British Airways' Concessions to European Commission Sparks Criticism from Virgin Atlantic

Strategic Insights -

Virgin Atlantic founder Sir Richard Branson has denounced British Airways' concessions to the European Commission over its proposed tie-up with American Airlines as "woefully inadequate". The concessions, aimed at addressing monopoly concerns, include offering to lease out four daily pairs of take-off and landing slots between the UK and the US. However, Sir Richard claims that the agreement will still result in a "monster monopoly" with an overwhelming dominance, leading to higher prices and reduced choice on transatlantic routes.

Key Takeaways:

  • British Airways has offered to lease out four daily pairs of take-off and landing slots between the UK and the US, including two to Boston and one each to Dallas and Miami, plus another two to New York that could be included "at some point in the future".
  • The proposed alliance with American Airlines, including Spain's Iberia, would constitute a "monster monopoly" with an "overwhelming dominance", according to Sir Richard Branson.
  • The deal would still result in higher prices and reduced choice on transatlantic routes, despite the concessions made by British Airways.
  • The European Commission is conducting a market-testing consultation, with a deadline of 10 April, to assess the impact of the proposed alliance.
  • The Oneworld alliance, which includes British Airways, American Airlines, and Iberia, is still dwarfed by its rivals, the Star Alliance and Skyteam.

Statistics:

  • 7.13 million people travelled through BAA's six British airports in February, a 2.4% rise on February 2009.
  • Heathrow saw a 5.3% increase in traffic, while adjusted for last year's winter weather, its traffic was still up by 2.7%.
  • The Star Alliance, which includes Lufthansa and US Airways, is more than twice the size of Oneworld.
  • Skyteam, which includes Air France and Delta, has the greatest number of routes, despite having fewer members.

Sources:

  • "British Airways 'offers to lease slots' to win Commission approval" by Ben Wright, Times Online (no date specified)
  • "Virgin boss attacks BA/AA pact" by Ben Wright, Times Online (no date specified)
  • "Heathrow in better shape than rivals" by Ben Wright, Times Online (no date specified)