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
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
"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.