SOUTH NORWALK, Conn., Aug. 10 /PRNewswire/ -- Sir Richard Branson, the
President of Virgin Atlantic Airways, today wrote to both US Presidential
candidates warning that a proposed alliance between British Airways and
American Airlines would severely damage competition on major transatlantic
routes and leave consumers worse off.
(Logo: http://www.newscom.com/cgi-bin/prnh/20060927/NYW045LOGO )
In his letter to Senators Barack Obama and John McCain, Sir Richard
says that "airlines everywhere are struggling with the current price of
oil, but the solution to their problems should not lie in an
anti-competitive agreement, which will inevitably lead to less competition
and higher fares."
BA and American Airlines, who together with Iberia would have nearly
half of all takeoff and landing slots at London's Heathrow airport, are
expected to file an application this week for permission to fix prices and
timetables, and share revenues and frequent flyer details, on their route
The two airlines have tried twice before to gain permission to bring
together their operations and, on both occasions, every regulator that
examined the alliance raised serious concerns about the anti-competitive
nature of the proposal.
Senator Obama represents Illinois, a state where many workers are
employed by American Airlines at Chicago O'Hare airport. The possible
alliance will place thousands of jobs under threat as BA and AA operations
are brought together.
Sir Richard writes in the letter: "BA and AA will argue that their
alliance is now acceptable because the competitive environment has changed
with the Open Skies accord on UK-US routes. This is a complete red herring.
Open Skies (which is only a temporary accord as it may be unwound in 2010)
has not significantly increased competition on UK/London-US routes." Open
Skies hasn't reduced ticket prices, either.
Against the background of high oil prices, Sir Richard writes: "Neither
is the current economic slowdown a justification for waiving through any
application. The job of the regulators is to assess the long-term impact of
the alliance on competition, not to provide special protection from the
immediate challenges of the economic cycle, with which every other airline
has to deal with."
The key issue for the competition authorities is the market dominance
that a combined BA/AA will have in individual markets. There are six
Heathrow routes on which BA and AA overlap and where competition would be
reduced. (The figures mostly refer to Summer 2008.)
BA/AA would have dominant market shares on the following routes to and
from Heathrow in terms of capacity:
JFK - 63%; Chicago - 66%; Boston - 82%; Miami - 72%; Los Angeles - 49%;
Dallas Fort Worth - 100%
In the letter Sir Richard explained that "BA/AA would have a
combination of high frequencies and a transatlantic network that could not
be replicated by any other airline/alliance, and which would make it
impossible for other carriers to compete for time-sensitive corporate or
Sir Richard also highlighted the fact that as well as Heathrow being
full, another major airport is limiting access: "We now have a similar
situation at New York airports, with government imposed restrictions. The
Heathrow-New York JFK route is by far the most important transatlantic
market, accounting for over 25% of the total Heathrow/US market."
Virgin Atlantic will be launching a major lobbying and advertising
campaign in due course to ensure regulators and consumers are fully aware
of the dangerous nature of a BA/AA and Iberia alliance, and why it should
For further information please contact the Virgin Atlantic Press Office
on 203-750-2570 or log onto www.virginatlantic.com
SOURCE Virgin Atlantic Airways