British Airways becomes a campaign issue

But the row should not be about Europe - the real themes are large but domestic

What could be juicier? It's a Euro-sceptic's dream. Neatly timed for the election, a tailor-made row with Europe. The villain is not merely a foreigner, but a European Commissioner who threatens to take Britain to court and has the backing of fellow Commissioner Neil Kinnock.

The issue is a deal with American Airlines which will increase the domination of British Airways, the dashing success story of the Government's privatisation programme, as a global force, and which the Commission wants to unravel. Surely it's a gift to the Tories, just the chance John Major and his President of the Board of Trade, Ian Lang, need to show that they are ready to stand up to Brussels.

That's certainly the version currently running nightly in the Tory tabloids. And it isn't completely baseless. It wasn't necessarily all that smart for Karel Van Miert, the EU's Competition Commissioner, to threaten court action in his otherwise rather persuasive letter expressing concern about the BA American deal. Some of those criticising Mr Van Miert seem to forget that he is acting to enforce competition in the single market - the one aspect of the EU to which Margaret Thatcher, among many others, wholeheartedly signed up. There are big arguments among lawyers over whether it is a matter of EC competence at all. The Labour Party, for example, in contrast to its former leader, cautiously accepts the Government's argument that the Commission does not have the authority to decide whether the deal is or isn't competitive. And it rankles that for too many years European aviation wasn't exactly a showpiece of free competition. Artificially high fares and a history of some pounds 7.5bn in EC-sanctioned subsidies to bale out national airlines don't exactly inspire confidence in the Commission as the traveller's best friend.

But the primary row isn't, or shouldn't be, about Europe at all. The real themes are large but domestic: privatisation and how it was carried out; competition policy; the influence of industry on the political process. The two main business players, Bob Ayling, BA's chairman, and Virgin's Richard Branson, are figures so big that politicians in both the main parties would cheerfully sell their own grandmothers in return for a pre- election endorsement from either. And it isn't at all clear that this is going to be such an easy issue for the Government in the run-up to the election.

The bald facts, unlike everything else in this story, are relatively simple: British Airways currently operates 244 flights a week from Britain to 22 US airports. American Airlines runs only six fewer, between seven US airports to 12 destinations in Europe. Under an "alliance" concluded with the US airline, BA will stop competing with American on all these routes and they will both co-operate instead, sharing the undoubtedly handsome profits between them.

The Office of Fair Trading, which looked at the deal, accepted that it could go ahead without a reference to the Monopolies Commission provided that British Airways gave up - by selling rather than donating - 168 "slots" (or 84 return journey routes) to other airlines. The main rival, Virgin, is arguing ferociously (and, naturally, in its own interest) that this stipulation is nowhere near stringent enough to guarantee competition, that the alliance will control up to 70 percent of the transatlantic market, that prices will drop at first to deter new entrants to the market, and then rise steeply over subsequent years, and that the deal is just plain non-competitive. So, too, do BA's other rivals, and so does Mr Van Miert, who has pointed out that on 13 routes the two airlines will now enjoy a 100 per cent monopoly and on some others, such as London-New York, London- Boston and London-Chicago, an 80 per cent one.

The Consumers' Association, in a fairly devastating submission to the OFT, warned that the deal would "act to limit real, effective choice for consumers on transatlantic routes". It also warned that the "open skies" agreement which the US authorities are insisting must be a price for any deal - and which Virgin claims will offer rival US airlines access to Europe without widening access to the internal US market - should be struck in the interest of consumers and not "as a response to airline directed pressure".

Whitehall gossip has it that Lang is quite sympathetic to the competition argument but has been under heavy pressure from Michael Heseltine, a man who tends to think that in industry big is beautiful, to OK the deal. There have even been dark - and wholly unsubstantiated - hints that Ayling's generous involvement with the millennium celebrations may be connected with the Government's backing. But you don't have to buy conspiracy theories to recognise that, after several years of ruthless campaigning to fight off competition in the airline industry, British Airways, from Lord King on, have been very big players indeed.

However, the real problem is that British Airways was privatised in something so near monopolistic form, and given overwhelming advantage in terms of "slots" at Heathrow, the world's busiest airport. Maybe that was necessary to get the flotation of what had been an ailing state company off the ground. But it raises a real question over whether, having gone from success to success, it should be operating on a more level playing field. And that's a particularly sharp choice for the party of competition. It would be odd if commercial airline passengers did not even enjoy the choice which ministers say is so important for consumers of the state education system. Lang should refer the deal to the Monopolies and Mergers Commission without delay.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksNow available in paperback
Arts and Entertainment
Babysitter Katie and Paul have terse words in the park
tvReview: The strength of the writing keeps viewers glued to their seats even when they are confronted with the hard-hitting scenes
News
i100
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
Sport
England’s opening goalscorer Alex Oxlade-Chamberlain battles with Scotland’s Charlie Mulgrew
FootballEngland must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Life and Style
Make-up artists prepare contestants for last year’s Miss World, held in Budapest
fashion
Sport
Wigan Athletic’s back-of-the shirt sponsor Premier Range has pulled out due to Malky Mackay’s arrival
Football
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Argyll Scott International: FP&A Manager Supply Chain

Benefits: Argyll Scott International: Argyll Scott is recruiting for a Permane...

Austen Lloyd: Commercial Property NQ+

£30000 - £50000 per annum + EXCELLENT: Austen Lloyd: COMMERCIAL PROPERTY SOLI...

Argyll Scott International: Retail Commercial Finance Analyst

Benefits: Argyll Scott International: Due to further expansion, a leading inte...

Langley James : Senior Technician; Promotion & Training Opp; Borough; upto £32k

£27000 - £32000 per annum + training: Langley James : Senior Technician; Promo...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

Bill Cosby rape allegations explained

Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

You know that headache you’ve got?

Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

Michael Dawson: I’ll thank Spurs after we win

Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

Frank Warren column

Dr Wu has big plans for the professionals yet he should stick to the amateur game
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines