  exit  would  reduce  the  number  of  competing  carriers
      operating on a London (three) market from four to three. The same conclusion  would  apply  if  we  were  to  consider  a  relevant  market
      encompassing all London airports.

[273] Form CO, Annex 18.3, paragraph 3.8.

[274]       Form CO, Annex 18.3, Exhibit 8.1.

[275]       Form CO, Annex 18.1, Exhibit 24.

[276]       Replies to Q1 – Questionnaire to corporate customers, questions 24.2  and  25.2;  Replies  to  Q2  –  Questionnaire  to  competitors,
questions 23.2 and 24.2; Replies to Q4 – Questionnaire to travel agents, questions 21.2 and 22.2; Replies  to  Q5  –  Questionnaire  to  consumer
associations, questions 17.2 and18.2.

[277]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[278]       Form CO, Annex 13, Airport barriers to entry, paragraph 10.2.

[279]       Form CO, Annex 13, Airport barriers to entry, paragraph 10.1

[280] Case No M.6663 – Ryanair/Aer Lingus III, recital 1200.

[281]       Replies to Q6 – Questionnaire to airport managers, question 16; Replies to Q8 – Questionnaire to slot coordinators, question 9.

[282]       IAG's response to RFI 3 of 9 June 2015, Form CO, Annex 7.1.

[283]       Form CO, Annex 7.1.

[284] Form CO, Section 6, paragraph 6.123.

[285] Form CO, Annex 18.4, paragraph 6.2.

[286]       Form CO, Section 6, paragraph 6.125.

[287]            Case No M.6663 – Ryanair/Aer Lingus III, recital 1372.

[288]       Form CO, Annex 18.1, Exhibit 25.

[289]       Form CO, Annex 18.1, Exhibit 24.

[290]       Replies to Q1 – Questionnaire to corporate customers, questions 24.4  and  25.4;  Replies  to  Q2  –  Questionnaire  to  competitors,
questions 23.4 and 24.4; Replies to Q4 – Questionnaire to travel agents, questions 21.4 and 22.4; Replies  to  Q5  –  Questionnaire  to  consumer
associations, questions 17.4 and18.4.

[291]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[292]       Form CO, Annex 13, Airport barriers to entry, paragraph 11.3.

[293]       Form CO, Annex 13, Airport barriers to entry, paragraph 10.2.

[294]       Replies to Q6 – Questionnaire to airport managers, question 16; Replies to Q8 – Questionnaire to slot coordinators, question 9.

[295]       Form CO, Annex 7.1.

[296]       Form CO, Annex 7.1.

[297]       Form CO, Annex 7.1.

[298]       Form CO, Annex 7.1.

[299]       Form CO, Annex 7.1.

[300]       Form CO, Annex 7.1.

[301]       Form CO, Annex 7.1.

[302]       Form CO, Annex 7.1.

[303]       American Airlines' service giving rise to the overlap is only seasonal, further reflecting the leisure focus of the  route  (Parties'
submission dated 19 June 2015, "Analysis of Transatlantic Routes").

[304]       As discussed above, the JBA operated on the Dublin-New York route during the winter 2013/2014 IATA season. However, the JBA's  winter
service was not resumed in the following winter IATA season [BUSINESS SECRETS]. Therefore, the JBA only operates on the route in the summer.

[305]       Based on the information provided by the Parties, an additional 49 passengers who are not attributed to a specific airline  travelled
on the Dublin-New York route in the summer 2014 IATA season. However, the number of passengers unaccounted for is negligible and even if it  were
attributed to the Parties it would not affect the assessment of the effects of the Transaction on the Dublin-New York route.

[306]       Form CO, Annex 7.1.

[307]       Form CO, Annex 7.1.

[308]       Form CO, Annex 7.1.

[309]       Form CO, Annex 7.1.

[310]       Form CO, Annex 18.3.

[311]       Form CO, Annex 18.3, paragraph 3.4.

[312]       Form CO, Annex 18.3, paragraph 3.4.

[313]       Form CO, Annex 18.3, Exhibit 8.

[314]       Q1 – Questionnaire to Corporate customers, question 23.5; Q2 – Questionnaire to Competitors – Air  transport,  question  22.5;  Q4  –
Questionnaire to Travel Agents, question 20.5; Q5 – Questionnaire to Consumer Associations, question 16.5.

[315]       Q1 – Questionnaire to Corporate customers, questions 24.5 and 25.5; Q2 – Questionnaire to  Competitors  –  Air  transport,  questions
23.5. and 24.5; Q4 – Questionnaire to Travel Agents, questions 21.5 and 22.5; Q5 – Questionnaire to Consumer Associations,  questions  17.5.  and
18.5.

[316]       Q1 – Questionnaire to Corporate customers, questions 24.5 and 25.5; Q2 – Questionnaire to  Competitors  –  Air  transport,  questions
23.5. and 24.5; Q4 – Questionnaire to Travel Agents, questions 22.5 and 21.6; Q5 – Questionnaire to Consumer Associations,  questions  17.5.  and
18.5.

[317]       Q1 – Questionnaire to Corporate customers, question 21; Q2 – Questionnaire  to  Competitors  –  Air  transport,  question  20;  Q4  –
Questionnaire to Travel Agents, question 18.

