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Virgin Atlantic Will Fight Despite EU Decision on BA/AAJuly 14, 2010 By: George Dooley
The European Commission’s (EU) announcement of its final decision to approve British Airways and American Airlines' alliance drew immediate fire from Sir Richard Branson, president of Virgin Atlantic, who called the decision anticompetitive. Branson, a persistent critic of the alliance that links AA, BA and Iberia, said he remains resolute in his belief that consumers will lose out as a result of the deal.
"We have fought this monster monopoly for the past thirteen years and are still resolute in our belief that this decision is shameful and consumers will suffer greatly as a result of this deal. The European Commission has let consumers down by agreeing to paltry remedies which are wholly inadequate," Branson said. "Luckily for the competition authorities, Virgin Atlantic will continue to compete to win passenger and corporate business despite this massively uneven playing field which we are forced to compete on."
"The final decision and remedies package remains woefully inadequate,” Virgin said in a statement. "The many shortcomings include too few slot remedies, no requirement for competitors to take up the remedies which means BA/AA can proceed regardless of whether competition is in place and slots which are only available on a limited-duration lease-hold basis thereby disincentivizing new entry. All of these factors combined mean that the remedies are unable to address the competitive harm caused by a combined BA/AA."
The key points of Virgin Atlantic's opposition to the proposed merger include: BA/AA will use their exemption from competition laws and their overwhelming dominance to destroy competition; raise prices and reduce choice; and that BA/AA will have a monopoly or be dominant on some of the busiest and most profitable routes between the U.S. and London’s Heathrow.
Virgin also argues that Heathrow Airport is unique in Europe. "Unlike other European hubs Heathrow is virtually full preventing competitors from challenging the dominance of BA and AA," Virgin said in a statement. "BA/AA would have 47 percent of slots at Heathrow. The airline with the next biggest slot holding is Lufthansa and bmi with 14.2 percent. Virgin Atlantic currently holds 3 percent."