Virgin Atlantic's Sir Richard Branson Warns U.S. Presidential Candidates of Anti-Competitive Link-Up Between British Airways and American Airlines

Aug 10, 2008, 01:00 ET from Virgin Atlantic Airways

    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: )
     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
 business travelers."
     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
 be blocked.
     For further information please contact the Virgin Atlantic Press Office
 on 203-750-2570 or log onto

SOURCE Virgin Atlantic Airways