Sir Richard Branson, the founder and President
of Virgin Atlantic, has written to the President of the United
States, Barack Obama, to warn him of what Sir Richard
believes are the dangers to consumers if British Airways and American Airlines
are allowed to effectively merge.
In his letter to President
Obama, Sir Richard Branson said, "Your Administration is
nearing a defining moment in US airline competition policy. The
choice is a stark one that could last for decades: whether to side
with the consumer and competition or whether to approve the
virtual merger of BA and AA."
"Never before has the US
Government approved an anti-trust immunity application where
barriers to entry are so significant that any new meaningful
competitive entry is virtually impossible. Take-off and landing
slots at London’s Heathrow Airport are scarce and virtually
impossible to obtain at times required for competitive
transatlantic services. In the rare instances that slots become
available, they are prohibitively expensive for airlines in good
economic times and out-of-reach in challenging ones."
and AA are seeking anti-trust immunity because it will enable them
to squeeze existing Heathrow-US competitors off key routes. If
BA/AA win, it will be an unprecedented loss for consumers – prices
will increase as the monopolists wield their power without
competitive pricing pressure and reduced competition inevitably
leads to worse customer service."
"BA and AA are
opportunistically suggesting your Administration should suspend
rigorous competition analysis due to the current economic
downturn. You should reject this self-serving sympathy ploy. Every
carrier faces financial challenges and should be adjusting their
business plans and costs without a free meal ticket from
"Mr. President, I am optimistic that your
Administration will stand on principle, rigorously subject BA/AA
to exacting competition analysis and ultimately choose to stand on
the side of consumers and competition by rejecting BA/AA’s
anti-trust application. Now, more than ever, consumers are
counting on you to put their interests first."
to proceed, Branson says BA/AA would have highly dominant market shares on key
routes, such as Heathrow-Boston 80%; Heathrow-Miami 70%;
Heathrow-Chicago 68%; Heathrow-JFK 62%; Heathrow-LAX 48%. It would
also have 100% share on Heathrow-Dallas Fort Worth.
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