All systems Go as BA blasted by rivals

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The Independent Online
BRITAIN'S newest airline took to the skies yesterday to a blast of opposition from competing carriers - and with the boss of its keenest rival on board.

Go, the low-cost airline set up by British Airways, launched its maiden flight from Stansted to Rome. But research by The Independent reveals that competitors already offer lower fares on all three of Go's initial routes.

Among the 147 passengers on the inaugural flight was Stelios Haji-Ioannou, chairman of the new airline's main rival, easyJet. He was accompanied by six easyJet staff, all fare-paying passengers, dressed in the company's distinctive orange uniforms.

Last week easyJet sought an injunction against Go's plans, arguing that British Airways was abusing a dominant position in the market. The move failed, but further legal action is planned.

Mr Haji-Ioannou accused BA of using its commercial muscle to wipe out competition: "Go has been given permission by BA to lose pounds 29m and then close in three years having put its rivals out of business. You only have to look at BA's track record to see how predatory they are."

A second airline executive on the maiden flight was Barbara Cassani, the chief executive of Go. A spokesman for Go denied that BA had set up the company merely to drive other low-cost airlines out of business. He said: "The low-cost market is set to quadruple in the next five years and there is huge potential for growth".

Go has been advertising heavily its fares of pounds 100 return, including airport tax, to three cities: Rome, Milan (where flights begin today) and Copenhagen (starting 5 June). Go is, however, flying between the inconvenient airports of Stansted and Milan Malpensa, rather than the more popular gateways of Heathrow and Linate. And although the base price is likely to be maintained for some seats, the overall level of fares is likely to rise as soon as Go is established. Low-cost airlines make profits by careful yield management, making the maximum revenue possible from each seat while attempting to fill every plane.

The summer of '98 could be the best yet for Britain's air travellers, as the arrival of Go has stimulated a fares war on European routes. Since Go announced its pounds 100 flat fare, competitors have responded with even lower prices. To Rome, Debonair is offering a fare of pounds 99 return from Luton, while Richard Branson's Virgin Express has come in at pounds 95 - though passengers have to change planes at Brussels.

The losers in the battle for bargains are likely to be the established full-service airlines, including British Airways itself - whose full economy fare from London to Milan is pounds 443.

Last week easyJet convinced a High Court judge that it had an arguable case against BA for an alleged abuse of dominance in cross-subsiding Go.James Rothie, a spokesman for the company, said: "Either they are a standalone company or they are being subsidised by BA and are therefore part of BA and in that case their prices should reflect that."

Business, page 24