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Aviation History
1993
1993 - 0076.PDF
BUSINESS Virgin threatens BA with US court action Virgin Atlantic Airways has warned that it is prepared to involve British Airways in a po tentially damaging anti-trust ac tion in the USA, unless the carrier shows genuine and pub lic signs of contrition for its "dirty tricks" campaign. The warning has come in the wake of the UK libel action, which ended on 11 January with BA agreeing to pay £610,000 in damages to Virgin and its owner Richard Branson. BA was also left with legal costs of around £3 million and was obliged to read out an unre served apology. Following the court ruling, Branson declared a "two-week cooling-off period", during which Virgin would consider its options. The airline says that it is looking "...for public expres sions of good faith that indicate BA is committed to open and fair competition". If such indications are not received, Virgin warns that it "...will take the maximum ac tions available in every country around the world". BA had made no such indica tions by 14 January. Virgin options include com plaints to the European Com mission and further lobbying within the UK, though poten tially most damaging would be an anti-trust case in the USA where many of the "dirty tricks" are alleged to have taken place. Virgin claims that it has lost millions of pounds' worth of business because of BA's cam paign. The issue came to public attention a year ago when Branson accused BA of a string of "dirty tricks" designed to discredit him and force his airline off the lucrative transatlantic routes. The major claims are that: • BA gained illegal access to Virgin computers — a claim now being investigated by the UK Government's data protec tion registrar; • BA sales people, some of whom impersonated Virgin staff, approached Virgin passengers at home and at airports with in ducements to switch flights; • a BA publicity consultant circulated misleading stories in the media about Virgin and in vestigations were sanctioned by BA designed to uncover damag ing information on Branson. Claims by BA chairman Lord King that Branson's allegations were merely a publicity stunt led to the libel action. Branson says that he will use the damages to start a "fighting fund" to lobby for greater pro tection of competition in the UK and Europe. Virgin has repeatedly called for an independent aviation- industry watchdog in the UK, similar to those bodies whuich have been set up to monitor other privatised industries. • FOCUS Competition in the cargo market [Type of shipment |- A Special cargo Standard cargo Parcels Docu ments 4 4 Airlines /forwarders Integrators 0 Combination carriers cargo carriers belly carriers ••I Delivery time | Same Next 2 3-5 >1 day day days days week Source: Lufthansa Cargo Integrators and airlines fight it out With growth forecast to average more than 6% a year over the next decade, the air-cargo market looks attractive, but Wilhelm Althen, vice-president at Lufthansa Cargo, warns against complacency. As he points out, much of the growth is coming from the small, hut highly lucrative, express-parcels market, which is expanding at 10% a year. This market is dominated by the big express parcels companies, such as Federal Express, DHL, TNT and UPS, which sprang up to fill the need for fast, integrated delivery services. Much of the growth in the US cargo market during the 1980s was absorbed by such groups, while traditional carriers lost out, says Althen. Spurred on by fierce competition, these integrators have since moved beyond the USA and begun to attack the fringes of the freight-forwarding business, putting them into direct competition with the airlines, which are themselves edging into profitable express work. Lufthansa's solution has been to join the integrators. In 1992 it exercised an option to take a 50% stake in DHL International (later discovering that DHL's other partner, Japanese Airlines, had done the same) and set up an express operation hubbed out of Frankfurt (Flight International, 23-29 September). Hughes' HUD business sold to Kaiser Hughes Aircraft has sold its military head-up display (HUD) product line to its rival Kaiser Electronics. Hughes says that the sale was made because "...there was no way we could be number two or three in HUDs in a foreseeable timetable". The Hughes business has only one production programme — the wide-angle HUD for Swe den's Saab JAS39 Gripen fighter. CAL initial share flotation flops An initial share flotation by Taiwanese flag-carrier China Airlines (CAL) has been ignored by local investors, leav ing the carrier with almost 90% of the issued stock unsold. CAL had hoped to raise around NT$2.8 billion ($110 million) from the sale, equiva lent to a 5% stake in the carrier. Despite early signs that the issue would be over-subscribed, investors had only taken up 10% of the shares by the 9 January deadline. CAL, which was Taiwan's sole international carrier .until 1992, is 85% owned by a non-profit body, the China Aviation Devel opment Foundation (CADF). Plans to float CAL on the Taipei Stock Exchange in 1993 are expected to see CADF's stake diminish to around 40%. For eign carriers will not be allowed to take a stake in the airline. CAL had .assets of NT58.2 billion at the end of August 1991. Pre-tax profits fell by 25% to NT$4.3 billion in 1991. D The contract for three test and six pre-production Gripen HUDs was signed in 1982, with the first of 36 production units de livered in October 1990. Hughes was negotiating for a follow-on order to equip a sec ond batch of 110 Gripens when the sale was completed. Kaiser is a leading manufacturer of HUDs, building units for the McDon nell Douglas F-15 and F-18. Hughes has retained the civil HUD business, which was part of its 1991 Flight Dynamics acquisition. About half of the 25-30 military HUD staff have transferred to Hughes' automo tive-electronics division. D 22 FLIGHT INTERNATIONAL 20 - 26 January, 1993
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