[318]       Q1 – Questionnaire to Corporate customers, question 21; Q2 – Questionnaire  to  Competitors  –  Air  transport,  question  20;  Q4  –
Questionnaire to Travel Agents, question 18.

[319]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[320]       Form CO, Annex 14.3.

[321]       Form CO, Annex 15.3.

[322]       Replies to Q2 – Questionnaire to competitors, questions 30 and 33.

[323]       Moreover, regarding indirect flights from Dublin to MDW, only negligible numbers of passengers flew in the  last  four  IATA  seasons
(consistently fewer than 500 passengers).

[324]       Form CO, Annex 7.1.

[325]       Form CO, Annex 7.1.

[326]       Form CO, Annex 7.1.

[327]       Form CO, Annex 7.1.

[328]       American Airlines' service giving rise to the overlap is only  seasonal  (Parties'  submission  dated  19  June  2015,  "Analysis  of
Transatlantic Routes").

[329]       Parties' submission dated 19 June 2015, "Analysis of Transatlantic Routes", p. 3.

[330]       The Parties' reply to RFI 18 of 21 October 2014, question 9.

[331]       Form CO, Annex 7.1.

[332]       United operates more than 580 daily flights out of  ORD,  including  60  daily  nonstop  flights  to  40  international  destinations
(Parties' submission dated 19 June 2015, "Analysis of Transatlantic Routes").

[333]       Q1 – Questionnaire to Corporate customers, question 23.6; Q2 – Questionnaire to Competitors – Air  transport,  question  22.6;  Q4  –
Questionnaire to Travel Agents, question 20.6; Q5 – Questionnaire to Consumer Associations, question 16.6.

[334]       Q1 – Questionnaire to Corporate customers, questions 24.6 and 25.6; Q2 – Questionnaire to  Competitors  –  Air  transport,  questions
23.6. and 24.6.; Q4 – Questionnaire to Travel Agents, questions 21.6 and 22.6; Q5 – Questionnaire to Consumer Associations, questions  17.6.  and
18.6.

[335]       Replies to Q1 – Questionnaire to corporate customers, question 33; Replies  to  Q2  –  Questionnaire  to  competitors,  question  35;
Replies to Q4 – Questionnaire to travel agents, question 29; Replies to Q5 – Questionnaire to consumer associations, question 24; Replies  to  Q7
– Questionnaire to civil aviation authorities, question 12.

[336]       These are the following 36 routes: Alicante–Cardiff, Amsterdam–Santiago (Spain),  Athens–Dublin,  Barcelona–Cardiff,  Barcelona–Cork,
Barcelona–Edinburgh,  Barcelona–New  York,  Bilbao–Dublin,  Bordeaux–Dublin,   Boston–Dublin,   Boston–London,   Boston–Madrid,   Boston–Shannon,
Brussels–Santiago (Spain), Bucharest–Dublin, Chicago–London, Chicago–Madrid, Chicago–Manchester,  Copenhagen–Glasgow,  Cork–Geneva,  Cork–Lisbon,
Cork–Munich, Dublin–Dubrovnik, Dublin–Geneva,  Dublin–Helsinki,  Dublin–Lyon,  Dublin–Naples,  Dublin–Nice,  Dublin–Orlando,  Dublin–Philadelphia
(PA), Dublin–San Francisco, Dublin–Toronto, Dublin–Toulouse, Dublin–Venice, Dublin–Washington, Manchester–New York.

[337]       Alicante–London, Barcelona–New York JFK, Bilbao–London Gatwick, Chicago O'Hare–London  Heathrow,  Faro–London  Heathrow,  London–Gran
Canaria (Las Palmas), London–Manchester, Madrid–Chicago O'Hare, Malaga–Belfast,  Malaga–London  Heathrow,  Manchester–Chicago  O'Hare,  New  York
JFK–Manchester, New York JFK–Shannon.

[338]       As explained above in Section IV.2.4.6, for the purpose of the assessment of the Transaction the Commission considers  that  JFK  and
Newark belong to the same market. In addition, the Parties and their competitors also fly  indirect  services  to  LGA.  The  assessment  of  the
effects of the Transaction on this route would not change irrespective whether LGA is included or not in  the  relevant  market.  Therefore  this
route is assessed at city pair level.

[339]       Replies to Q1 – Questionnaire to corporate customers, questions 34-36; Replies to Q2 – Questionnaire to competitors – air  transport,
questions 36-38; Replies to Q4 – Questionnaire to travel agents, questions 30-32;  Replies  to  Q5  –  Questionnaire  to  consumer  associations,
question 25-27; Replies to Q7 – Questionnaire to civil aviation authorities, question 13.

[340]       Only [˂1000] passengers travelled on the route in the winter 2012/2013 IATA season.

[341]       AF-KLM and the Lufthansa group are active on the route and in the winter 2013/2014 IATA season held shares of [10-20%]  and  [40-50%]
respectively.

[342]       Star JV, Sky Team JV, and Virgin Atlantic are active on the route and in the winter 2013/2014 IATA season held  shares  of  [10-20%],
[0-5%], and [0-5%] respectively.

