Monster Monopoly

AA/BA alliance a "monster monopoly"?

Virgin Atlantic president Richard Branson has called upon the US Department of Transportation to reject a proposed alliance between American Airlines, British Airways and three other airlines, claiming that it would form a "monster monopoly" that would pose a serious threat to the survival of rival airlines and would mark the end of "red-hot competition." In an address to the National Press Club in Washington last week, Branson warned that a tie-up would be "disastrous" for consumers, and highlighted the fact that American and British Airways, combined with their oneworld alliance partners, would control almost half of the takeoff and landing slots at London Heathrow. "It doesn’t make sense to encourage even less competition by allowing dominant carriers to increase their stranglehold by setting prices together and agreeing schedules," he said. "...Our arguments are as strong today as they were on the previous two occasions when BA and AA tried to merge. Their dominance has grown even further between then and now." Under the proposed alliance, American, British Airways, Finnair, Iberia, and Royal Jordanian Airlines would receive antitrust immunity on transatlantic flights - something that has already been granted by the DOT to carriers in the rival SkyTeam and Star alliances. "This permission or antitrust immunity has already been granted to 10 airlines in Star and six in SkyTeam - including the recently merged and now world's largest airline Delta," said an American spokesperson, in an email to AFP, adding that the proposed alliance was "simply seeking to level the playing field." But Branson predictably did not agree with this logic, stating: "I understand that it is tempting for regulators to say, 'We’ve given dispensation to one alliance, we should do likewise for others' as they’ve done previously. But they must resist temptation. Each anti-trust application must be considered on its merits and it’s clear that the application for a merger between BA and AA must be rejected." Branson has lobbied against proposed two AA/BA tie-ups in the past (1997 and 2001), both of which failed due to regulatory concerns. American's argument that 'it's only fair that we get this too' certainly has credit to it, but the sticking point is likely to be Heathrow - the AA/BA presence there is already enormous. The DOT has six months to issue a ruling, so we'll just have to wait and see if Branson is successful in putting down a proposed AA/BA alliance for a third time. Last month, former American CEO Robert Crandall said that "any objective observer would have to look very hard to find a way in which alliances have benefited consumers." He also believes that "airline alliances have been far more beneficial for international airlines than for US carriers, and for that reason alone, I think they should be disallowed." Interestingly, he also noted that if Star Alliance and SkyTeam are allowed their own antitrust agreements, "AA-BA should be permitted as well."

Virgin America's top 10 requested cities

Virgin America recently released a list of the ten cities that are most requested for new VA service. The survey is still up, so if you don't see your preferred route listed below, you can still vote.

1. SFO- Chicago
2. SFO- Honolulu
3. SFO- Miami
4. LAX- Miami
5. SFO- Portland
6. LAX- Chicago
7. SFO- Phoenix
8. JFK- Miami
9. SFO- Denver
10. LAX- Portland

Many of these routes are currently flown only by a few legacy carriers. The San Francisco - Chicago and Los Angeles - Chicago routes, for example, are currently flown only by United and American. JFK - Miami is flown only by American and Delta, and American has a monopoly on the San Francisco - Miami and Los Angeles - Miami routes. Even though Virgin America would certainly be taking a risk by flying into the fortress hubs of legacy carriers (United in Chicago, American in Miami, etc.), their relatively premium product would probably attract quite a few unsatisfied AA and UA customers. Those are the routes (LAX-MIA, SFO-ORD) that would be best for Virgin America to fly, especially as they would avoid head-to-head competition with other low cost carriers (i.e. Frontier on SFO-DEN).

Lufthansa's bmi takeover drama continues

Although the takeover of British carrier bmi (formerly known as British Midland Airways) by German airline Lufthansa was approved on thurday by European Union antitrust authorities, the German newspaper Suddeutsche Zeitung yesterday report dthat Lufthansa is backing out of the deal, apparently after taking a closer look at bmi's rather precarious financial situation and deciding that the price would be too high. bmi, which lost $151m in 2008, was 30% (minus one share) owned by Lufthansa, 20% by Scandinavian Airlines, and 50% (plus one share) by former British Midland chairman Sir Michael Bishop. Last October, Lufthansa announced that it would be acquiring Bishop's stake in bmi, meaning that the German carrier would be effectively controlling bmi. bmi is one of the latest of Lufthansa's potential acquisitions; it already wholly owns Italian carrier Air Dolomiti, German low-cost carrier Germanwings, Swiss International Air Lines, Lufthansa Italia, and regional carriers Eurowings and Lufthansa CityLine, among others (it will wholly control Austrian Airlines pending approval by the EU later this year). It also owns significant stakes in bmi, Luxembourg's national airline Luxair, Belgian carrier Brussels Airlines, and jetBlue.

UPS retiring DC-8

0 Comments Published on Saturday, May 16, 2009 at 9:52 AM.

photo by So Cal Metro

Another aircraft retirement took place recently as UPS operated its final DC-8 flight into Louisville, KY Tuesday morning, receiving a 'water cannon salute' from fire trucks. Last month, UPS decided to accelerate the retirement of its 44-strong DC-8 fleet as a cost-cutting measure; originally, the planes were due to be phased out by 2013. Most of the airline's DC-8s were around 40 years old, and it will certainly sad to see the type go. DC-8s have been absent from scheduled passenger aviation in the US for almost twenty years now; generally speaking, many older types of planes (DC-10s, 727s) often find new lives hauling packages after they're through hauling passengers.