British Midland’s new links with Lufthansa and its Star alliance reflect the growing and inevitable global trend towards consolidation in the airline industry, British Airways said today, calling on Brussels for a clear airline policy taking proper account of the new world of alliances.

British Airways commented: “Alliances are a natural progression. Provided they are allowed to develop on a fair and equal basis, they will lead to greater efficiencies and improved services, and that’s good news for consumers.

“We don’t object to Lufthansa buying this stake in British Midland in principle. We don’t object to British Midland becoming a part of global alliance in principle. But we would expect these developments to be examined by the regulators for their effect as much as for precedents.

“Airlines throughout Europe must abide by the same laws and the same interpretation of those laws. They must be regulated on a fair and equal basis.

“We will be examining the British Midland agreements with Lufthansa and the Star alliance in detail - and the regulators` treatment of them. If we felt they were being treated on a different basis from others, we would vigorously seek the appropriate action.”

British Airways will be urging Brussels to establish and publish a clear and transparent policy on airline regulation, properly considering the implications of alliance development, and apply it on a fair and equal basis, no matter which airlines are involved or where.

The airline stated: “Regulation of the airline industry within Europe must adapt for the new era of global alliances and great changes they mean for competition in this industry. The benefits that flow from hub-against-hub, or network, competition are not widely understood by the regulators - and European airlines must be allowed to become members of global alliances unless they are to be left behind.

“Regulators must look again at alliances, their benefits and problems and adopt a new approach towards their regulation.”

Notes to editors:

1 British Airways is the only major airline in Europe facing full and fierce competition in its home market. The UK is Europe’s most competitive airline market. Apart from competition from home-based traditional scheduled airlines, the penetration of low-cost carriers in the UK is five times above the European average.

2 British Airways already faces more competition at its main hub than any other major European competitor at its home base. With British Midland, Star will have some 26 per cent of the slots at Heathrow - against 36 per cent held by British Airways, rising to 41 per cent with all oneworld carriers. Lufthansa has 70 per cent at Frankfurt, Germany`s Heathrow, and oneworld 4 per cent.
There is no chance whatsoever of other alliances getting a similar level of slots at Frankfurt, or at any Star hub, than Star has at Heathrow. Most other major European airlines have 50 to 60 per cent of the slots at their home base. British Airways competes with eleven other scheduled carriers between the UK and the USA alone.

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