[343]       AF-KLM is active on the route and in the winter 2013/2014 IATA season held a share of [10-20%].

[344]       Only [˂1000] passengers travelled on the route in the winter 2012/2013 IATA season.

[345]       Only [˂1000] passengers travelled on the route in the winter 2012/2013 IATA season.

[346]       On Alicante–Cardiff and Amsterdam–Santiago (Spain), the data provided by the Parties indicates that both Parties did sell tickets  in
the past two IATA seasons, and the routes are therefore indeed overlaps. However, the market shares of Aer Lingus are  just  slightly  above  [0-
5%].

[347]       As explained above in Section IV.2.4.6, for the purpose of the assessment of the Transaction the Commission considers  that  JFK  and
Newark belong to the same market. In addition, the Parties and their competitors also fly  indirect  services  to  LGA.  The  assessment  of  the
effects of the Transaction on this route would not change irrespective whether LGA is included or not in  the  relevant  market.  Therefore  this
route is assessed at city pair level.

[348]       Replies to Q1 – Questionnaire to corporate customers, questions 34-36; Replies to Q2 – Questionnaire to competitors – air  transport,
questions 36-38; Replies to Q4 – Questionnaire to travel agents, questions 30-32;  Replies  to  Q5  –  Questionnaire  to  consumer  associations,
question 25-27; Replies to Q7 – Questionnaire to civil aviation authorities, question 13.

[349]       According to ACL statistics, an airline can rely on the pool to launch or extend services  at  Manchester  in  both  the  summer  and
winter seasons. For example in summer 2015 ACL were able to clear and allocate 98.8% of slots as requested. ACL, MAN S15 Start of Season  report,
available at:
http://www.acl-uk.org/UserFiles/File/MAN%20S15%20Start%20of%20Season%20Report.pdf.

[350]       On the London – Alicante route, easyJet, Norwegian, Ryanair, and TUI offer direct year-round services. On the London  –  Faro  route,
easyJet and Monarch Airlines offer direct year-round services. On the London–Malaga route, easyJet, Norwegian, Monarch Airlines,  and  TUI  offer
direct year-round services.

[351]       On the London–Bilbao route, AF-KLM, Air Europa, and Lufthansa offer indirect year-round services.

[352]       Replies to Q1 – Questionnaire to corporate customers, questions 34-36; Replies to Q2 – Questionnaire to competitors – air  transport,
questions 36-38; Replies to Q4 – Questionnaire to travel agents, questions 30-32;  Replies  to  Q5  –  Questionnaire  to  consumer  associations,
question 25-27; Replies to Q7 – Questionnaire to civil aviation authorities, question 13.

[353]        These  are  the  following  25  routes:  Lanzarote–Paris,   Bordeaux–Edinburgh,   Boston–Manchester/Leeds/Liverpool,   Boston–Milan,
Copenhagen–Tenerife, Dubrovnik–Edinburgh, Dublin–Las Vegas  (NV),  Dublin–Los  Angeles,  Dublin–Portland  (ME),  Dublin–Phoenix,  Dublin–Seattle,
Dublin–Vancouver, Edinburgh–Hamburg, Edinburgh–Nice, Geneva–Glasgow, Glasgow–Milan, Glasgow–New York,  Glasgow–Orlando,  Glasgow–Rome  Fiumicino,
Geneva–Tenerife, Manchester/Leeds/Liverpool–Nice, Manchester/Leeds/Liverpool–San Francisco, Nice–Newcastle, Newcastle–New York, Newcastle–Rome.

[354]       Barcelona–Glasgow, Edinburgh–Rome, Rome Fiumicino–Glasgow, Rome  Fiumicino–Newcastle,  Brussels–San  Francisco.  This  excludes  five
routes to New York JFK where the New York market comprises both JFK and EWR: Budapest–New York JFK, Hamburg–New  York  JFK,  New  York  JFK–Milan
Linate, New York JFK–Newcastle, New York JFK–Toulouse.

[355]       On the following long haul routes market shares for TS passengers are significantly higher than for NTS  passengers:  Dublin–Phoenix,
Dublin–Seattle, Dublin–Vancouver, Newcastle–New York. All of these routes are very small (about 3 000 passengers per season at the  highest)  and
competitors like the Star JV and the Sky Team JV are active on all of these routes. Therefore serious doubts do not arise on any of them.

[356]       These are the following 17 city pair  routes:  Lanzarote–Paris,  Bordeaux–Edinburgh,  Boston–Milan,  Copenhagen–Tenerife,  Dublin–Las
Vegas (NV), Dublin–Los Angeles,  Dublin–Portland  (ME),  Edinburgh–Hamburg,  Edinburgh–Nice,  Geneva–Glasgow,  Glasgow–Milan,  Glasgow–New  York,
Glasgow–Rome Fiumicino, Geneva–Tenerife,  Manchester/Leeds/Liverpool–Nice,  Manchester/Leeds/Liverpool–San  Francisco,  Newcastle–Rome;  and  the
following 5 airport pair routes: Barcelona–Glasgow, Edinburgh–Rome, Rome Fiumicino–Glasgow, Rome Fiumicino–Newcastle, Brussels–San Francisco.

