Rivals say open skies is no answer to BA tie-up
Tuesday 16 July 1996
In an unprecedented lobbying effort, Delta, United and Continental Airlines told the Commons Transport Select Committee that the damage to competition would far outweigh any gains from the chance to bid for slots to Heathrow. The hearing follows Richard Branson's outspoken attack on the deal and increases the pressure on UK and US authorities. The Office of Fair Trading is also investigating.
"We would sacrifice the opportunity to compete for Heathrow in order to stop this deal going through," Robert Coggin, Delta's executive vice- president of marketing, said. The BA-American tie-up involves merging ticket sales, revenues and marketing operations.
Its critics say it would increase BA's share of the Heathrow-US market from 42.5 to 60 per cent. On routes from Heathrow to Miami and Boston, their combined market share would increase to 100 per cent.
The alliance requires anti-trust immunity in the US. In previous cases, US government approval has depended on an open-skies agreement allowing airlines to trade slots.
Rivals insisted yesterday that this would not prevent BA-American from using predatory pricing on the most lucrative routes and monopolising valuable ground facilities at Heathrow to squeeze competition.
United Airlines has a similar tie with Lufthansa which recently received US anti-trust immunity after the conclusion of an open-skies deal with Germany.
A spokesman for BA said: "The criticism is a bit rich from airlines who already have deals themselves. Why shouldn't what's good for them be good for us?"
But United, Delta and Continental all argue there is greater competition for routes between Frankfurt and the US. Delta claimed it had "no problems with slots to Frankfurt compared with the situation at Heathrow."
United said it had 34 per cent of services from Frankfurt to the US, compared with Delta's 23.6 per cent. BA prefers to compare European routes in general rather than focusing on its privileged position at Heathrow.
BA said: "This deal can only lead to lower fares, more competition and greater choice."
Continental, United and Delta last night denied they were combining lobbying efforts in an attempt to sink the alliance. But they admit their campaign against BA was unprecedented.
"It's unprecedented, but so is this proposed deal. It's breathtaking, it's so ludicrous," said Barry Simon, Continental's vice-president for Europe.
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