Virgin warns of BA/AA 'stranglehold' at Heathrow
October 8, 2008Virgin Atlantic has warned that a proposed alliance between British Airways and American Airlines (AA) could create a transatlantic monopoly.
The carrier's opposition to the partnership is nothing new - having already launched a £3 million lobbying campaign against it - but its latest comments have ratcheted up the rhetoric even further.
Speaking at the International Aviation Club in Washington, Virgin chief executive Steve Ridgway accused the two airlines of attempting to "stitch up" the most important routes from London Heathrow.
He cited a raft of statistics and insisted the alliance would give BA and AA an effective stranglehold at the UK hub, undermining competition and ultimately harming passengers.
Britain's national carrier has twice-previously attempted to strengthen cooperation on fares and timetables with AA - both times being obstructed by competition regulators.
In addition to America's stringent anti-trust laws governing foreign airline ownership, several voices in the industry have railed against the alleged competitive advantage of the tie-up.
By coordinating their pricing and scheduling structures, the two carriers would be able to save millions by optimising capacities on key routes.
But with growing sympathy for consolidation in the troubled airline industry - beset by the global economic crisis - regulators are expected to look on the proposals more favourably this time round.
Bemoaning the new landscape, Ridgway issued a clarion call for Virgin's customers to voice their outrage. "BA and AA want to roll back the [airline industry's] successes of deregulation and liberalisation," he seethed.
"In the case of BA, the lack of anti-trust immunity didn't stop them achieving a ten per cent operating margin last year. BA and AA want to have their cake and eat it - at consumers' expense."
Virgin argues that affording the carriers dominance in the lucrative transatlantic market would adversely affect competition.
It notes that BA and AA would control 63 per cent of capacity between Heathrow and New York JFK, as well as 66 per cent between the UK hub and Chicago and 75 per cent of Miami services.
On one route between Heathrow and Dallas Fort Worth the carriers would operate an absolute monopoly, Ridgway complained.
But a BA spokesman retorted: "British Airways and AA's market share on transatlantic routes from Heathrow (51 per cent) is much smaller than the Lufthansa/ Star alliance from Frankfurt (80 per cent) or the Air France/Skyteam alliance from Paris (73 per cent)."
He added that even after the tie-up there would still be seven separate EU or US airlines flying between Heathrow and America.
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