Branson runs to the government again

Self styled entrepreneurial gadabout, Sir Richard Branson, is running to nanny state wanting to seek protection for part of his multi million pound business empire. This time it is Virgin Atlantic Airways he wants to protect.

You see, British Airways, American Airlines and Spanish carrier Iberia are seeking anti-trust immunity in order to co-ordinate and operate as one across the Atlantic and within Europe and the USA. This would enable them to co-ordinate, schedules, fares and routes. The absurdity that frequent flyers belonging to BA and American (both members of the OneWorld alliance) can't earn frequent flyer points on the other airlines services across the Atlantic would be removed.

The three carriers (along with Finnair and a couple of other small OneWorld alliance carriers in the northern) want to integrate so that BA can sell a ticket including a domestic connection using AA in the US, and AA can do the same with a BA connection.

The Atlantic is one of the most competitive air corridors in the world, with 42 airlines flying between the EU and the USA, and it being an open market on international routes for airlines from either market. AA/BA and Iberia have 21% of the market share at the moment, although between the UK and the US it is around 44%, and London-New York 52%.

Other airline alliances already have this anti-trust immunity. Star Alliance, which Trans Atlantic means United, Lufthansa, US Airways, BMI, SAS, TAP, Austrian and Swiss, has 35% of the traffic Trans Atlantic. Skyteam, comprising Air France/KLM and Delta/Northwest, has 28% of the market.

However, Branson cries foul. He claims it will create a "monopoly" which of course it wont. He's making it up, playing his favourite role of the hard done by little guy, who only wants what's best for himself consumers. You see Virgin Atlantic isn't in any of the alliances. It does do codesharing and co-ordinates closely with BMI and Continental Airlines. However, out of the nine airlines flying between Heathrow and the US, Virgin Atlantic has the second largest operation.

He complains that it would put 51% of landing slots at Heathrow in the hands of one conglomeration. Hardly a monopoly, especially since Skyteam holds 73% of the slots at Paris Charles de Gaulle and 85% at Amsterdam Schiphol, while Star Alliance carriers hold 80% of Frankfurt. All BA, AA and Iberia want is the same as its competitors - Branson is moaning because his airline is independent and he doesn't like competing. You see, unlike BA, Virgin has no flights within Europe - so no wonder BA is bigger, Virgin doesn't even operate in competition with it on many of its routes.

However, the best response to Branson is the one I saw from Willie Walsh -BA's CEO - in the Daily Telegraph on Friday.

"He knows a good deal about monopolies. With help from taxpayers, he has run a real one on fast trains between London and Manchester since 1997. And now he is talking about establishing another one by taking over Gatwick airport."

Yes, Virgin Trains has a monopoly on passenger rail services between London and Manchester, it has done this with millions of pounds of subsidies - that's real entrepreneurship isn't it? Branson says he wants to buy Gatwick airport, from which BA and AA both operate very few Trans Atlantic services.

So go on "beardie", compete. You did well earlier this year when BA's troubles at Terminal 5 coincided with the opening of a major upgrade to your part of Terminal 3 at Heathrow. You could tie up closer with BMI. In other words, you could compete your way to success, not moan to the government.

For all that, I'm giving your airline another shot in a couple of months time - Heathrow to New York. I hope it's better than last time!

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?