BA link-up with AA will not kill competition: Willie Walsh
Published: 12 Sep 2008
Competition will not disappear if British Airways' partnership with American Airlines goes ahead, according to Willie Walsh, chief executive officer, British Airways.
Walsh, in an article contributed in The Telegraph, said BA's operation with American would improve customer service. It would provide not only better connections but also greater access to discounted fares, reciprocal frequent flier benefits and, for corporate customers, more flexible and geographically extensive deals.
"And perhaps the most fundamental customer benefit is that the partnership would create a stronger business, able to withstand the present economic tempests and provide quality services and good-value fares on a long-term basis," wrote Walsh. "Virgin Atlantic thinks none of this matters. It seems to believe that aviation's competitive environment has not changed since the 1990s and that the point of transatlantic regulation is simply to give Virgin Atlantic an easy life. There's only one answer to that. No way, VA."
Referring to two alliances – Star (which has 35pc of EU-US traffic) and Skyteam (28pc), Walsh said both
alliances have been granted anti-trust immunity by the regulators, allowing them to operate effectively as single airlines on transatlantic routes.
"That is the same legal status British Airways and American Airlines have applied for, supported by Iberia, so that our oneworld alliance can compete fairly with the Big Two. Operating as separate carriers, our combined share of the EU-US market currently stands at 21pc," he wrote. "Our proposed partnership would allow us to create real competition on many routes currently dominated by Star and Skyteam. This is especially important for customers who want to travel beyond main hubs, including people who live in the UK regions. For example, for journeys between Glasgow and Las Vegas, the Star alliance currently has 74pc of the market."
"If you look at transatlantic routes direct from the big European hubs, the dominance of Star and Skyteam is equally apparent. Star's share of seats to the US from Lufthansa's hub at Frankfurt is 80pc. Skyteam's is 85pc from KLM's base at Amsterdam and 73pc from Air France's hub at Paris Charles de Gaulle. With American, our combined share from Heathrow is 51pc."
"[Sir] Richard Branson likes to pretend this level of market share would be a "monster monopoly". He knows a good deal about monopolies. With help from taxpayers, he has run a real one on fast trains between London and Manchester since 1997. And now he is talking about establishing another one by taking over Gatwick airport. The truth is that transatlantic competition is more intense at Heathrow than at any other European airport."
"Since Open Skies came into effect, there are nine airlines flying to the US from Heathrow. The second largest is Virgin Atlantic. And the competition is growing. Only this week, Continental announced plans to increase its Heathrow transatlantic schedule from the end of next month."
Comments
You must be logged in to post comments.
Pitkin said on 12 Sep 08:
My oh my. Willie Walsh seems to be quite defensive.
I am only a passenger and a reader of newspapers. I have no inside knowledge of either British Airways or American Airlines. With that said, it appears from a distance that there have been severe management problems at both airlines in recent years.
My impression is that Branson is more honest and forthright than his counterparts at other airlines.