Luxair Files Legal Challenge Against Lufthansa–ITA Airways Merger Over EU Approval
In a move that has stirred fresh debate over competition in European aviation, Luxembourg’s flag carrier, Luxair, has officially filed a legal challenge with the European General Court against the European Commission’s approval of Lufthansa’s acquisition of a minority stake in ITA Airways, Italy’s national carrier. The complaint focuses on what Luxair contends are insufficient remedies to preserve fair competition, particularly at Milan Linate Airport. This lawsuit not only questions the regulatory approval process but also raises larger concerns about consolidation in European skies.
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Background: Lufthansa’s Stake in ITA Airways
Lufthansa’s planned acquisition of a 41% stake in ITA Airways marks a significant moment in the ongoing reshaping of Europe’s aviation landscape. With Alitalia’s legacy in the background, ITA was born in 2021 as a leaner, government-supported airline designed to replace the struggling former national carrier. The German aviation giant saw an opportunity to expand its Southern European footprint by integrating ITA into its multi-brand group, which includes SWISS, Austrian Airlines, Brussels Airlines, and Eurowings.
Lufthansa’s investment was formally approved by the European Commission in May 2024, following an 11-month antitrust investigation. The Commission imposed several conditions to address competitive concerns, including surrendering valuable take-off and landing slots at key airports.
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Luxair’s Objection: The Core Arguments
At the center of Luxair’s legal challenge is the belief that the remedies offered during the EU approval process do not sufficiently ensure market access for smaller and medium-sized carriers.
1. Slot Access at Milan Linate
Milan Linate is a high-demand, slot-constrained airport where competition is already limited. Luxair argues that Lufthansa’s dominance—especially following its alliance with ITA—would be compounded if smaller carriers cannot obtain viable takeoff and landing slots at key times. The remedies proposed by Lufthansa included releasing certain slots, but Luxair contends that these are either unattractive (non-peak times) or structured in a way that only larger airlines with extensive infrastructure can realistically utilize them.
2. Barrier to Entry
The case further argues that the conditions for new entrants are too restrictive, effectively excluding smaller carriers like Luxair. To operate competitively on short-haul business-heavy routes like Milan–Frankfurt or Milan–Brussels, airlines need peak-hour slots and meaningful access to ground handling, marketing support, and interline agreements. Luxair asserts that the remedies ignore these operational necessities.
3. Market Concentration
Luxair’s legal filing also highlights the broader impact of market concentration. With Lufthansa controlling an increasingly large network in Central and Southern Europe, it could effectively dictate prices and schedules on many intra-European routes, marginalizing smaller operators and diminishing consumer choice.
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The European Commission’s Stance
In approving the merger, the European Commission acknowledged the potential anticompetitive effects but believed they were mitigated by the proposed remedies. According to its May 2024 ruling, Lufthansa and ITA agreed to:
Release up to 34 slots at Milan Linate and other airports.
Provide interline access to selected competitors.
Maintain code-sharing and intermodal ticketing options.
Commissioner Margrethe Vestager, who leads EU competition policy, emphasized that the deal would “preserve competition while allowing for a sustainable restructuring of the Italian aviation sector.” She also noted that the remedies were negotiated after a detailed analysis involving input from competing airlines, consumer groups, and airport operators.
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Legal Landscape: What Happens Next?
Luxair’s challenge, filed in the General Court of the European Union in Luxembourg, is a judicial review of the Commission’s merger clearance. While such appeals are relatively rare, they are not unprecedented. The court will evaluate whether the Commission’s decision-making process was flawed, whether it considered all necessary evidence, and whether the proposed remedies were legally and economically sufficient.
The review process could take 12–24 months, potentially delaying or modifying aspects of Lufthansa’s plans for ITA. Though the court cannot unilaterally block the merger outright, it can annul the Commission’s approval or require a re-evaluation of the case.
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Implications for Lufthansa and ITA
If Luxair’s challenge gains traction, Lufthansa could face delays or additional concessions. The German carrier had planned to integrate ITA into its broader network by early 2026, harmonizing loyalty programs, operations, and scheduling. Key initiatives like fleet modernization, shared procurement, and cost restructuring are already underway.
A court ruling against the Commission could force Lufthansa to renegotiate its stake, offer more competitive concessions, or even reduce its influence over ITA’s operations—especially at Linate, Rome Fiumicino, and other contested hubs.
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The Competitive Environment in European Aviation
Luxair’s challenge highlights broader concerns in European aviation, particularly around:
1. Dominance of Legacy Airline Groups
Europe’s skies are increasingly dominated by a few large airline groups:
Lufthansa Group
Air France–KLM
International Airlines Group (IAG), parent of British Airways, Iberia, and others
These groups often operate as “airline clusters,” pooling slots, revenue management systems, and frequent flyer programs. Critics argue that these clusters stifle innovation and leave smaller airlines struggling to compete.
2. Slot Allocation and Airport Access
Slot allocation remains one of the most controversial topics in EU aviation. At airports like Heathrow, Frankfurt, and Linate, prime slots are essentially monopolized, and secondary carriers rarely get access without state or regulatory intervention.
The Luxair case exposes systemic challenges in the EU’s slot management policy, particularly around ensuring equitable access for smaller operators and new entrants.
3. State Aid and Public Funding
Another point of contention is the role of public subsidies. ITA was created using over €1 billion in Italian state aid, with additional loans and grants since then. Critics argue that such support gives unfair advantages to government-backed carriers, making it harder for privately run airlines like Luxair to survive.
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Industry Reactions
The aviation industry has responded with a mix of caution and support for Luxair’s move.
Ryanair, which has long criticized “legacy consolidation,” welcomed the challenge. CEO Michael O’Leary said the EU must “protect competition, not enable monopolies under the guise of restructuring.”
Air France–KLM and IAG have remained largely silent, possibly due to their own ongoing merger reviews and fleet investments.
ACI Europe, representing airports, warned that limiting Lufthansa’s expansion could have negative effects on connectivity, especially in underserved regions of Italy.
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The Role of Luxair
Luxair may not be a household name like Lufthansa or Ryanair, but its actions carry weight. As a national carrier with decades of experience, it operates in competitive Central European markets and serves as a vital link for Luxembourg’s economy.
By filing this lawsuit, Luxair is asserting the rights of smaller airlines and signaling that competition law should not favor scale at the expense of fairness. It’s also a strategic move: if Luxair succeeds, it could gain access to premium slots and routes currently out of reach.
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Broader EU Legal and Policy Context
The Luxair case intersects with broader discussions about EU industrial policy. The European Commission has historically encouraged cross-border consolidation to create “European champions” capable of competing globally. But this industrial logic sometimes clashes with competition law, especially when consolidation occurs within EU borders.
There is also increasing political pressure to align EU transport policy with sustainability goals. Critics argue that mega-mergers result in overcapacity, higher emissions per passenger, and diminished incentives for innovation in green aviation.
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Conclusion
Luxair’s legal challenge to the Lufthansa–ITA Airways merger is more than a technical legal objection; it’s a flashpoint in a much larger debate about the future of European aviation. The case touches on issues of fairness, access, competition, state aid, and market concentration—issues that will shape the skies over Europe for years to come.
As the European General Court deliberates, stakeholders across the industry will be watching closely. The ruling could redefine how mergers are approved, how airport slots are allocated, and how the EU balances the tension between economic scale and open competition.
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Sources:
Reuters – Luxair challenges Lufthansa-ITA merger
European Commission Press Releases
Airline Group Statements
Court of Justice of the European Union archives