[357]       Responses to Q1 – Questionnaire to corporate  customers,  question  35;  Q2  –  Questionnaire  to  competitors,  question  37;  Q4  –
Questionnaire to travel agents, question 31; Q5 – Questionnaire to consumer associations, question 26.

[358]       The market investigation has not highlighted sufficiently reasoned concerns regarding the situation at other airports.

[359]       Following the cessation of Little Red operations on two domestic UK routes operated under the commitments in case M. 6447  –  IAG/bmi
by the end of the summer 2015 IATA season, the slots returned by Little Red will revert to IAG. Unless  these  slots  are  taken  up  by  another
carrier in the following IATA seasons, they will increase IAG's slot portfolio at Heathrow by around 1%.

[360]       Virgin Atlantic's non-confidential submission of 2 April 2015. See also Sections 5.1.1 and 5.1.2 above.

[361]       Responses to Q.2 – Questionnaire to competitors, questions 30, 31 and 32.

[362]       See HAL' response to Q.6 – Airport managers, questions 19.1. and 26.1.

[363]       If the shares of slots held by IAG's integrated alliance partners  (namely,  American  Airlines,  Finnair,  Japan  Airlines,  and  US
Airways) are aggregated with those of IAG, the slot holding would amount to around 58%. Therefore, the Commission's conclusion would  not  change
fundamentally.

[364]       Moreover, shuffling power does not necessarily have only anti-competitive effects. Indeed, it can allow a carrier to  react  flexibly
to changes in demand patterns or events such as exits or entries. Such adaptability can deliver benefits to consumers in particular  in  that  it
can allow for quick adaptation of supply to demand. See case M. 6447 – IAG/bmi, paragraph 500.

[365]       This risk does not depend on how the tickets for the indirect journeys are distributed.

[366]       Form CO, Annex 18.2, Exhibit 10.

[367]       Out of Dublin, in the same season, IAG ranked second among the biggest  marketing  carriers  on  long-haul  destinations,  with  [100
000–200 000] passengers, after Aer Lingus ([500 000–1 000 000] passengers).

[368]       Form CO, Annex 18.1, Exhibit 06, Part I, "BA Short-haul Summary", December 2014, p.6.

[369]       […].

[370]       Form CO, Annex 18.1, Exhibit 06, Part IV, [Document title]

[371]       For example, according to the CAA Passenger Survey 2013, [30-40%] on the DUB-LHR route,  and  [50-60%]  on  the  BHD-LHR  route,  are
connecting. Looking at PaxIS data from the Parties, [10-20%] of Aer Lingus and [40-50%] of BA passengers on the DUB-LHR route are connecting,  on
the BHD-LHR route, [5-10%] of Aer Lingus and [20-30%] of BA passengers are connecting.

[372]       Replies to Q1–Questionnaire to corporate customers, question 37.1; Replies  to  Q3–Questionnaire  to  competitors  on  feed  traffic,
questions 9 and 24; Replies to Q4–Questionnaire to travel agents, question 33.1; Replies to Q5–Questionnaire to consumer  associations,  question
19.

[373]       CAA Consumer Protection Group, non-confidential reply to Q5–Questionnaire to consumer associations, question 3.1.

[374]       CAA Consumer Protection Group, non-confidential reply to Q5–Questionnaire to consumer associations, question 29.1.

[375]       Aer Lingus Rule 2.5 announcement on IAG's recommended cash offer, available at :  http://corporate.aerlingus.com/iagoffer/pdf/Rule-2-
5-Announcement.pdf. The announcement further states "Strengthening of Ireland’s connectivity: The anticipated benefits to Aer Lingus’  long  haul
and short haul networks are expected by the Independent Aer Lingus Directors to enhance connectivity to and from Ireland.  Increased  traffic  on
Aer Lingus’ services between Ireland and London Heathrow will enhance the viability of all services."

[376]       Aer Lingus Rule 2.5 announcement on IAG's recommended cash offer, Section 7, Aer Lingus background to and  reasons  for  recommending
the Offer.

[377]       Replies to Q1–Questionnaire to corporate customers, questions 37.2 and 37.4; Replies  to  Q3–Questionnaire  to  competitors  on  feed
traffic, questions 9, 10, 12, 13 and 24. Replies to Q6–Questionnaire to airport managers, question 23.

[378]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.40. and IAG response to RFI 2  of  2  June  2015,
paragraph 1.7.

[379]       Form CO, Annex 9, Observations on Virgin Atlantic’s Submissions to the TCC, paragraph 3.33.

[380]       Case No M.6447 – IAG/bmi, footnote 227.

[381]       In summer 2014 IATA season, Aer Lingus launched its own direct Dublin–Toronto service and in summer  2015  IATA  season,  Aer  Lingus
launched a four time weekly service on Dublin–Washington. While these city-pairs would meet the criterion applied to select the  routes  for  the
feed analysis using winter 2013 and summer 2014 data, this would rely on data when Aer Lingus had  only  just  commenced  a  Toronto  service  or
before it had commenced a Washington service. [EI business strategy and change of incentive]. The Commission is of the view  that  it  is  likely
that some of the passengers previously connecting to the United, Air Canada and  WestJet's  services  would  be  diverted  onto  the  Aer  Lingus
service, regardless of the present Transaction. Therefore, feed for these specific routes would not appear problematic in  the  context  of  this
Transaction.

