Airline disputes proposed alliance

It could be a bumpy ride.

Norwalk-based Virgin Atlantic Airways has taken issue with an airway alliance.

Virgin has called for the attention of regulators in Europe and the U.S. concerning a proposed alliance between British Airways, American Airlines and Iberia Airline. Virgin believes the alliance presents a monopoly and should not be allowed to fly.

Virgin released a statement saying, “The proposed BA, AA and Iberia alliance would have appreciable and lasting negative effects for both long-term competition and consumers. It would allow a combined BA, AA, Iberia to dominate on routes between London Heathrow and the U.S. and, compounded by the considerable barriers to entry, to use their combined market power to weaken competitors’ offerings, thereby further strengthening and entrenching their own dominance to the detriment of consumers.”

 

Willie Walsh, CEO of British Airways said, “I think it’s well recognized that Heathrow is full and the opportunity to acquire additional slots, while not impossible, is difficult.”

 

Virgin Atlantic said it agrees with Walsh that Heathrow is full, but said U.S. and European Union regulators must still weigh in on any decisions.

Commenting on take-off and landing slots, Virgin Atlantic said in its submission, “We urge the European Commission to recognize that even extensive slot remedies on their own would not make this a suitable case for an individual exemption. Slot remedies alone could not reinstate an effective level of competition nor address the substantial negative effects which would arise from the proposed alliance.”

Recently CEO of American Airlines Gerard Arpey criticized a potential joint venture between Japan Airlines and Delta and said high market shares and large slot holdings by airlines would pose a major threat to competition.

Steve Ridgway, CEO of Virgin Atlantic, said the Delta and Japan Airlines joint venture would result in a total capacity share on U.S.-Narita routes 10 percent smaller than the 64 percent share that BA, AA and Iberia would hold on U.S.-Heathrow routes.

“We call on regulators on both sides of the Atlantic to listen carefully to what Messrs Walsh and Arpey now have to say about the constraints at London Heathrow and acceptable market shares for alliances, which contrasts sharply with the positions they have taken in trying to drive through their proposed alliance,” said Ridgway.