Virgin Atlantic Says Joint Venture Should Be Blocked
In the face of record fuel prices
and a plummeting global market, airlines that were once rivals are
now increasingly willing to let bygones be bygones, in the mutual
interest of surviving these tough times. We've already seen the
proposed merger between Delta and Northwest, and the recent "strong
alliance" proposed by Continental and United.
It now appears another US carrier, American Airlines, is close
to choosing a pair of new dance partners. The world's largest
carrier is close to applying for antitrust immunity for a three-way
alliance with British Airways and Spain's Iberia, reports The
All three are current members of the "OneWorld" alliance, but
protections and benefits under that code-sharing agreement don't
apply to transcontinental flights. The new deal would change that,
allowing American and BA to reap the benefits of sharing costs on
trans-Atlantic routes, as well as a new link between Europe to
This is familiar territory for BA and American. Both carriers
applied for similar anti-trust immunity in 1997, and again in
2001... but each submission was struck down by regulators, who said
the only way such a deal could happen would be for both airlines to
give up valuable landing slots at London Heathrow... a deliberately
But that was then, and this is now. Both carriers say the recent
"Open Skies" agreement between the US and European Union has
already loosened regulatory restrictions, and freed up slots for
Continental, Delta, Northwest and US Airways at Heathrow.
Other recent mergers, proposed
mergers and fledgling alliances have also strengthened American's
and BA's biggest rivals.
One of those rivals, Virgin Atlantic, called such an alliance
"anti-competitive," and urged regulators to go for the trifecta in
blocking the deal.
"We would oppose this attempt," the airline said Thursday. "It
would form a dominant mega-power on transatlantic air routes from
two of the largest EU members, forcing up ticket prices for
passengers and restricting choice. BA/AA/Iberia would together
dominate slots at Heathrow Airport and use that power to block new
entrants onto key routes in Europe and across the Atlantic.
"The current crisis in aviation must lead to survival of the
fittest, not protection for the fattest," Virgin added. "Regulators
must block this attempt to create such a giant champion of