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Virgin Atlantic Continues to Oppose BA/AA AllianceApril 13, 2010 By: George Dooley
Virgin Atlantic Airways said it has yet to see any concrete consumer benefits that could justify the European Commission (EU) agreeing to anti-trust approval for the proposed British Airways/American Airlines alliance. Virgin Atlantic has submitted its objections to the EU’s Market Testing report.
Virgin Atlantic’s key objections to the BA/AA deal include charges that the carriers will use their exemption from competition laws and their overwhelming dominance to destroy competition, raise prices and reduce choice. The BA/AA alliance will have a monopoly or be dominant on some of the busiest and most profitable routes between the U.S. and Heathrow, Virgin argues.
"I remain extremely concerned that consumers are not being put first in the European Commission's decision-making process," Sir Richard Branson, president of Virgin Atlantic, commented. "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," Branson continued. "It is clearly in BA and AA's interests to offer the least attractive remedies possible so they do not face any additional competition The key points of the submission are 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."
Other key issues which Virgin Atlantic identifies in its EU submission, include:
* The remedies fail to adequately address the significant barriers to entry including slot constraints, frequency advantage, hub dominance and access to connecting traffic that the Commission itself identified in its Statement of Objections.
* The number of slots are insufficient and the slots are not to be provided from existing frequencies - BA and AA will continue to have massive frequency advantage.
* Releasing slots only on a leasehold basis disincentives new entry and the risk that competitors will end up paying for the leases would mean that not only will the competitors have to right the wrong but they may also pay for the privilege.