Sir Richard Branson of Virgin Airlines is once again at odds with his main rival British Airways and has opposed the British Airways/American Airlines transatlantic alliance on the grounds that it poses more dangers than other flights because it would control more than 60% of flights to Boston, Chicago and New York’s JFK airport. Flying to and from Heathrow Airport which is Europe’s busiest airport would create a monopoly and unhealthy dominance with BA/AA between Heathrow and the USA.
He wants a hearing to be called because British Airlines wants to establish an alliance with American Airlines and Iberia (the Spanish airline) which would enable them to share revenue and scheduled flights across the Atlantic (already being investigated by the European Commission).
The US Department of Transportation has not yet agreed to grant British Airways and American Airlines the anti-trust immunity which is necessary to complete their agreement. BA has been struggling with a pre-tax loss of £148 million in its first quarter this year and so wants a swift completion to the agreement, but denies any news of a hearing.
Richard Branson argued there were not enough slots at Heathrow to allow significant new competition, but Willie Walsh, the chief executive of British Airways has countered back saying that Virgin boss should face realities of the economies of the airline industry. He cast a gloomy forecast for the airline industry stating there were no visible signs of improvement.
With BA’s loss being its first since it was privatised 22 years ago, he claims that the Open Skies agreement which allows European airlines to fly to the USA from anywhere in the European Union is necessary, considering the competition from two other alliances namely SkyTeam, which is between Air France and Delta and Star Alliance a joint venture between Lufthansa, United Airlines and BMI.