6-Apr-2010 3:43 PM

Virgin Atlantic to demand European Commission denies proposed BA/AA antitrust immunity

Virgin Atlantic President, Sir Richard Branson, plans to demand the European Commission block British Airways and American Airlines’ proposed antitrust immunity alliance (telegraph.co.uk, 03-Apr-2010/Bloomberg, 04-Apr-2010). Sir Richard stated there are a number of reasons as to why the planned agreement is “quite unbelievable”, including concerns over market dominance. Sir Richard rejected the carriers’ claims the alliance would lead to lower fares. He added his issue is not with BA and American, but instead with the US Department of Transportation for approving the alliance.

Virgin Atlantic:
“The biggest damage would be for consumers who would see choice and service reduced dramatically as the two of them [BA and AA] exploit what will be a monopolistic position because of the clout they will have with travel agents and corporate customers. We will then be competing on an incredibly unlevel playing field. It will be much harder for us to add new routes and frequency to the US. In most cities BA/AA will be entrenched as the dominant carriers and they will cut off traffic so any expansion would have to be to non-US markets – Africa and the Far East for example. I think the same would apply to other carriers… Inevitably, when people control 60-70% of a market they can pretty well charge what they want. They will be allowed to sit down in a cosy room together, the two biggest carriers in the world will be allowed to collude on fares completely legally and they will have anti-trust immunity…I don't necessarily blame American or BA. It is up to chairmen of companies to try to dominate, to try to create monopolies, and if they get away with it they have done their job and if they try to stop monopolies being created they've done their job as well. It is for the government and regulators, it is their principal purpose of being elected into government to make sure that they are there for the consumers' interest and they are there to ensure that competition continues,” Sir Richard Branson, President. Source: telegraph.co.uk, 03-Apr-2010.