Scotland business

Virgin lodges complaint over airline merger

BA planes
Image caption The deal would give BA a monopoly of routes between Heathrow and Scotland's largest cities

Passengers face higher fares and reduced services between Scottish airports and London Heathrow if British Airways succeeds in taking over rivals BMI, Virgin Atlantic has claimed.

The airline made the claim as it lodged a formal complaint on the proposed merger to the European Commission.

It said passengers would be left with a "choice of one" on flights between Aberdeen and Edinburgh and Heathrow.

Late last year, BA owner IAG agreed a binding deal to buy BMI from Lufthansa.

The move, which is subject to clearance by competition bodies, would give BA a monopoly of routes between Heathrow and Scotland's three largest cities.

In its formal submission to the commission, Virgin said BA would have the "opportunity and the means" to increase fares dramatically and reduce flights on routes.

'Dark ages'

Sir Richard Branson's airline pointed to BMI's withdrawal of its flights from Heathrow to Glasgow in early 2011, which left BA as the sole operator.

It claimed industry data showed this resulted in average fares paid by passengers increasing by 34%, while the number of flights on the route decreased by nearly half.

Virgin also claimed at least 1.8 million Scottish passengers faced price increases.

Sir Richard said the takeover would "take British flying back to the dark ages".

He said: "When British Airways was left the only operator on the Glasgow to Heathrow route in 2011, fares paid by Scottish travellers rocketed by 34% in six months. That is not beneficial, that is backbreaking and plainly unfair.

"BA is already operating on 60% of BMI's routes so this move is clearly about knocking out the competition."

He added: "The regulators cannot allow British Airways to sew up UK flying and squeeze the life out of the Scottish travelling public.

"It is vital that regulatory authorities, in the UK as well as in Europe, give this merger the fullest possible scrutiny and ensure it is stopped."

IAG said it was confident regulatory authorities would approve the deal.

'Healthy competition'

In a statement, it said: "BMI is a massively loss-making airline.

"Selling it to IAG offers the best solution for British consumers and UK plc, securing more jobs than if the airline was broken up and sold off for its Heathrow slots.

"This deal is the only option for safeguarding services to the UK regions. We've committed to keeping services from Belfast to Heathrow and increasing flights to Scotland.

"Far from cutting back, British Airways added 4,000 weekly seats on its services from Heathrow to Glasgow last year.

"Virgin Atlantic has never flown to Scotland and, as far as we know, has no plans to do so."

It added: "Heathrow has healthy competition with more than 80 airlines operating at the airport. It is one part of the overall London market and we face strong competition from airlines across five London airports."

'Damaging' move

A number of Scottish MEPs and MSPs have outlined their concerns about the merger's implications with the European Union's Competition Commissioner Joaquin Almunia, arguing the move could have a significant damaging effect on choice and competition for passengers in Scotland.

SNP MEP Alyn Smith said: "If this move goes ahead IAG would have a monopoly on the Edinburgh-Heathrow and Aberdeen-Heathrow routes: this could lead to reduction in service and increase in price.

"This could also prove problematic logistically for passengers who have connecting flights with all flights from Aberdeen and Edinburgh being forced through Heathrow's Terminal 5."

Tory MSP Murdo Fraser, who has also raised the issue with the Office of Fair Trading, said: "My principal concern is the implication to Scotland of the proposed takeover, in particular, the potential impact on competition in the airline sector in the UK and also on whether BA will make changes to the frequency of flights between Scotland and the UK or to overall capacity."

Edinburgh Liberal Democrat MP Mike Crockart said air links between Edinburgh and London were "vital" for businesses and tourists.

He added: "The proposed deal raises serious concerns around competition and passenger choice.

"It's not simply an issue about direct flights between Scotland's major cities and London Heathrow, but also about the potential impact on competition for connecting routes to the rest of the world."

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