Aegean Airlines' proposed acquisition of Olympic Air has been cleared by the European Commission.
After "in-depth investigation" into the Greek airlines' second attempt to join forces, the Commission has concluded that financial difficulties would force Olympic Air to exit the market "in the near future" if not acquired by Aegean.
And if Olympic went out of business, Aegean would be Greece's "only significant domestic service provider", it argues: "Therefore, with or without the merger, Olympic would soon disappear as a competitor to Aegean. Thus the merger causes no harm to competition that would not have occurred anyway."
The Greek crisis has caused a 26% drop in demand for domestic air passenger transport from Athens between 2009 and 2012, notes the Commission, and the first half of 2013 brought further decline: 6.3% year-on-year.
The number of routes served by the Greek airlines has also reduced, it adds. When the Commission blocked Aegean's previous attempt to merge with Olympic, in 2011, the airlines competed on 17 routes, nine of which were deemed to raise competition concerns. Now, says the executive body, there is overlap on seven routes, of which five are served only by the two airlines: Athens to Chania, Mytilene, Santorini, Corfu and Kos, the last two of which Aegean only serves from the Greek capital in the summer.
"Entry in the immediate future by other airlines is unlikely on any of those routes," says the Commission, citing "a variety of reasons: potential entrants see more profitable opportunities elsewhere, they consider the costs of entry too high, or they stay away from the Greek domestic market due to Greece's current dire economic situation".
It delivers a damning verdict on Olympic's viability as a standalone entity: "Olympic is a failing firm and would go out of business soon. Olympic has never been profitable since its privatisation in 2009 and has received considerable financial support from its sole shareholder, Marfin Investment Group, ever since.
"A thorough analysis of Olympic's business prospects has confirmed that the company is highly unlikely to become profitable in the foreseeable future under any business plan."
It adds: "There is no other credible purchaser other than Aegean interested in acquiring Olympic."
The Commission has been investigating the proposed deal since April, having been notified of it in February.