For decades, Olympic Airways symbolized Greek national pride in the skies. Founded by shipping magnate Aristotle Onassis, the airline was known for its luxurious service and global reach. But by the early 2000s, years of financial losses and repeated clashes with European regulators over state aid brought the carrier to a critical juncture. We examine how Olympic Airways moved closer to privatization, ending thirty-five years of state ownership and opening a new chapter in Greek aviation history.
What Was the Historical Significance of Olympic Airways?
Olympic Airways began as the vision of Greek shipping magnate Aristotle Onassis, who purchased the former national airline TAE and renamed it Olympic Airways on April 6, 1957. Under Onassis’s leadership, the airline transformed into a world-class carrier known for exceptional service and innovation.
The airline quickly developed a reputation for lavish style under Onassis’s ownership. Cabin crews wore Pierre Cardin-designed uniforms, and first-class passengers dined with golden cutlery while listening to a pianist in the cabin. This commitment to luxury made Olympic Airways legendary in commercial aviation.
Olympic was also a technological pioneer. In 1959, it became one of the first European airlines to operate jet aircraft when it introduced the de Havilland Comet 4B. Later, it launched groundbreaking long-haul routes, including a non-stop service between Athens and New York City using Boeing 707-320 aircraft in 1966.
Why Did Olympic Airways Require Privatization?
Following the death of Onassis’s son Alexander in a 1973 plane crash, Onassis sold his Olympic shares to the Greek state. This transition to government ownership marked the beginning of financial challenges that would eventually necessitate privatization.
Financial Troubles and State Aid Investigations
For thirty years, Olympic Airways struggled with mounting financial losses and management problems. The airline became severely indebted as successive Greek governments used it for political purposes, swelling staff numbers with political appointments. The European Commission had been investigating illegal state aid to Olympic since 1994.
In 2002, the Commission adopted a final negative decision concerning aid granted by Greece to Olympic Airways, finding that previously authorized aid had become incompatible with European treaties due to failure to implement restructuring plans correctly. The Commission also identified new illegal and incompatible state aid.
How Did the Privatization Process Unfold?
The path to privatization was long and complex, spanning multiple attempts and intense negotiations with European authorities.
The Final Push for Approval
In September 2008, the Greek government announced it would close down Olympic Airlines and relaunch it as a private company. This plan received the crucial blessing of the European Commission, which had been a contentious partner in Olympic’s affairs since 1994.
European Transport Commissioner Antonio Tajani stated that the Greek government’s plan to sell the airline’s assets, including ground-handling and maintenance services, didn’t violate EU rules. However, he insisted that Olympic must return €850 million in illegal state aid it received between 2005 and 2007.
Commissioner Tajani emphasized that the EU would closely monitor the sale to ensure assets were transferred at market prices with absolute transparency. An independent trustee was appointed to oversee the process and guarantee compliance with EU regulations.
The Privatization Plan Structure
The final privatization plan, often called the “Pantheon proposal,” involved creating three separate companies from Olympic’s operations:
- Flight operations – to be sold as a new airline
- Ground handling services – to operate as a separate entity
- Technical base and maintenance – to form another company
Under this arrangement, the new airline would acquire approximately 65% of Olympic’s former capacity at market prices. The most valuable assets included Olympic’s coveted landing slots at major international airports like New York, London, Paris, Rome, and Frankfurt.
What Was the Outcome of the Privatization?
On March 6, 2009, Development Minister Kostis Hatzidakis announced the sale of Olympic’s flight operations and technical base to Marfin Investment Group (MIG), Greece’s largest investment fund. This marked the end of 35 years of state ownership for the airline.
As part of the agreement, MIG purchased valuable assets including the exclusive rights to the “Olympic” brand name and the iconic six-rings logo. The new owners planned to secure approximately 4,000 of the 8,500 jobs from the former state-owned group.
Hatzidakis proclaimed that “This plan will finally resolve in the best way an issue that has troubled Greek society for 30 years”. The new airline, renamed Olympic Air, officially commenced operations on September 29, 2009, taking over from the former Olympic Airlines.
Olympic Air vs. Olympic Airlines: Key Differences
| Aspect | Olympic Airlines (State Era) | Olympic Air (Private Era) |
|---|---|---|
| Ownership | Greek Government | Marfin Investment Group |
| Employees | Approx. 8,500 | Approx. 5,000 planned |
| Financial Status | Reliant on state subsidies | Private investment |
| Fleet Strategy | Mixed aging fleet | Ordered new Bombardier Q400 aircraft |
What Happened After Privatization?
The relationship between the new Olympic Air and its main competitor, Aegean Airlines, quickly evolved. In February 2010, just months after Olympic Air launched operations, both airlines announced an agreement to merge. However, the European competition commission initially blocked this merger in January 2011, citing anti-competitive concerns.
Ultimately, the sale to Aegean Airlines received EU approval on October 10, 2013. Olympic Air became a subsidiary of Aegean Airlines, focusing on regional and domestic routes with a fleet of ATR aircraft. Today, Olympic Air operates as part of the Aegean Group, maintaining the historic Olympic brand while serving Greek islands and regional destinations.
Frequently Asked Questions
Why did Olympic Airways have to repay €850 million to the Greek state?
The European Commission determined that €850 million in Greek state support provided to Olympic Airways between 2005 and 2007 constituted illegal state aid under EU competition rules. This repayment was a mandatory condition for approving the airline’s privatization plan.
What happened to Olympic Airways employees after privatization?
The new owners, Marfin Investment Group, planned to retain approximately 4,000 of the 8,500 employees from the former state-owned Olympic Airlines group. The Greek government committed to providing support for those who lost their jobs during the transition.
When did Olympic Air officially begin operations?
Olympic Air officially commenced limited operations on September 29, 2009, the same day that Olympic Airlines ceased most flights. The full-scale launch of the new airline took place on October 1, 2009.
Does Olympic Air still exist today?
Yes, Olympic Air continues to operate as a regional airline and subsidiary of Aegean Airlines. It currently focuses on domestic routes within Greece and nearby international destinations using a fleet of ATR aircraft.
Conclusion: The Legacy of Olympic’s Privatization
The privatization of Olympic Airways marked the end of a decades-long struggle between the Greek government and European authorities over the carrier’s future. While the process required difficult compromises, including the repayment of substantial state aid and significant workforce reduction, it ultimately resolved what one minister called “an issue that has troubled Greek society for 30 years.”
The transition from state-owned Olympic Airlines to privately-owned Olympic Air, and eventually to its current status as an Aegean Airlines subsidiary, demonstrates the complex evolution of national carriers in the modern aviation industry. Though the golden age of Onassis’s luxurious service has passed, the Olympic name continues to connect Greece’s communities through regional air service, preserving a legendary brand while adapting to contemporary market realities.
