Airlines Information

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."

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."