Investment Funds and Airline Ownership — August 2018

In March this year, Margrethe Vestager, the powerful Danish EU Commissioner for Competition, gave a speech in Brussels which attracted only modest press coverage but which could have wide-ranging implications for the future ownership structure of airlines. The speech focused on the growing concentration of company ownership, and in particular cross-ownership by investment funds, something which has generated increased attention in North America and Europe. What was particularly interesting, however, was the fact that Ms Vestager specifically mentioned the airline industry in this respect.

As she noted: “In the US, they collect much more complete information than in Europe about exactly who owns which shares. So we can see examples of industries — like the airline business — where some investment funds own shares in all the big companies in the industry. And when investors have an interest in several companies in the same market, they might be better off if those companies don’t compete too hard. If they ease off on trying to outdo each other, so no one wins big — but no one loses big either. And of course, that can mean that consumers lose out.” [Emphasis added]