Virgin Atlantic claims BA/AA alliance is not putting consumers first
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Virgin Atlantic has urged the European Commission not to grant anti-trust approval to the proposed anti-competitive alliance between British Airways and American Airlines because it “has yet to see any consumer benefits which have been identified that could justify the deal”.
The airline made the claims in its response to the European Commission’s Market Testing report, in which BA and AA agreed to give up a number of lucrative trans-atlantic slots.
In its response, Virgin says that “the proposed commitments do not remedy the consumer harm identified by the Commission itself in its Statement of Objections as well as being insufficient, ineffective, and not viable.”
Sir Richard Branson, President of Virgin Atlantic, adds: “I remain extremely concerned that consumers are not being put first in the European Commission’s decision-making process. No evidence of consumer benefits has been put forward. The Commission needs to throw out the commitments proposed by BA and AA which are insufficient in allaying the Commission’s concerns set out in its Statement of Objections. The problems with the remedies are wide-ranging – they are totally inadequate, both in scope and substance.
“A significant failing of the proposals is that there is no ‘fix it first’ approach, which would protect consumers from abuse by ensuring that competitors take up the remedies before BA and AA could start their collusion. It is clearly in BA and AA’s interests to offer the least attractive remedies possible so they do not face any additional competition.”
Branson has been fighting against the deal going ahead for over two years nowand says he will do “whatever it takes” to stop the proposed merger. Virgin claims that BA/AA will use their exemption from competition laws and their overwhelming dominance to destroy competition, raise prices and reduce choice and BA/AA will have a monopoly or be dominant on some of the busiest and most profitable routes between the US and Heathrow.
Yesterday British Airways and Spanish airline Iberia signed a deal to merge and create one of the world’s biggest airline groups.The new company will be called International Airlines Group, but the BA and Iberia brands will continue to operate as normal. If the BA/AA deal goes ahead, it is expected that they will also join the group.
Readers' comments (1)
Sam Jones | Fri, 9 Apr 2010 2:55 pm
Virgin Atlantic suffers from two huge failures. Firstly, it complains about slot availability at Heathrow Airport. Nothing could be further from the truth – the simple fact is that they do not want to put their money where their mouth is any buy them when slots are available. Emirates, Etihad Airways, Qatar Airways, TAM, Continental Airlines, US Airways, Delta Airlines, Kingfisher Airlines, Oman Air, China Airlines and many others have bought slots when they’ve been available – Virgin Atlantic has not. Why?
Secondly, Virgin Atlantic’s failure to align itself with a major airline alliance has meant that it has not reaped the benefits other carriers do by working together. Despite being 49% owned by Singapore Airlines/Temasek/Singaporean Government, the airline is just a familiar brand with media connotations that it survives off – as a business, it clearly has been slow to evolve and adjust to the realities of the market – a market with open skies that it advocated and now wants stopped just because British Airways and American Airlines seek to cement their partnership.
The oneworld alliance antitrust immunity deal will not be stopped.
If both the Department of Transport and European Commission value their policymaking then they have no choice but to approve the deal as one party has already given it the green light. If they don’t, they should terminate all the other deals they’ve approved and demand slot divestiture across the board if that is the price of equality.
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