Friday, August 15, 2008

Branson the whinging entrepreneur

I have before said that Sir Richard Branson or "Beardie" as Jeremy Clarkson likes to call him, is far more about style than substance. One need only see his latest bleatings to show how little of a true entrepreneur he really is.

British Airways, American Airlines and Iberia (and to a lesser extent Finnair and Royal Jordanian) are all seeking immunity from competition authorities in the EU and USA to allow them to codeshare and more closely integrate their networks. Hardly surprising with high jetfuel prices, intense competition between and within Europe and North America, and as all three are in the OneWorld alliance.

Skyteam alliance airlines Air France/KLM (which has by far the plurality of slots at both Paris Charles de Gaule and Amsterdam Schiphol airports) already have this with partner airlines Northwest and Delta, as do Star Alliance airlines Lufthansa and United. Lufthansa has dominance in airport slots at both Frankfurt and Munich.

Beardie is upset because BA has 42% of slots at Heathrow, and American around 6%. He said "If this monster monopoly is approved it will be third time unlucky for consumers. It will still be bad for passengers, bad for competition, and bad for the UK and US aviation industries."

Let's see what this "monopoly" looks like:

London to New York you can fly on BA, AA, Virgin Atlantic, Delta, Continental, Air India, Kuwait Airways.
London to LA you can fly on BA, AA, Virgin Atlantic, United, Air France, Air NZ.
London to Chicago you can fly on BA, AA, United, Virgin Atlantic, Air India.

Of course you can fly indirectly on these routes through Europe, Canada and other US destinations on umpteen airlines, a lot cheaper than the direct routes typically.

There is also no legal restriction on any US or European airline entering any TransAtlantic routes (although landing slots at Heathrow are at a premium, Delta, Continental and Northwest got some earlier this year without enormous effort). Monopoly? Hardly!

Let's compare that to trains between London and Manchester - how many operators run that? Oh yes, one - Virgin Trains, and it gets hundreds of millions of pounds in subsidies from British taxpayers to do this. Of course there is competition by air and road Beardie would say, of course he would - he isn't involved in monopolies now is he?

So why does BA have so many slots? Well Heathrow is BA's hub, like Frankfurt is Lufthansa's and CDG is Air France, and Schiphol is KLM's. You don't operate an airline that flies within the UK or around Europe at all, so it's no bloody wonder you have less. There are, of course, several European airlines over the years that have gone bust you could have bought and revived, but I don't see you doing that - not going to buy out and rename Alitalia, Virgin Italia?

You might see what Chairman (and majority owner) of BMI - Sir Michael Bishop - another competitor of yours (and BAs), with the 2nd highest number of slots - has said instead "I think things have changed after open skies and they are not setting any precedents. What BA is asking for is what both the other major alliances already have." according to the Daily Telegraph.

So Beardie - compete, make your own arrangements (you already have a codeshare deal with Continental, but I'm sure it's not as lucrative now Continental has agreed to join Star Alliance) and don't pretend that somehow AA gives BA anything more except closer integration to the US domestic market. Why don't you fly from Frankfurt, Schiphol or CDG? Why don't you seek to closely integrate with BMI? Why is Singapore Airlines finding it hard to sell its 49% stake in your floundering airline?

A real entrepreneur responds with a competitive challenge by outsmarting and outdoing the competition - stop running to Nanny State to protect your business and work it out - an airline dedicated to nothing but long haul flights from the UK, with only a smidgeon of partners feeding it, is not a sustainable business. It's not the fault of BA that it's figured out where the future is and you haven't. What are you scared of? Most British business class travellers wouldn't touch American Airlines for obvious reasons and if fares "go up" you benefit if there is less capacity on the route? Or is this maverick "I'm all for competition" all style over substance?

Is that why you're spending money lobbying Barack Obama and John McCain to protect your impotent business?

2 comments:

TheLaw26 said...

Interesting perspective. Branson has such an intriguing, and almost provocative image in the eyes of many Americans. He's thought of as a Maverick or frontiersman.

One thing you have to understand about Branson, at least from what I've read, is that he gets tired of his businesses. He's always in seek of something new. Therefore, I'm not surprised by your commentary.

Also, John Assaraf from “The Secret” and author of “The Answer” is holding a free conference call August 20th about how to condition your mind to reach entrepreneurial success. I’d highly suggest listening in. Go here for details and registration… http://www.JohnAssaraf.com/hia/challenge.htm?s=hiac2008

John is also providing free chapter downloads from “The Answer” here… http://www.readtheanswer.com/index.php?RTA=web2

Anonymous said...

Branson is also setting up something to do with healthcare but I can't quite understand what he is trying to do.

Is it some type of private GP scheme??