08 October 2008

Virgin warns of 'stranglehold' at Heathrow if BA/AA alliance goes ahead

Virgin Atlantic has warned that a British Airways/American Airlines alliance could create a stranglehold on JFK and Heathrow Airports.

Speaking at the International Aviation Club in Washington, Virgin chief executive Steve Ridgway said: Ã¢â¬ÅâœBA/AA isnÃ¢â¬â¢t just another alliance. It is an attempt to stitch up the most important long-haul routes from EuropeÃ¢â¬â¢s most important airport, London Heathrow.

Ã¢â¬ÅâœBA and AA want to roll back the successes of deregulation and liberalisation in international aviation. In the case of BA, the lack of anti-trust immunity didnÃ¢â¬â¢t stop them achieving a 10% operating margin last year. BA and AA want to have their cake and eat it, at consumersÃ¢â¬â¢ expense.Ã¢â¬~

He said BA/AA would control 63% of the capacity between JFK New York and Heathrow, 66% between Chicago and Heathrow, 79% between Boston and Heathrow, 75% between Miami and Heathrow, and 100% between Dallas Fort Worth and Heathrow.

Ã¢â¬ÅâœFacts are stubborn things Ã¢â¬' while BA and AA have proclaimed that US carriers now have Ã¢â¬ÅâœfreeÃ¢â¬~ access to Heathrow, public financial filings show that Continental had to pay $209million for four Heathrow slot pairs, or over $50million per roundtrip flight.

Ã¢â¬ÅâœFreeÃ¢â¬~ access to Heathrow? Hardly. Also, with JFK recently joining the Heathrow club as a closed airport with virtually no competitive entry, red flags should be flying high on both sides of the Atlantic.

Ã¢â¬ÅâœBA argues that it needs to link up with American because SkyTeam and Star are dominant at their hubs. But the fact is that BA on its own is already bigger between Heathrow and the US than Star is from Frankfurt or SkyTeam is from Paris Ã¢â¬' and thatÃ¢â¬â¢s before it gets together with American Airlines. Heathrow, which is totally full, accounts for nearly a quarter of all passengers traveling between Europe and the US."

Virgin Atlantic has launched a website for consumers and agents showing why passengers will lose out.

It is urging customers to register their opposition to any alliance by visiting the website www.virginatlantic.com/monstermonopoly.

In his speech, Ridgway also outlined how Virgin had Ã¢â¬Åâœcushioned itselfÃ¢â¬~ well for any downturn.

In the first six months of its financial year to August 2008, Virgin Atlantic and its tour operator Virgin Holidays saw revenues increase from Ã&#pound;1.19billion to Ã&#pound;1.37billion.

Pretax profits rose from Ã&#pound;43million to Ã&#pound;72million. Cash in the bank increased to Ã&#pound;688m at the end of the first half of the year (2008/09), compared with Ã&#pound;599m at the end of the last financial year (2007/08).

Virgin Atlantic carried 3 million passengers in the first half of the year, up 3% on the same period in the year before, while Upper Class passenger numbers increased by 6%.

By Bev Fearis