19 May 2009

Virgin submits evidence to DoT over proposed BA/AA tie-up

The proposed tie-up between British Airways and American Airlines would create a Ã¢â¬Åâœmonster monopolyÃ¢â¬~, according to rival Virgin Atlantic.

Submitting its evidence to The US Department of Transportation (DoT), Sir Richard Branson claimed the move would give BA a stranglehold on some of the busiest routes in the world into and out of London Heathrow.

The airlineÃ¢â¬â¢s submission says: Ã¢â¬ÅâœBA and AA assert that their alliance will create significant public benefits (yet) many of these benefits are either illusory or do not require an extraordinary grant of immunity in order to be implemented.

Ã¢â¬ÅâœThe application is structured primarily to protect Ã¢â¬ËœFortress HeathrowÃ¢â¬â¢ and to discourage, not encourage, the introduction of new capacity and innovative fares.Ã¢â¬~

It said BA already has 41% of take-off and landing slots at Heathrow, compared with Virgin AtlanticÃ¢â¬â¢s 3%.

If the application for anti-trust immunity is approved, Virgin said BA and its Oneworld partners would have nearly half of all slots.

Virgin argued that little has changed since the Open Skies agreement came into effect last year:

Ã¢â¬ÅâœBA and American would be able to use their market power to raise fares, lessen service levels and inhibit innovation. The virtual monopoly would threaten the services of the remaining competitors in the relevant markets, and especially the services of the carriers that operate on the overlap routes.Ã¢â¬~

It said BA/AA would dominate with most of the capacity on key routes such as Heathrow-Boston (80%); Heathrow-Miami (73%); Heathrow-Chicago OÃ¢â¬â¢Hare (64%) , Heathrow-New York JFK (64%) and Heathrow-Dallas (100%).

By Bev Fearis