Branson: EC taking 'lazy approach' to AA/BA/IB review; considers 'legal' action

Virgin Group Chairman Richard Branson said he will consider some form of "legal process" to block the British Airways/American Airlines/Iberia transatlantic joint venture if it is approved by the European Commission.

The oneworld partner airlines have been making efforts to appease EC concerns as it nears a final decision (ATWOnline, March 11). The US Dept. of Transportation already has granted tentative approval to the trio's request for antitrust immunity to share revenues and capacity. Branson long has argued that the tie-up would violate antitrust regulations and be damaging to the airline industry (ATWOnline, May 15, 2009). It also would present VG's Virgin Atlantic Airways with a formidable transatlantic competitor.

"We actually believe the Commission should just say, 'No way BA-AA'," he told the Financial Times yesterday. "The way the Commission is currently going about it is fundamentally flawed and misguided, and to be honest it's rather a lazy approach."

Branson argued that the EC should treat the proposed JV as a merger. "In every other way they'll be behaving as a single entity, so we believe that the Commission should be treating it as they would treat any merger situation," he explained. The EC has maintained it is reviewing a prospective "alliance" that does not fall under laws that would govern a merger.

"No evidence of consumer benefits has been put forward," Branson told the newspaper. He said AA/BA/IB's offer to lease at least four daily slot pairs at London Heathrow or Gatwick to competitors is "totally inadequate, both in scope and substance. . .BA and AA will continue to have massive frequency advantage."

Bisignani advises Japan to rethink airport policies, calls for cross-border mergers

IATA DG and CEO Giovanni Bisignani in Tokyo called on the Japanese government to "put its aviation house in order to compete in the Asia/Pacific market."

Following a meeting with Japanese Transport Minister Seiji Maehara, Bisignani said IATA supports the minister's vision "to increase the competitiveness of Japan's air transport sector" and praised the country's airlines and airports for working together to meet the organization's target to achieve 100% barcoded boarding passes by year end.

He was critical, however, of the plan to implement a ¥2,400 ($26) per-tonne charge for international operations at Tokyo Haneda, calling it unjustified. "Setting such a high charge for Haneda ignores the natural impact of added capacity to reduce unit costs," he said. "And it misses a great opportunity to drive efficiencies at both Haneda and Narita, which should compete on costs and services to serve the Tokyo market."

The airport situation in the Kansai region also needs to be sorted out, he said: "The five runways of Itami, Kansai and Kobe serve 36 million passengers at year. Singapore runs its successful hub serving 37 million passengers on just two runways and with much cheaper costs."

Bisignani pointed out that Japan is a mature market "on the doorstep of one of the world's fastest-growing aviation markets--China," observing that over the past decade the Chinese international market has grown from 500,000 seats per week to 1.4 million "while Japan has remained virtually unchanged with weekly international seats growing from 1.2 million to 1.3 million."

Separately, Bisignani said during a press conference in the Japanese capital that further mergers and consolidation among airlines are "a must" to improve competitiveness in an industry expecting a combined loss of $2.8 billion this year. "No other industry is so fragmented, so we have to consolidate in order to build more efficiency," he said.

The IATA chief called for regulatory support for barrier-free mergers across borders, saying that different legal frameworks have hindered extensive global industry consolidation. He declined to comment on a possible merger between United Airlines and US Airways, saying, "There are many conversations going on. Everyone is dating, but I make no comments on dating."

British Airways cabin crew start four-day strike

LONDON (AFP) – British Airways (BA) cabin crew launched a four-day strike Saturday, the second wave of action in a week as part of a bitter, long-running dispute over pay and conditions.
BA has pledged that more than three-quarters of its passengers -- or over 180,000 out of 240,000 -- will still be able to travel as planned during the walkout, which follows a similar three-day action last week.
Another 18 percent of its customers have been rebooked with other airlines, or have switched their travel dates to avoid the strike period, it said.
BA chief executive Willie Walsh said the "vast majority" of its staff were "pulling together to serve our customers and keep our flag flying".
"At the same time, I feel really sorry for those customers whose plans have been ruined by the Unite union's completely unjustified action," he added.
Amid growing hostility between BA and trade union Unite, whose members are staging seven days in total of strikes, the union claimed the cost to BA would be 100 million pounds (111 million euros, 149 million dollars).
"If you add together the cost of lost bookings, of revenue effectively transferred to other airlines along with BA passengers, the cost of (leased) aircraft and the cost of knock-on post-strike disruption, this is the ball-park area we are in," the union said in a statement.
By contrast, BA said Monday that a three-day walkout from last Saturday would cost seven million pounds a day and that an assessment of the full cost of the seven-day action could only be made after it was finished.
Talks between the two sides broke down eight days ago, on the eve of the first wave of strikes.
Walsh came under fire from leading academics in a letter to The Guardian newspaper published Friday.
The letter, signed by 116 industrial relations experts from universities across Britain, argued that Walsh's actions were designed to break Unite, which represents BA's 12,000 cabin crew.
They added that Walsh had withdrawn an offer which could have prevented Unite's strikes -- and used airplanes from fierce rival Ryanair to combat last weekend's strike.
BA has also axed highly-prized perks like big travel discounts for all striking workers.
"It is clear to us that the actions of the chief executive of British Airways... are explicable only by the desire to break the union which represents the cabin crew," the academics' letter read.
"What other possible interpretation can there be for Willie Walsh tabling an inferior offer to BA's previous one, or indeed his marshalling of resources, including those of bitter rival Ryanair, to undermine the action of his staff?"
BA issued a curt response to deny that it was seeking to break Unite.
"We reject the suggestion that BA's real objective is to break Unite," the carrier said in comments emailed to journalists.
BA is hoping to fly a full and normal schedule from London's City and Gatwick airports over the next four days.
At London Heathrow, one of the world's busiest airports, the carrier said it would operate 70 percent of long-haul and 55 percent of its short-haul flights.
The airline, which is attempting to merge with Spanish rival Iberia, said last month it expected to notch up a record loss in the current financial year due to weak demand for air travel.
In December, BA won a legal battle to prevent a 12-day walkout by cabin crew over Christmas and New Year after a judge ruled that a ballot of staff by Unite was invalid.
Prime Minister Gordon Brown has condemned the strike.
But with a general election expected to take place in May, the main opposition Conservatives have accused the government of a weak response to the strike because Unite is a major donor to Brown's ruling Labour party.

