ITB 2024 Special Reporting
Branson warns Obama against BA/AA merger.
Tuesday, 18th August 2009
Source : Virgin Atlantic
Sir Richard Branson, the founder and President of Virgin Atlantic, has written to the Barack Obama, to warn of the dangers to consumers if BA and American Airlines are allowed to effectively merge.

Friday 14th August marks the first anniversary since troubled carriers BA and AA applied to regulators for permission to fix prices and schedules, and share marketing and operational data.

Regulators in the US 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 US.

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

"Your Administration is nearing a defining moment in US 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 US 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-US 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.

Branson's statement, key fact for consumers, five myths about BA/AA and more details can be found at www.virginatlantic.com/monstermonopoly
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