The Two Airlines Applied To Share Market Data, Fix Schedules One Year Ago

Sir Richard Branson, the founder and President of Virgin Atlantic, has written to the President of the United States, Barack Obama, to warn of what he says are dangers to consumers if British Airways and American Airlines are allowed to effectively merge.

Friday marks the first anniversary since troubled carriers British Airways and American Airlines applied to regulators for permission to fix prices and schedules, and share marketing and operational data.

Regulators in the U.S. and Europe have been studying crucial data relating to the application and assessing the dominant market shares which BA and AA would have on some of the most popular and profitable routes between London Heathrow and the U.S.

In his letter to President Obama, Sir Richard Branson said:

"Your Administration is nearing a defining moment in U.S. airline competition policy. The choice is a stark one that could last for decades: whether to side with the consumer and competition or whether to approve the virtual merger of BA and AA."

"Never before has the U.S. Government approved an anti-trust immunity application where barriers to entry are so significant that any new meaningful competitive entry is virtually impossible. Take-off and landing slots at London's Heathrow Airport are scarce and virtually impossible to obtain at times required for competitive transatlantic services. In the rare instances that slots become available, they are prohibitively expensive for airlines in good economic times and out-of-reach in challenging ones."

 "BA and AA are seeking anti-trust immunity because it will enable them to squeeze existing Heathrow-U.S. competitors off key routes. If BA/AA win, it will be an unprecedented loss for consumers - prices will increase as the monopolists wield their power without competitive pricing pressure and reduced competition inevitably leads to worse customer service."

"BA and AA are opportunistically suggesting your Administration should suspend rigorous competition analysis due to the current economic downturn. You should reject this self-serving sympathy ploy. Every carrier faces financial challenges and should be adjusting their business plans and costs without a free meal ticket from government."

"Mr. President, I am optimistic that your Administration will stand on principle, rigorously subject BA/AA to exacting competition analysis and ultimately choose to stand on the side of consumers and competition by rejecting BA/AA's anti-trust application. Now, more than ever, consumers are counting on you to put their interests first."

If allowed to proceed, BA/AA would have highly dominant market shares on key routes, such as Heathrow-Boston 80%; Heathrow-Miami 70%; Heathrow-Chicago 68%; Heathrow-JFK 62%; Heathrow-LAX 48%. It would also have 100% share on Heathrow-Dallas Fort Worth.

FMI: www.virginatlantic.com