Virgin asks EC to reject BA and AA alliance

[November 26th 2008]

Virgin Atlantic is today urging the European Commission to reject the planned “virtual merger” between two of the world’s biggest airlines, British Airways and American Airlines.

“We urge the European Commission to reject outright this third attempt by BA and AA to stifle competition between Heathrow and the US,” says Virgin Atlantic chief executive, Steve Ridgway.

“Their virtual merger would lock-up one of the world’s busiest air corridors against new and existing competition, increase BA’s grip on the most constrained international airport in the world and cause grave harm to consumers with higher prices,” Ridgway adds.

Virgin says that if BA and American Airlines are allowed to combine they would use their market power to raise fares, adjust schedules to keep out competitors and cut off connecting feeder traffic to other airlines at Heathrow.

According to Virgin, six routes between Heathrow and the US currently benefit from BA and AA operating independently. If allowed to merge it maintains that BA/AA would have a monopoly or be dominant on some of the busiest and most profitable routes between the US and Heathrow.

Virgin Atlantic’s figures suggest that BA/AA would control 64% of the capacity between JFK New York and Heathrow; 64% between Chicago and Heathrow; 80% between Boston and Heathrow; 73% between Miami and Heathrow; and 100% between Dallas Fort Worth and Heathrow and Seattle and Heathrow.

“Even if BA and AA were forced to give up slots at Heathrow, these so-called slot remedies on their own would not be suitable as they would be insufficient to reinstate any effective level of competition. They would not cancel out anticompetitive effects arising out of the increased network reach planned by BA and AA,” suggests Ridgway.

Virgin says that BA on its own has more capacity between Heathrow and the US than the Star Alliance network of airlines has from Frankfurt to the US or SkyTeam has from Paris to the US. “Heathrow, which is totally full, accounts for nearly a quarter of all passengers travelling between Europe and the US,” states Virgin.

Written by: Nick Purdom