Virgin Atlantic’s objections to the BA/AA tie-up
April 12th, 2010 by elisa

Virgin Atlantic has urged The European Commission to consider the impact on passengers before approving a transatlantic tie-up between British Airways and American Airlines.

Virgin claims that BA/AA will use their exemption from competition laws and their “overwhelming dominance” to destroy competition, raise prices and reduce choice.

Airline president Sir Richard Branson said: “I remain extremely concerned that consumers are not being put first in the European Commission’s decision-making process.

“No evidence of consumer benefits has been put forward. The Commission needs to throw out the commitments proposed by BA and AA which are insufficient in allaying the Commission’s concerns set out in its Statement of Objections.

“The problems with the remedies are wide-ranging – they are totally inadequate, both in scope and substance.

“A significant failing of the proposals is that there is no ‘fix it first’ approach, which would protect consumers from abuse by ensuring that competitors take up the remedies before BA and AA could start their collusion.

“It is clearly in BA and AA’s interests to offer the least attractive remedies possible so they do not face any additional competition.”

Key issues which Virgin Atlantic identifies within its submission to the Commission include:

· The remedies fail to adequately address the significant barriers to entry including slot constraints, frequency advantage, hub dominance and access to connecting traffic that the Commission itself identified in its Statement of Objections.

· The number of slots are insufficient and the slots are not to be provided from existing frequencies – BA and AA will continue to have “massive” frequency advantage.

· Releasing slots only on a leasehold basis disincentivises new entry and the risk that competitors will end up paying for the leases would mean that not only will the competitors have to right the wrong but they may also pay for the privilege.

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