Virgin Atlantic Chief Calls Link-Up 'Anti-Competitive'

Sir Richard Branson, the President of Virgin Atlantic Airways, recently wrote to both US Presidential candidates claiming a proposed alliance between British Airways and American Airlines would "severely damage competition on major transatlantic routes and leave consumers worse off."

"Airlines everywhere are struggling with the current price of oil, but the solution to their problems should not lie in an anti-competitive agreement, which will inevitably lead to less competition and higher fares," Branson wrote Sunday in his letter to Senators Barack Obama and John McCain.

As ANN reported last month, American is reportedly looking at a trans-Atlantic alliance -- not merger -- with British Airways, and Spain's Iberia. The three carriers are expected to file an application this week for permission to consolidate prices and timetables, and share revenues and frequent flyer details, on their route networks.

Of particular concern to Virgin is the fact that, if the deal is approved, the three airlines would control nearly half of all takeoff and landing slots at London's Heathrow airport. The airline notes that BA and American have tried twice before to gain permission to bring together their operations... "and, on both occasions, every regulator that examined the alliance raised serious concerns about the anti-competitive nature of the proposal."

Branson is hedging his bets, though, in hoping to gain support from the two likely US presidential nominees.

"BA and AA will argue that their alliance is now acceptable because the competitive environment has changed with the Open Skies accord on UK-US routes," he writes. "This is a complete red herring. Open Skies (which is only a temporary accord as it may be unwound in 2010) has not significantly increased competition on UK/London-US routes."

Against the background of high oil prices, Branson added "Neither is the current economic slowdown a justification for waiving through any application. The job of the regulators is to assess the long-term impact of the alliance on competition, not to provide special protection from the immediate challenges of the economic cycle, with which every other airline has to deal with."

FMI: www.virginatlantic.com, www.britishairways.com, www.aa.com