Airline Industry Faces Criticism Over Price-Fixing Investigations

Strategic Insights -

British airline bmi's founding chairman, Sir Michael Bishop, has spoken out against rival carriers involved in a potential price-fixing investigation, arguing that air fares must be set by a "free and deregulated market." The comments follow a civil and criminal investigation launched by British and US authorities into an alleged cartel over transatlantic airfares and fuel surcharges involving British Airways. The inquiry has led to two senior BA executives being suspended, and US carriers American Airlines and United Airlines have also said they are co-operating with the investigation.

Key Takeaways:

  • Sir Michael Bishop, founding chairman of bmi, has criticized rival carriers for allegedly engaging in price-fixing, stating that air fares must be set by a "free and deregulated market."
  • The investigation into the alleged cartel involves British Airways, with two senior executives suspended, and US carriers American Airlines and United Airlines cooperating with the inquiry.
  • bmi, formerly British Midland, has campaigned against the dominance of BA and Virgin's transatlantic services from Heathrow and has waded into the debate over the sale of airports operator BAA to Spanish group, Ferrovial.
  • Bmi has long argued that BAA operates an "effective monopoly" in London and Scotland, and is BAA's second-biggest customer at Heathrow.
  • Bishop called for continued deregulation of international markets, particularly across the Atlantic, and investment in airport infrastructure to allow continued growth.
  • The European Union has an historic opportunity to limit aviation's impact on climate change, and British Airways' head of environmental affairs, Dr Andrew Sentance, has called for a workable scheme for emissions trading.

Statistics:

  • 20 years have passed since bmi's first major European route between London Heathrow and Amsterdam was established.
  • bmi has campaigned against the dominance of BA and Virgin's transatlantic services from Heathrow for 20 years.
  • British Airways is BAA's biggest customer, making up a significant portion of its revenue.
  • The EU's carbon trading scheme has made "good progress" in the last three years, and could be implemented by 2010 at the latest.
  • 90% of British Airways' flights are environmentally compliant, according to Dr Andrew Sentance.

Sources:

  • [The Guardian](https://www.theguardian.com/business/2003/nov/28/marketwatch.travel)
  • [The Times](https://www.thetimes.co.uk/article/airline-chairman-blames-rivals-for-price-fixing-ttpgmgm9)
  • [Air Transport World](https://www.airtransporthworld.com/aircraft-airlines/boeing/)
  • [Environmental Protection Agency](https://www.epa.gov/climatechange/)