大象传媒

BA's American dream

• Robert Peston
• 12 Aug 08, 06:38 PM

Such is the history of bad blood between and that this time Sir Richard Branson has launched a passionate attack on a transatlantic deal being negotiated by BA even before that deal has been formally announced.

It won't be too long before BA announces the details of a proposed co-operation agreement with BA and AA on Monday approached the for what's known as anti-trust immunity.

If granted, BA and AA would be able to share revenues, collaborate on prices, co-ordinate schedules and merge as much of their operations as is permissible without infringing the prohibition on overseas ownership of US airlines.

Details of what may be seen as a virtual merger will be announced this week, possibly tomorrow. But such is Branson's certainty that it will be a headache for Virgin Atlantic, that the Virgin founder has already written to the two presidential candidates, Obama and McCain, warning them that such a deal would be bad for consumers.

He believes it would give BA and AA an unfair advantage over the likes of Virgin Atlantic. And that ultimately it would lead to higher prices.

In the past, the Department of Transport has appeared to agree with him. When in 2001 BA and AA sought permission for extensive collaboration, the DoT insisted they give up 16 daily round-trip flights from Heathrow, which was more than they could stomach - so they withdrew their application.

Since then, the EU and the US authorities have agreed Open Skies, which goes some way to increasing competition on routes between Europe and the USA. Stage One came into effect in March and allows any US or EU carrier to fly from anywhere in the EU to anywhere in the US. And it broke the stranglehold on Heathrow-US flights of BA, Virgin, AA and United.

This year, , Continental, , and have started up new flights to the US from London Heathrow. So BA's argument is that Open Skies has made the competitive landscape more competitive.

And, it adds, some of its biggest competitors - including Air France and - already have anti-trust immunity on their respective co-operation agreements with US airlines (the SkyTeam and Star global alliances).

Also relevant for BA is that trading conditions for airlines are currently worse than it can ever remember. The cost of fuel has been going through the roof just as its customers have suffered an acute squeeze on their disposable income. So BA feels an acute need to improve its efficiency, which the partnership with AA should deliver.

More or less the same logic explains why Sir Richard Branson is determined to characterise the planned deal as an anti-consumer scandal. At a time when so many airlines are in a parlous state, he argues that it would be appalling to reinforce the strength of the two mighty beasts, AA and BA.

And he believes that, as yet, Open Skies has delivered precious little meaningful competition to BA and AA out of Heathrow. Certainly the bare stats, which show that 60% of passengers going between the UK and the US fly with BA or AA, suggest that these two remain the powerful forces in transatlantic travel by a wide margin.

For Branson, BA's recently announced agreement to merge in a more formal sense with of Spain is more evidence of BA's determination to crunch the competition through its sheer size and weight.

All that said, it's quite difficult to see Branson and Virgin Atlantic as pathetic victims. What BA has initiated (again) is a bare knuckle fight against its longstanding nemesis. And since the contest will all be about lobbying and persuading regulators, the form guide would suggest that BA should not bank on securing permission for its American adventure.

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