[382]       Form CO, Annex 18.2, Exhibit 2.

[383]       According to the same dataset as that used to produce Table 32.

[384]       According to the same dataset as that used to produce Table 32.

[385]       See Non-horizontal Merger Guidelines, paragraph 34.

[386]       Form CO, Annex 18.2, Exhibits 4.1 and 4.2, Type of agreement governing feed.

[387]       [Parties’ inventory management systems].

[388]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.14.

[389]            Non-horizontal Merger Guidelines, paragraph 35.

[390]       Form CO, Exhibit 18.2, Exhibits 5.1 and 5.2 and replies to Q3–Questionnaire to competitors on feed traffic, question 4.

[391]       Replies to Q3–Questionnaire to competitors on feed traffic, question 4.

[392]       Case COMP/39596 BA/AA/IB.

[393]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.10.

[394]       M.6447–IAG/bmi, paragraphs 535 and following.

[395]       The costs of such access depend on fares and financial  settlement  rules  set  in  the  relevant  interlining  and  special  prorate
agreements.

[396]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.24.

[397]       Form CO, Attachment C, Part 2.

[398]       Form CO, Attachment D3, [Document title].

[399]       Form CO, Attachment D13, [Document title].

[400]       Form CO, Attachment D86, [Document title].

[401]       Aer Lingus, answer to Q2 of 13 May 2015, question 3.

[402]       Non Horizontal Merger Guidelines, paragraphs 40–41.

[403]       In comparison to the number of passengers which would be lost on short-haul flights as a result of foreclosure.

[404]       IAG, reply to RFI 4 of 9 June 2015, paragraph 4.1. The Parties also acknowledge that [IAG’s inventory  management  system]  as  well.
Form CO, Section 6, paragraph 6.99.

[405]       In particular, in one such internal document it is stated that [EI’s inventory  management  system  and  revenue  management],  while
[EI’s inventory management system and revenue management]. Aer Lingus response to 29 April 2015 request, 21032014  Board  Strategy  Presentation,
Doc Id 663).

[406]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraphs 1.33 and 1.38.

[407]       Non-confidential version of Virgin's submission of [8 May] 2015, Annex 2.

[408]       Non-confidential version of Virgin's submission of [8 May] 2015.

[409]       Form CO, Annex 9, Observations on Virgin Atlantic’s Submissions to the TCC, paragraph 3.33.

[410]       Form CO, Annex 9, Observations on Virgin Atlantic’s Submissions to the TCC, paragraphs 4.2 and following and Appendix 1.

[411]       Form CO, Annex 9, Table in paragraph 3.3.

[412]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.14.

[413]       Form CO, Annex 8, Analysis of Aer Lingus feed at LHR, LGW, DUB and MAD, paragraph 1.14.

[414]       Form CO, Annex 18.5, response to RFI 12 of 21 April 2015, paragraph 8.1.

[415]       An interim SPA is currently in place pending finalisation of a SPA pursuant to the terms of the IAG/bmi merger commitments.

[416]       Gatwick Connect is a free service that offers passengers to combine flights where they have already purchased  their  airline  ticket
(Gatwick Connect does not sell or issue airline tickets). Once passengers land at Gatwick, they collect their bags from the baggage reclaim  hall
and go to the Gatwick Connect desk, where they will be assisted in connecting to their next flight, allowing them  to  go  straight  to  security
without having to take their bags with them; http://www.gatwickairport.com/at-the-airport/Flight-Connections/gatwick-connect/  (retrieved  13July
2015).

[417]       Form CO, Section 6, paragraph 6.39.

[418]       IAG response to RFI 2 of 8 June 2015, Exhibit 2.

[419]       Gatwick Connect, Non-confidential submission of 24 April 2015.

[420]       Replies to Q1–Questionnaire to corporate customers, questions 31.1 and 31.2; Replies to Q4–Questionnaire to travel agents,  questions
27.1 and 27.2; Replies to Q5–Questionnaire to consumer associations, questions 22.1 and 22.2; Replies to Q6–Questionnaire  to  airport  managers,
question 24.1; Replies to Q7–Questionnaire to Civil aviation authorities, question 18.1.

[421]       Section 4 of Excise Notice 550: Air Passenger Duty,  available  at  https://www.gov.uk/government/publications/excise-notice-550-air-
passenger-duty/excise-notice-550-air-passenger-duty#exemptions-from-apd .

[422]       Non Horizontal Merger Guidelines, paragraph 48.

[423]       Replies to Q1–Questionnaire to corporate customers, questions 28 and 30; Replies to Q4–Questionnaire to travel agents,  questions  25
and 26; Replies to Q5–Questionnaire to consumer associations, questions 20 and 21.

[424]       In summer 2014 IATA season, Aer Lingus launched its own direct Dublin–Toronto service and in summer  2015  IATA  season,  Aer  Lingus
launched a four time weekly service on Dublin–Washington. While these city-pairs would meet the criterion applied to select the  routes  for  the
feed analysis using winter 2013 and summer 2014 data, this would rely on data when Aer Lingus had  only  just  commenced  a  Toronto  service  or
before it had commenced a Washington service. [EI business strategy and change of incentive]. The Commission is of the view  that  it  is  likely
that some of the passengers previously connecting to the United, Air Canada and  WestJet's  services  would  be  diverted  onto  the  Aer  Lingus
service, regardless of the present Transaction. Therefore, feed for these specific routes would not appear problematic in  the  context  of  this
Transaction.

