2nd UPDATE:Branson:Can't Assure Virgin Survival If Air Alliance Approved
15 May 2009 - 7:43AM
Dow Jones News
Virgin Atlantic Airlines President Richard Branson said Thursday
a proposed alliance led by AMR Corp.'s (AMR) American Airlines and
British Airways PLC (BAIRY) would be "absolutely disastrous" for
industry competition and threaten some carriers' survival,
including his own.
Members of the Oneworld Alliance, including American, BA and
others, are awaiting approval from the U.S. Transportation
Department for antitrust immunity, which would allow them to
cooperate on scheduling and revenue sharing.
Branson said such an alliance would be akin to a merger of Coke
and Pepsi, adding that the alliance would give two industry giants
unparalleled pricing and scheduling advantages over
competitors.
While Branson characterized the alliance as a "merger" of BA and
American, American contends that the alliance would not be a
merger.
The result for passengers, employees and "fair and healthy
competition will be absolutely disastrous," said Branson, speaking
at a breakfast organized by the National Press Club in Washington.
"It will be the end of red-hot competition."
Asked whether Virgin Atlantic could survive if a BA-American
alliance is approved by U.S. regulators, Branson said, "It would be
very difficult."
"I cannot guarantee Virgin Atlantic's survival if BA and AA are
allowed to merge," he said.
An American Airlines official accused Branson of
"fear-mongering," contending that approval of the antitrust
immunity would enhance, not impede, competition.
"As soon as our application is approved, it will allow for an
immediate re-leveling of the playing field," since other alliances
have already received antitrust immunity, said Kevin Cox,
American's vice president for state and community affairs.
Cox said the company is confident U.S. regulators will approve
the application by this fall. A Transportation Department spokesman
said the application is still in the review process.
British Airways said in a statement that more than 40 airlines
fly between European Union cities and the U.S., "yet only one has
expressed outright opposition to our application - Virgin
Atlantic."
"Our application is about establishing fair competition with the
other global transatlantic alliances," the company said, adding
that the Oneworld Alliance would give customers discounted fares,
smoother connections and more frequent-flyer benefits.
-By Josh Mitchell, Dow Jones Newswires; 202-862-6637;
joshua.mitchell@dowjones.com