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Virgin Atlantic Continues Battle Against BA/AA Plans

March 10, 2010 By: George Dooley

Sir Richard Branson, president of Virgin Atlantic, labeled British Airways (BA) and American Airlines' (AA) proposed package of commitments put forward in the European Commission's formal Market Testing report as "woefully inadequate." The package would modify the competitive effects of the BA/AA alliance on competing airlines such as Virgin. Virgin, BA and AA are in a long-standing conflict over the impact of the BA/AA alliance and its effects on competition – especially in London’s Heathrow.

Earlier this week, Branson met with the new vice president of the Commission and Commissioner for Competition, Joaquin Almunia, to discuss his “grave concerns” about the proposed British Airways/American Airlines alliance. Both BA and AA have staunchly defended their alliance and urged approval by UK, U.S. and EU authorities.

The key points of Virgin Atlantic's long standing opposition to the proposed merger include fears that BA/AA will use their exemption from competition laws and their overwhelming dominance to destroy competition, raise prices and reduce choice. Virgin is also concerned that BA/AA will have a monopoly or be dominant on some of the busiest and most profitable routes between the U.S. and Heathrow.

"The proposals are woefully inadequate in counter-acting the anti-competitive harm of a combined BA/AA," Branson said. "I continue to question why the Commission is even considering these proposals to try and put right the consumer harm of this monster monopoly when it does not seem to have any evidence of concrete consumer benefits. You can't remedy the irremediable.

"The proposals fall far short of what is necessary and Virgin Atlantic will seek to demonstrate why this anti-competitive alliance should be stopped," Branson continued. "Consumers on both sides of the Atlantic are relying on the European Commission to protect their rights. We will continue to work with the Commission to help them recognize the potential damage BA/AA could cause as the new Commissioner gets to grips with this important issue.

“The market testing report sets out the package of commitments BA and AA have proposed in an attempt to counteract the anti-competitive effects of the proposed monopolistic alliance," Bransons added. "All interested parties are invited to respond to the proposals before the Commission takes a decision on whether its own concerns, regarding the proposed alliance, as expressed in its Statement of Objections, have been adequately met. In its Statement of Objections the Commission took the view that the agreement may be in breach of EU rules on anti-competitive business practices."

Virgin believes that London’s Heathrow Airport is unique in Europe. “Unlike other European hubs Heathrow is virtually full preventing competitors from challenging the dominance of BA and AA," Branson argues. "BA/AA would have 47 percent of slots at Heathrow."



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