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Virgin Atlantic

Sir Richard Branson in plea to President Obama

August 13, 2009

Sir Richard Branson has taken his fight against the proposed tie-up between British Airways and American Airlines to the very top of the US government.

The Virgin Atlantic founder has written to President Barack Obama, warning him that "now, more than ever, consumers are counting on you to put their interest first".

His letter has provoked an outcry from critics, however, who note that subsidiary airline Virgin Blue is busy lobbying regulators to approve a merger of its own.

BA and AA are attempting to win anti-trust immunity so that they can share information and coordinate closely on flight schedules and prices.

It is the third time the airlines have tried to strengthen ties, with two previous bids being struck down by regulators. This time round analysts were expecting recessionary fears to boost their chances, but no deal has been struck after a year of negotiations.

Putting forward the case against the tie-up, Sir Richard said that limited slot availability at Heathrow Airport would result in a "monster monopoly" on transatlantic flights.

"Never before has the US government approved an anti-trust immunity application where barriers to entry are so significant that any new meaningful competitive entry is virtually impossible," he wrote just ahead of the one-year anniversary of BA's application.

"If their proposals were to be approved, AA-BA would have a monopoly, or near monopoly, on some of the busiest and most profitable routes from the US to Europe."

But the entrepreneur's complaint immediately raised eyebrows, with critics noting that Virgin Blue – the Australian airline which Sir Richard retains a 26 per cent stake in – has itself just filed for anti-trust immunity with Delta Airlines, the world's largest carrier.

Taking a swipe at Sir Richard for the apparent inconsistency, a spokesman for BA told The Telegraph: "We are pleased that Virgin airlines in the southern hemisphere now agree that anti-trust immunity deals can be beneficial for consumers and competition.

"We look forward to this view being maintained by Virgin carriers north of the equator."

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