[425]       BA is no longer active in the provision of ground handling to third parties and only provides such services intra-group.

[426]       Arrecife Airport – Lanzarote and El Matorral Airport – Fuerteventura.

[427]       Málaga International Airport, Arrecife Airport – Lanzarote and El Matorral Airport – Fuerteventura.

[428]       Barcelona airport.

[429]       Arrecife Airport – Lanzarote and El Matorral Airport – Fuerteventura.

[430]       San Pablo Airport and Valencia Airport.

[431]       Email of the Parties of 22 June 2015, entitled "Case M.7541 IAG/Aer Lingus – Ground handling update [SANDM-CC.FID2716798]".

[432]       Dublin Airport, Cork Airport and Shannon International Airport.

[433]       Dublin Airport and Shannon International Airport.

[434]       Málaga International Airport, Alicante Airport, Bilbao Airport, Ibiza Airport, Gran  Canaria  International  Airport,  Madrid–Barajas
Airport, Palma de Mallorca Airport, Santiago de Compostela Airport, Tenerife South Airport – Reina Sofia Airport.

[435]       Barcelona Airport.

[436]       Arrecife Airport – Lanzarote and El Matorral Airport – Fuerteventura.

[437]       Arrecife Airport – Lanzarote, Málaga International Airport, Barcelona Airport, Bilbao Airport, Fuerteventura Airport, Ibiza  Airport,
Gran Canaria International Airport, Palma de Mallorca Airport, Santiago de Compostela Airport, Tenerife South Airport – Reina Sofia Airport.

[438]       Arrecife Airport – Lanzarote and El Matorral Airport – Fuerteventura.

[439]       Responses to Q9–Questionnaire to Groundhandling competitors, question 20; Q10–Questionnaire  to  groundhandling  customers,  question
16.

[440]       Royal Decree 1161/1999 of 2 July 1999.

[441]       Santiago de Compostela Airport.

[442]       Barcelona Airport and Madrid-Barajas Airport.

[443]       Dublin Airport and Shannon International Airport.

[444]       Form CO, paragraphs 6.247 and following.

[445]       Maintenance, repair, overhaul (see Section IV.3).

[446]       Amsterdam Airport Schiphol (AMS), Athens  International  Airport  (ATH),  Hartsfield–Jackson  Atlanta  International  Airport  (ATL),
Barcelona El Prat Airport (BCN), Bengaluru International  Airport  (BLR),  Chhatrapati  Shivaji  International  Airport  –  Mumbai  (BOM),  Logan
International Airport – Boston (BOS), Indira Gandhi  International  Airport  –  Delhi  (DEL),  Dallas/Fort  Worth  International  Airport  (DFW),
Domodedovo International Airport – Moscow (DME), Dubai International Airport  (DXB),  Entebbe  International  Airport  (EBB),  Edinburgh  Airport
(EDI), Newark Liberty  International  Airport  (EWR),  Ministro  Pistarini  International  Airport  –  Ezeiza/Buenos  Aires  (EZE),  Leonardo  da
Vinci–Fiumicino Airport – Rome (FCO), Rio de Janeiro-Galeão  International  Airport  (GIG),  São  Paulo-Guarulhos  International  Airport  (GRU),
Cointrin International Airport- Geneva (GVA), Washington Dulles International Airport (IAD),  George  Bush  Intercontinental  Airport  –  Houston
(IAH), John F. Kennedy International Airport – New York (JFK), Los Angeles International Airport  (LAX),  Larnaca  International  Airport  (LCA),
London Gatwick Airport (LGW), London Heathrow Airport (LHR), Linate Airport –  Milan  (LIN),  Lisbon  Portela  Airport  (LIS),  Murtala  Muhammed
International Airport- Lagos (LOS), Chennai International Airport (Madras International Airport) (MAA), Madrid–Barajas Airport (MAD),  Manchester
Airport (MAN), Orlando International Airport (MCO), Miami International Airport (MIA), Munich Airport (MUC), Malpensa  Airport  –  Milano  (MXP),
Jomo Kenyatta International Airport – Nairobi (NBO), Oakland International Airport (OAK), O'Hare International  Airport  –  Chicago  (ORD),  Orly
International Airport – Paris (ORY), Philadelphia  International  Airport  (PHL),  Seattle–Tacoma  International  Airport  (SEA),  San  Francisco
International Airport (SFO), Sydney Airport (SYD), Viracopos-Campinas International Airport (VCP), Toronto Pearson International Airport (YYZ).

