Procedure Instigation for the Adoption of Fresh Regulations by the Commission
In a significant move, Lufthansa Group has invested in Latvian airline, Air Baltic, with plans to close the deal by August 2025, following a positive antitrust review in June 2025 [2].
The investment, which involves convertible bonds worth 14 million euros, does not appear to pose significant competition concerns at this stage, as the antitrust review suggests. However, the potential for increased ticket prices on routes between Germany and the Baltics is a topic of discussion.
Air Baltic's operations in the Baltic region are supported by strong demand and strategic partnerships, which generally help maintain competitive pricing. The airline's focus on improving operational efficiency and expanding its presence in the ACMI market could also mitigate price increases by optimizing capacity and costs [2].
However, the regulatory landscape is an important factor to consider. The Federal Cartel Office, responsible for monitoring competition, ensures that any potential collusion or price-fixing is addressed. Given the positive antitrust review, it's likely that regulators have accounted for these risks.
The main shareholder of Air Baltic remains the Latvian state, and the airline continues to operate as a fully independent company. The state is looking to involve neighboring states Estonia and Lithuania in Air Baltic before a potential IPO [1].
Air Baltic's extensive wet lease operations are directed towards companies within the Lufthansa Group, with the airline leasing aircraft and crews on a large scale. Lufthansa, as a strategic investor, may have a seat on Air Baltic's supervisory board [6].
It is worth noting that the Federal Cartel Office sees competition law issues on certain routes between Germany and the Baltics. Passengers may expect rising ticket prices to Baltic capitals Riga, Tallinn, or Vilnius due to insufficient competition. However, the competitive landscape and Air Baltic's strategic partnerships could help maintain reasonable pricing.
Air Baltic, founded in 1995, has not yet announced plans for an IPO [3]. The airline's financial restructuring and strategic partnerships are aimed at strengthening its market position rather than reducing competition.
References: [1] "Latvia seeks to involve Estonia and Lithuania in Air Baltic before IPO - Reuters." Reuters, 2025. [2] "Lufthansa Group's Investment in Air Baltic: Implications for Competition and Ticket Prices." Airline Business, 2025. [3] "Air Baltic: No IPO Plans Announced." Air Baltic Press Release, 2025. [4] "Lufthansa Group Allowed to Invest in Air Baltic with 10% Stake." Lufthansa Group Press Release, 2025. [5] "Air Baltic's Strategic Partnerships and Operational Efficiency." Airline Business, 2025. [6] "Lufthansa to Have a Seat on Air Baltic's Supervisory Board." Lufthansa Group Press Release, 2025.
