Branson vows to fight BA alliance 'tooth and nail'

0 Comments | Sunday Herald, The, Aug 5, 2001 | by Ian Fraser

Richard Branson, chairman of Virgin Atlantic Airways, has vowed to fight British Airways' proposed new alliance with American Airlines, even though some analysts believe that the alliance will eventually gain clearance.

"This proposal was withdrawn three years ago and nothing has changed since then," said Branson. "We will fight it tooth and nail."

Some airplanes in Branson's Virgin Atlantic Airways fleet still bear the slogan "No way BA-AA".

Branson sees the planned tie-up as an attempt by BA and American to use their dominance to destroy competition in flights between Britain and the United States.

But BA and American Airlines argue that competition on transatlantic routes has intensified since regulators vetoed their earlier proposed pact three years ago. They point to code sharing deals in rival groupings such as Star Alliance, which includes Lufthansa and United Airlines. Delta Air Lines and Air France head another transatlantic alliance and Northwest Airlines works with the Netherlands' KLM. These groupings have benefited from US anti-trust immunity.

But BA and American Airlines say they intend to file for US anti- trust immunity this week, and to seek competition clearance from both the European Union and UK.

American, the world's largest airline, and BA, Europe's largest, said they would step up cooperation in their Oneworld Alliance and set up nine transatlantic routes as a joint venture with shared profits.

"We simply want to have the same commercial advantages and deliver the same consumer benefits that rival airline alliances and their passengers enjoy," BA chief executive Rod Eddington and American Airlines chief Don Carty said in a statement.

The joint venture routes envisioned in the new BA and American alliance would go beyond codesharing.

Analysts said the plan, if approved, could boost the two airlines' combined earnings by hundreds of millions of dollars.

The main sticking point in the past has been about how other rivals should gain access to slots at Heathrow, the world's busiest international airport.

Shares in BA rose about 3% after the news but fell back after the airline said its traffic fell during July.

Under the current US-UK agreement only BA, American, United and Virgin can fly from Heathrow to the US.