Published: 08 Oct 2008: Virgin Atlantic has warned that US consumers would be harmed by a tie-up between British Airways and AMR Corp.'s American Airlines due to the dominance they would have at both JFK and Heathrow Airports.
Published: 08 Oct 2008: Virgin Atlantic has warned that US consumers would be harmed by a tie-up between British Airways and AMR Corp.´s American Airlines due to the dominance they would have at both JFK and Heathrow Airports.
Steve Ridgway, chief executive, Virgin Atlantic, said: "BA/AA isn´t just another alliance. It is an attempt to stitch up the most important long-haul routes from Europe´s most important airport, London Heathrow. BA 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 didn´t stop them achieving a 10 percent operating margin last year. BA and AA want to have their cake and eat it, at consumers´ expense."
The airline stated that BA/AA would have a monopoly or be dominant on some of the busiest and most profitable routes between the US and Heathrow. BA/AA would control 63 percent of the capacity between JFK New York and Heathrow; 66 percent between Chicago and Heathrow; 79 percent between Boston and Heathrow; 75 percent between Miami and Heathrow; and 100 percent between Dallas Fort Worth and Heathrow.
Ridgway added: "Facts are stubborn things – while BA and AA have proclaimed that US carriers now have "free" access to Heathrow, public financial filings show that Continental had to pay $209million for four Heathrow slot pairs, or over $50million per roundtrip flight. "Free" 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."
"BA 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 – and that´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."
"As we´ve seen with the BAA ownership of London airports, protected monopolies don´t invest but simply raise prices as service levels decline. It´s not very surprising – after all monopolies don´t need to invest to stay ahead of the competition – by definition, there is no competition."