Sir Branson against BA's new deal

Virgin founder Sir Richard Branson

TEXT OF STORY

Stacey Vanek-Smith: The high price of crude has hit the bottom lines of a lot of companies -- especially airlines. Carriers are developing plans to cope with the changing marketplace. American Airlines and British Airways are expected to ask the U.S. government for permission to operate more closely. That has the boss of rival Virgin Atlantic on the attack. Sir Richard Branson has even written a letter to the presidential candidates. From London, Stephen Beard reports.


Stephen Beard: BA and American want to operate more like one carrier on transatlantic routes. They want to coordinate their flights and their fares. But in today's letter to Senators Obama and McCain, the Virgin boss condemns the proposed deal. He says consumers will lose out.

It would make the two carriers utterly dominant on critical routes between Heathrow and some major American cities. Their combined market share into JFK, New York would be 63 percent, into Chicago 66 percent, into Boston 82 percent.

Paul Charles is spokesman for Virgin Atlantic:

Paul Charles: Now these are market shares that are way too dominant. And we know what dominant companies do -- they raise ticket prices for consumers, and they snuff out competition.

BA has refused to comment on the Virgin letter. The airline says the deal is necessary to cut costs. The BA boss recently claimed the whole airline industry is facing its worst trading environment ever.

In London, this is Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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