BRANSON CLAIMS VICTORY OVER BA IN “PUT UP OR SHUT UP” SLOT DEBATE

Sir Richard Branson today claimed victory in the long-running debate with British Airways over the availability of slots at Heathrow airport. Following repeated claims by BA that slots are available to competitors who wish to operate services to and from the US Richard Branson challenged BA to make good on that claim.

BA was invited to provide ten pairs of slots at Heathrow. Virgin Atlantic offered to pay £2 million to charity for each pair. In the event that BA failed to do so Virgin suggested that BA should pay £2 million per pair, £20 million in all, to charity.

The deadline passed at close of play on Friday 14 December with BA failing to supply even one pair of slots. Richard Branson then wrote to Lord Marshall, Chairman of BA, and said:

“I am saddened but certainly not surprised that, having reached the end of the challenge period, British Airways has not been able to supply Virgin Atlantic with even one pair of slots at Heathrow.

“It does, however, settle our argument once and for all. Both BA and American Airlines have disingenuously claimed that competitors can easily find slots at Heathrow for services to and from the US. The truth is that slots are not available at Heathrow for transatlantic services. Having failed to rise to this challenge I do not expect to hear BA or AA repeating this claim ever again.

“By my reckoning having failed the challenge BA should now pay £20m to charity in time for Christmas. I look forward to hearing that you have.”

The outcome of this challenge has serious implications for BA’s proposal to form an anti-competitive alliance with American Airlines. Both BA and AA have argued that their proposals should be approved unconditionally by the US Department of Transportation, the UK Office of Fair Trading and the European Commission (all of whom are reviewing the application). The outcome of this challenge illustrates the difficulty competitors would face in attempting to compete with the combined strength of BA and AA. Richard repeated his pledge to fight the proposal:

“We will fight it tooth and nail. This is no normal codeshare application – BA and AA are applying for anti-trust immunity quite simply because they want to act anti-competitively. Between them they control over 60% of the Heathrow-US market, 100% on several key routes and around 70% of peak-time slots used for North Atlantic services. If they’re given anti-trust immunity to operate on some of the busiest sets of routes on the planet they will collude to:

· use their overwhelming dominance to destroy competition, raise prices, and reduce service.”