iberia has launched recently the new budget airline iberia express. There have been problems with the launch of this airline carrier with the pilots of iberia who have opposed it. Strikes have been going on every week till the spanish government, who is ruled supposedly by the conservative party, has decided to place an arbitrator (a spanish judge) to set an award to end the conflict between the directive of iberia and pilots. In the award, which has to be followed by both parties, it whas been set that iberia express could not do long haul flights, that is flights over 6 hours, and could not use wide body aircraft, as the new a330 which iberia has recently bought. So this decision it basically implies iberia express can never grow bigger than iberia as the spanish government does not allow it, even if iberia express makes more profit than iberia. So iberia pilots thru this decision rule the company and not the shareholders, in which british airways is part of it thru the international airlines group (iag)

this same story happened years ago when clickair, which was a low cost budget airline having financial problems, merged with vueling, a catalonian low cost carrier which was functioning well at the time. Both airlines merged into equal parts into the new airline which maintained the name of vueling, that way iberia pilots could control the movement of vueling, in other words they could control salaries. This is the reason why nowadays the prices of airline tickets in vueling are so expensive and have not been able to go down

in conclusion iberia express cannot function as a low cost carrier as it is under the control of pilots thru iberia and iberia is not in the hands of iag shareholders. Airfares cannot go down making iberia express more competitive thru the ruling of the actual spanish government, who is on the pilots side and is which is damaging the iag alliance