[447]       Amsterdam Airport Schiphol (AMS), Kotoka International Airport – Accra (ACC), Lanzarote Airport (ACE), Malaga  International  Airport
(AGP), Alicante Airport (ALC), Barcelona International Airport (BCN), Bilbao  Airport  (BIO),  Brussels  Airport  (BRU),  Léopold  Sédar  Senghor
International Airport – Dakar (DKR), San Sebastián Airport (EAS), Ministro Pistarini International Airport – Ezeiza/Buenos Aires (EZE),  Leonardo
da Vinci–Fiumicino Airport – Rome (FCO), Fuerteventura Airport (FUE), Rio de Janeiro-Galeão  International  Airport  (GIG),  São  Paulo-Guarulhos
International Airport (GRU), Granada Jaén Airport (GRX), La Aurora International Airport – Guatemala City (GUS), Cointrin  International  Airport
– Geneva (GVN), Ibiza Airport (IBZ), John F. Kennedy International Airport – New York  (JFK),  A  Coruña  Airport  (LCG),  Almería  International
Airport (LEI), London Heathrow Airport (LHR), Jorge Chávez International Airport – Callao (LIM), Murtala Muhammed International Airport  –  Lagos
(LOS), Gran Canaria International Airport (LPA), Madrid-Barajas Airport (MAD), Mahon Airport – Menorca (MAH), Mexico City  International  Airport
(MEX), Miami International Airport (MIA), Murcia-San Javier Airport (MJV), O'Hare International  Airport  –  Chicago  (ORD),  Orly  International
Airport – Paris (ORY), Asturias Airport – Oviedo (OVD), Palma de Mallorca Airport (PMI), Pamplona Airport (PNA), Tocumen International Airport  –
Panama City (PTY), Comodoro Arturo Merino Benítez International Airport – Santiago (SCL), Santiago  de  Compostela  Airport  (SCQ),  Santander  –
Parayas Airport (SDR), Juan Santamaría International Airport – San José (SJO), La Palma Airport (SPC), Malabo International  Airport  (SSG),  San
Pablo Airport (SVQ), Tenerife North Airport (TFN), Tenerife South Airport (TFS),  Vigo-Peinador  Airport  (VGO),  Vitoria  Foronda  International
Airport (VIT), Valencia Airport (VLC), Valladolid Airport (VLL), Jerez Airport (XRY).

[448]       Madrid Barajas Airport, Barcelona Airport.

[449]       Form CO, paragraph 6.215

[450]       Málaga International Airport, Alicante Airport, Barcelona  Airport,  Bilbao  Airport,  Fuerteventura  Airport,  Ibiza  Airport,  Gran
Canaria International Airport, Madrid-Barajas Airport, Palma de Mallorca Airport, Santiago de Compostela Airport, Tenerife South Airport –  Reina
Sofia Airport.

[451]       Santiago de Compostela Airport.

[452]       Santiago de Compostela Airport.

[453]       See answers to Q11–Questionnaire to MRO competitors, question 15; Q12–Questionnaire to MRO customers, question 11.

[454]       A draft set of commitments was submitted on 23 June 2015 and discussed with the Commission on 24  June  2015.  The  version  formally
lodged on 24 June 2015 incorporates some comments made by the Commission relating to technical provisions (e.g. the inclusion or not of  existing
SPA terms with codeshare partners of Aer Lingus) and certain definitions.

[455]       A draft set of commitments was submitted on 2 July 2015 and discussed with the Commission  on  3  July  2015.  The  version  formally
lodged on 3 July 2015 incorporates some comments made by the Commission relating to technical provisions (e.g. the  use  of  slots  for  the  two
routes concerned) and certain definitions.

[456]       Capitalized terms used herein but not defined herein have the meaning ascribed to them in the  Final  Commitments  attached  to  this
Decision.

[457]       The Final Commitments therefore do not tie each slot released by IAG to a specific route, but rather provide for a certain degree  of
flexibility, allowing prospective entrants to take as many of the offered slots as they deem necessary to  operate  on  the  route(s)  concerned.
However, a minimum number of slots is guaranteed to be operated on each of the two routes.

[458]       The Parties do not consider that, as at the date of this decision, London Heathrow is a Hub for Virgin Atlantic; Form  RM,  paragraph
2.75.

[459]       See Clause 4.5 of the Final Commitments. In paragraph 2.70 of the Form RM. the Parties note that "given the difficulties  surrounding
straight rate proration that the oneworld airlines are in the process of moving off straight rate terms.

[460]       Commission notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission regulation (EC) No  802/2004,
OJ C 267, 22.10.2008, p. 1.

[461]       Cf. point 63 of the Commission Notice on Remedies, and Case T-177/04 easyJet v Commission [2006] ECR II-1931, para 197 ff. Point  63,
footnote (4), of the Commission Notice on Remedies state that, in air transport mergers, a mere reduction of barriers to entry  by  a  commitment
of the parties to offer slots on specific airports may not always be sufficient to ensure the entry of new  competitors  on  those  routes  where
competition problems arise and to render the remedy equivalent in its effects to a divestiture.

[462]       Replies to R1 – Market test questionnaire to competitors, question 1, replies to R2 –  Market  test  questionnaire  to  other  market
participants, question 1.

[463]       Replies to R1 – Market test questionnaire to competitors, question 1, replies to R2 –  Market  test  questionnaire  to  other  market
participants, question 1.

[464]       Replies to R1 – Market test questionnaire to competitors, question 1.

