Virgin claims BA/AA is a ‘stitch up’

Virgin Atlantic continues its angry response to talks of a BA/AA alliance by warning that US consumers would be harmed by the dominance of a BA/AA stranglehold on JFK and Heathrow Airports.

Speaking at the International Aviation Club in Washington, Steve Ridgway, the Chief Executive of Virgin Atlantic, said:

“BA/AA isn’t just another alliance. It is an attempt to stitch up the most important long-haul routes from Europe’s most important airport, London Heathrow. BA and AA want to roll back the successes of deregulation and liberalisation in international aviation. In the case of BA, the lack of anti-trust immunity didn’t stop them achieving a 10% operating margin last year. BA and AA want to have their cake and eat it, at consumers’ expense.”

Virgin suggests that BA/AA would have a monopoly or be dominant on some of the busiest and most profitable routes between the US and Heathrow. They say BA/AA would control 63% of the capacity between JFK New York and Heathrow; 66% between Chicago and Heathrow; 79% between Boston and Heathrow; 75% between Miami and Heathrow; and 100% between Dallas Fort Worth and Heathrow.

Steve Ridgway added:


“Facts are stubborn things - while BA and AA have proclaimed that US carriers now have “free” access to Heathrow, public financial filings show that Continental had to pay $209million for four Heathrow slot pairs, or over $50million per roundtrip flight. “Free” access to Heathrow? Hardly. Also, with JFK recently joining the Heathrow club as a closed airport with virtually no competitive entry, red flags should be flying high on both sides of the Atlantic.

“BA argues that it needs to link up with American because SkyTeam and Star are dominant at their hubs. But the fact is that BA on its own is already bigger between Heathrow and the US than Star is from Frankfurt or SkyTeam is from Paris - and that’s before it gets together with American Airlines. Heathrow, which is totally full, accounts for nearly a quarter of all passengers traveling between Europe and the US.

“As we’ve seen with the BAA ownership of London airports, protected monopolies don’t invest but simply raise prices as service levels decline. It’s not very surprising - after all monopolies don’t need to invest to stay ahead of the competition - by definition, there is no competition.”

Virgin Atlantic has launched its new informational website for consumers showing why it feels passengers will lose out.

In his speech, Steve Ridgway also said that Virgin Atlantic had “cushioned itself” well for any downturn. In the first six months of its financial year (March - August 2008), Virgin Atlantic, and its tour operator arm Virgin Holidays, saw revenues increase by 15% from £1.19billion to £1.37billion. Pretax profits rose from £43million to £72million. Cash in the bank increased to £688m at the end of the first half of the year (2008/09), compared with £599m at the end of the last financial year (2007/08).