Virgin Atlantic today welcomed the US Department of Justice`s report which confirms the airline`s fear that the proposed BA/AA alliance would lead to higher fares and reduced service. However, Virgin is disappointed at the proposed conditions for approval of the alliance which Virgin believes would be inadequate to counter its anti-competitive impact.
Virgin Atlantic will study the DOJ report in detail but makes the following initial comments:
* Virgin particularly welcomes the DOJ finding that slots are even harder to acquire at Heathrow now than in 1996 when this alliance was first proposed. This is in direct contradiction to statements made by Lord Marshall, Chairman of British Airways, in recent weeks that competitors will readily be able to find slots to compete against BA/AA.
* Virgin welcomes the DOJ finding that the alliance threatens a substantial loss of competition which would likely result in higher air fares and reduced service.
* Virgin welcomes the recommendation not to allow BA and AA to include services between London and Dallas and London and Chicago in their alliance.
* Virgin is disappointed that DOJ recommends that only 126 weekly slots be given up by BA/AA to remedy the anti-competitive impact of their alliance on London - New York and London - Boston. Virgin feels that BA/AA should not be allowed to operate jointly on these key transatlantic routes at all and if so only with a much higher slot divestiture.
* Virgin welcomes the DOJ finding that the business travel market would be hardest hit by the alliance and looks forward to suitably tough remedies in this area.
Richard Branson, Chairman of Virgin Atlantic Airways, repeated his pledge to continue to fight the proposal;
We will fight it tooth and nail. This is no normal codeshare application BA and AA are applying for anti-trust immunity quite simply because they want to act anti-competitively. Between them they control over 60% of the Heathrow-US market, 100% on several key routes and around 70% of peak-time slots used for North Atlantic services. If they`re given anti-trust immunity to operate on some of the busiest sets of routes on the planet they will collude to:
* use their overwhelming dominance to destroy competition
* raise prices
* reduce service.