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Prime Minister Optimistic About Icelandair and WOW Merger

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Prime Minister Optimistic About Icelandair and WOW Merger

WOW air and Icelandair

Photo: Golli.

The merger of Icelandair and WOW air could be a good thing, says Prime Minister Katrín Jákobsdóttir, RÚV reports. In an interview with the outlet, Katrín indicated that she was not concerned about a lack of competition and the consequences this could have for consumers, but rather said the event underscored the importance of the government having active and effective oversight of the aviation sector.

The board of Icelandair Group made a purchase agreement to buy all of low fare airline WOW air’s stocks on Monday. The two companies will continue to operate under their current brand names. Their conjoined market share on the Atlantic aviation market will be about 3.8%. The takeover will create opportunities for an expansion into new markets, and it is expected that Icelandair Group’s unit cost will lower substantially. The company will be even better prepared to compete with other airlines on the international aviation market.

When asked whether or not the government had a hand in the merger, Katrín said no, but indicated that “...we’d had news of these talks. We have, of course, been closely monitoring developments in the aviation market in recent months. We’ve seen that various airlines have gotten into trouble, both here in Iceland and in Europe, not least because of rising oil prices and falling flight ticket prices. So we have of course followed the matter closely, but we didn’t play any part in that conversation.”

Katrín said that the merger appeared to have been well-received on the market and said that while the two Icelandic airlines were becoming one, this shouldn’t raise concerns about a lack of competition, “in that we have 28 companies that offer regular flights to and from Iceland. So there’s hard international competition...[C]ompetition is not just domestic, it is, of course, international. I think that will continue to be the case.”

Airlines are not solely important to the tourism industry, Katrín continued, but “...have become economically important in and of themselves. So of course I think this shows that it’s very important for the government to maintain active oversight of this market.”

Katrín ended her comments by saying that she believes the merger could be a good thing, not least because of the economic importance of the air travel industry. “I think this could be positive.”

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