[465]       Replies to R1 – Market test questionnaire to competitors, question 10, replies to R2 – Market  test  questionnaire  to  other  market
participants, question 9.

[466]       Replies to R1 – Market test questionnaire to competitors, question 11, replies to R2 – Market  test  questionnaire  to  other  market
participants, question 10.

[467]       Replies to R1 – Market test questionnaire to competitors, question 15.1, replies to R2 – Market test questionnaire  to  other  market
participants, question 14.1.

[468]       Replies to R1 – Market test questionnaire to competitors, question 15.2, replies to R2 – Market test questionnaire  to  other  market
participants, question 14.2.

[469]       Replies to R1 – Market test questionnaire to competitors, question 3.

[470]       See Section V.5.2.

[471]       Form RM, paragraph 2.8(iii).

[472]       Aer Lingus does, however, operate an 08:50 service to DUB and BHD, a 16:50 service to DUB and BHD and a  19:00  service  to  DUB  and
BHD. Whilst a Prospective Entrant would not be entitled to two slots in the same time, there is nothing to prevent  a  Prospective  Entrant  from
operating in consecutive hour periods.

[473]       Form RM, paragraph 2.8.(v).

[474]       Replies to R1 – Market test questionnaire to competitors, question 4, replies to R2 –  Market  test  questionnaire  to  other  market
participants, question 4.

[475]       Form CO, Attachment E_13, Strategy Document – Ireland to London Market 2013-2015.

[476]       In Case No. D2/38.479 – British Airways/ Iberia/ GB Airways,  the  Commission  has  previously  concluded  that  remedies  consisting
essentially of seven slot pairs at Gatwick and not at Heathrow were sufficient so as not to raise serious doubts for five  point-to-point  routes
between London Heathrow/Gatwick and Spain where O&D traffic was substantial, the parties held high combined market shares and  the  existence  of
entry barriers, notably in terms of slot shortage at one or both ends, rendered potential competition difficult,  especially  for  time-sensitive
passengers.

[477]       Considering for the two routes concerned only operations from Heathrow and Gatwick, Gatwick has a share of time-sensitive  passengers
between 25%-45%.

[478]       IAG, Aer Lingus, Ryanair ([10-20%] and [10-20%] capacity in the winter 2014/2015 and in the summer  2015  IATA  season  respectively)
and CityJet ([10-20%] and [5-10%] capacity in the winter 2014/2015 and in the summer 2015 IATA season respectively) operate on this route.

[479]       IAG, Aer Lingus, easyJet ([20-30%] and [20-30%] capacity in the winter 2014/2015 and in the summer  2015  IATA  season  respectively)
and Flybe ([5-10%] and [5-10%] capacity in the winter 2014/2015 and in the summer 2015 IATA season respectively) operate on this route.

[480]       See Section V.10.

[481]       Form RM, paragraph 2.58.

[482]        In February 2015, the Aer Lingus fleet consisted of: 4 Airbus A319-100, 33 Airbus A320-200, 3 Airbus A321-200, 3 Airbus A330-200,  4
Airbus A330-300

[483]       The Final Commitments would not apply to the "Aer Lingus Regional" franchise with Stobart Air. Aer  Lingus  Regional/Stobart  Air  is
separately owned and operated.

[484]       Replies to Q1 – Questionnaire to competitors final, question, 7 and replies to  Q2  –  Questionnaire  to  other  market  participants
final, question 7.

[485]       [Aer Lingus' SPA booking practices] Form RM, paragraph 2.79, footnote 40.

[486]       Replies to Q1 – Questionnaire to competitors final, question, 11.1 and replies to Q2 – Questionnaire  to  other  market  participants
final, question 11.1.

[487]       Form RM, paragraph 2.69.

[488]       Aer Lingus Reply to RFI 10 of 9 July 2015.

[489]       Form CO, Annex 18.2, footnote 28. [Aer Lingus' inventory access]

[490]       Replies to Q1 – Market test questionnaire to competitors, questions 3  and  4;  Q2  –  Market  test  questionnaire  to  other  market
participants, questions 3 and 4.

[491]       The Final Commitments provide that any SPA entered into for feed at Dublin for the Chicago route may be terminated by Aer  Lingus  on
30 days' notice in the event that the recipient(s) of the feed traffic account(s) for  30%  or  more  of  all  passengers  (including  connecting
passengers) travelling on the Dublin-Chicago airport pair in two consecutive IATA seasons in which the recipient carrier’s service  is  operated.
This is subject to the proviso that, in each relevant IATA season, Aer Lingus feed did not account for more  than  5%  of  the  total  number  of
passengers travelling on the recipient carrier’s Dublin-Chicago service. The Commission is of the view that the  30%  threshold  is  adequate  in
light of the increment brought about by the Transaction. As regards the second percentage, IAG lowered it  from  10%  to  5%  to  better  address
competition concerns following the market test.

-----------------------
 In the published version of this decision, some information has been omitted pursuant to Article 17(2) of Council Regulation (EC)  No  139/2004
 concerning non-disclosure of business secrets and other confidential information.  The  omissions  are  shown  thus  […].  Where  possible  the
 information omitted has been replaced by ranges of figures or a general description.

                                                                  PUBLIC VERSION

                                                                 MERGER PROCEDURE