Strike begins as talks between BA, union collapse

LONDON – A three-day strike by British Airways cabin crew affecting thousands of travelers began Saturday after last-ditch talks between the airline's management and union leaders collapsed.
The walkout has forced BA to cancel thousands of flights, but it still hopes to operate around 65 percent of its international schedule over the period.
The Unite union has gathered some support from unions in the United States, Germany and Spain for its action — taken to protest a pay freeze and changes to working conditions — but the other unions have so far stopped short of pledging direct action that would affect BA's ability to refuel and service its planes.
A total of 1,100 flights out of the 1,950 flights scheduled to operate during the walkout will be canceled, but the airline has leased planes and crew from rival carriers to take up some of the shortfall.
At its Heathrow base, more than 60 percent of long-haul flights will operate, but only 30 percent of short-haul. At Gatwick, all long-haul flights and more than half the short-haul flights will run as normal.
"Tens of thousands of BA people stand ready to serve our customers," said BA Chief Executive Willie Walsh. "BA will be flying tomorrow."
Adam Huberman of Issta, a flight and tour agency specializing in trips to Israel, said he was taking 60 to 80 calls a day from passengers planning to travel to Israel before Passover, which starts March 30.
He said the strike couldn't have come at a worse time.
"It is the busiest time of the year," he said, adding that the agency had put on some flights of its own. "Some will be able to go but fares are obviously higher because it's so last minute."
Among others whose plans were affected were the Cardiff County and Vale of Glamorgan Youth Band from Wales, who are scheduled to play in a wind band festival at Carnegie Hall in New York on Tuesday.
Their scheduled Saturday flight was one of the ones BA has canceled, but after television and radio appeals — and a letter to rival virgin Atlantic — BA managed to get them onto alternative planes.
Picket lines will be mounted over the weekend at several entrances to Heathrow, but Walsh said he had "no concern whatsoever" about the threat of solidarity actions in other countries.
The U.S. International Brotherhood of Teamsters urged travelers to find alternatives during the strike.
"We are keenly aware of British Airways' operations in the United States and the cities served by the airline," the Teamsters, who represent 40,000 workers in the aviation industry, said in a statement. "We continue to look at this situation as it evolves and are keeping our options open."
Walsh said it was "deeply regrettable" that the union declined to accept a proposal on pay and working conditions from the airline, adding that offer would be withdrawn once the strike begins.
Unite joint general secretary Tony Woodley said that BA "does not want to negotiate and ultimately wants to go to war with this union."
The prospect of travel chaos in Britain in the run-up to the Easter break also intensified with news that railway signal workers voted in favor of a strike, joining rail maintenance workers. The Rail Maritime and Transport union has not called dates for a walkout of both groups of workers but has refused to rule out the Easter long weekend.
The prospective industrial unrest is an unwelcome turn of events for the ruling Labour Party on the eve of a national election.
Prime Minister Gordon Brown called for the strike to be called off immediately.
"The Prime Minister believes that this strike is in no one's interest and will cause unacceptable inconvenience to passengers," his office said in a statement.
"As the country struggles out of the recession, the last thing we need is the unions holding the country to ransom," said Theresa Villiers, the opposition Conservative Party's transport spokeswoman.
BA argues that the disputed changes — including a pay freeze in 2010, a switch to part-time work for 3,000 staff and a reduction in cabin crew sizes from 15 to 14 on long-haul flights from Heathrow airport — are critical for its survival. Unite argues it was not properly consulted on the changes.
BA said Friday it had offered to modify the changes, even though they had been approved by Britain's High Court, but Unite had declined to put the offer to its members to vote.
Analysts estimate that BA has already lost more than 25 million pounds because of canceled tickets and the cost of contingency plans, which include leasing fully crewed planes from other airlines.
Unite has a second, four-day walkout planned to begin March 27 and has said more strikes will be scheduled for after April 14 if the dispute is not resolved. It has pledged not to walk out over the busy Easter period.