Virgin Atlantic Battles BA/AA Link

Virgin Atlantic, one of the world's leading long-haul airlines, has submitted new evidence to the U.S. Department of Transportation (DOT) in relation to British Airways' (BA) third attempt to link-up with American Airlines (AA). Yesterday, the industry faced the DOT’s deadline for comments from third parties on the move that could grant antitrust immunity to BA and AA. A DOT decision on the BA/AA alliance is expected late in October.

Sir Richard Branson has said the effective merger of BA and AA would create a "monster monopoly," with BA locking out competition and having a stranglehold on some of the busiest routes in the world into and out of London Heathrow.

In its recent comments, Virgin Atlantic says: "BA and AA assert that their alliance will create significant public benefits (yet) many of these benefits are either illusory or do not require an extraordinary grant of immunity in order to be implemented. The application is structured primarily to protect 'Fortress Heathrow' and to discourage, not encourage, the introduction of new capacity and innovative fares.

“BA already has 41 percent of take-off and landing slots at Heathrow, compared with Virgin Atlantic's 3 percent," Virgin Atlantic said. "If the application for antitrust immunity is approved, BA and its Oneworld partners would have nearly half of all slots. Its size at Heathrow, which was the base for 8 out of the top 10 U.S. routes to Europe last year, would continue to dwarf the slots held by two other alliances, Star Alliance and SkyTeam.”         

Virgin Atlantic said its submission highlights that little has changed since the Open Skies agreement came into effect last year.  "BA and American still retain a dominant share of frequency in the routes they overlap on (such as Heathrow-New York JFK, Heathrow-Boston, Heathrow-Chicago, Heathrow-Miami and Heathrow-Los Angeles)," the company said. "Heathrow constitutes a separate market to other London airports. Heathrow has a richer and bigger catchment, higher yields and an abundance of connecting flights with carriers from all alliances and carriers which are not aligned.

"BA and American would be able to use their market power to raise fares, lessen service levels and inhibit innovation," the airline said. "The virtual monopoly would threaten the services of the remaining competitors in the relevant markets, and especially the services of the carriers that operate on the overlap routes. BA/AA would dominate with most of the capacity on key routes such as Heathrow-Boston (80 percent); Heathrow-Miami (73 percent); Heathrow-Chicago O'Hare (64 percent), Heathrow-New York JFK (64 percent) and Heathrow-Dallas (100 percent).”


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