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Aviation History
2001
2001 - 2797.PDF
BUSINESS ALLIANCES KAREN WALKER / WASHINGTON UK authorities ignore Virgin's pleas Virgin Atlantic chairman Sir Richard Branson is ready to fight to thwart BA/American on anti-trust immunity islamic ^ NO WAY BA/AA a •iftimiiifiiiiiiifiiiiiii C-VB1C Virgin has made no secret of its stance on anti-trust immunity Virgin Atlantic Airways' opposition to American Airlines' and British Airways' renewed request for anti-trust immunity for their alliance looks likely to be ignored by UK authorities as it seeks a wider agreement with the USA involving open skies. High-level UK Government sources say they are willing to do an open skies deal with the USA in return for US authorities granting anti-trust immunity to BA for its alliance with American and to BMI British Midland for its alliance with United Airlines. BA and American were expected to file their request with the US Department of Transportation last week. The move would leave Virgin - which has a codeshare with Continental Airlines but has steered clear of global alliances - out in the cold. Virgin chairman Sir Richard Branson has already said he will fight the BA/AA proposal "tooth and nail", but his pleas seem likely fall on deaf ears. General Dynamics is continuing its acquisition spree with an agree ment to purchase the defence and government communications and information technology business of commercial electronics giant Motorola for $825 million in cash. The government appears ready to do an open skies deal if two of its three major airlines are given immunity and is sceptical of Virgin's motives for blocking a deal. Virgin, 49% owned by Singapore Airlines, argues that open skies should not happen until the USA grants cabotage rights and allows foreign ownership of its earners. Sources say the UK will not demand . these concessions, although it has called for them in previous failed open skies talks. Virgin is also in support of wait ing for a broader European Union- USA transatlantic multilateral deal. But a UK official points out that Virgin - unlike BMI - is the only UK carrier other than BA to hold USA-London Heathrow rights under the Bermuda II treaty, a posi tion worth protecting. The senior government official says: "Waiting for a transatlantic deal or insisting on cabotage are not realistic possibilities. It's Virgin code for no deal for five years." The Scottsdale, Arizona-based Motorola Integrated Information Systems group anticipates sales this year of around $830 million. The group, which employs 3,000 people and specialises in secure communications and information The introduction of BMI into the transatlantic equation since BA and AA's last attempt to gain immunity failed in 1998 has markedly changed the debate. BMI is 20% owned by Star Alliance part ner Lufthansa and the Heathrow ambitions of both, allied to approval for a United anti-trust deal, should reduce opposition to the BA/AA move. BMI started transatlantic services from Manchester earlier this year. Instead of support from the UK Government, which Virgin feels has always been in BA's pocket, the airline will be looking for support from the European Commission (EC) and US politicians. A senior manager at Virgin told Flight International's sister online news service Air Transport assurance for military and govern ment customers, will become part of GD's Information Systems and Technology sector, which had sales last year of $2.4 billion. GD says the acquisition will strengthen the company's C'ISR (command, Intelligence: "The previous transport minister, John Prescott, did any thing that BA wanted and we assume the new minister, Stephen Byers, will do the same. And BMI will do anything to get open skies." The EC is legally challenging the right of individual EU nations to make bilateral deals, and is seeking a mandate to be the negotiating authority for a transatlantic multi lateral that would supersede all deals signed to date between the USA and EU countries. Part of the reason for the UK's apparent sudden interest in open skies after years of prevari cation may lie with that EC mandate, which could be granted by the end of the year if a European court rules in favour of the Commission. control, communications, comput ers, intelligence, surveillance and reconnaissance) capabilities. Over the past two years, GD has bought Gulfstream and Galaxy Aerospace, as well as GTE's defence electronics arm. DEFENCE General Dynamics to buy Motorola's communications arm in cash Global alliances are raising the stakes in transatlantic travel American Airlines and British Airways' decision to re-seek anti-trust immunity raises the stakes in the battle between the global alliances over the prize of transatlantic travel. At stake for American and BA - founding partners in the Oneworld alliance - is the possibility that their alliance may soon end up the only one without anti-trust immunity in the world's most lucrative travel market. Delta Air Lines says it plans to file for anti-trust immunity with European SkyTeam alliance partners - Air France, Alitalia and CSA Czech Airlines. Open skies - a prerequisite to the US granting immunity - already exists with Italy and the Czech Republic. Full open skies between the USA and France will be discussed in Paris in September. A deal would leapfrog SkyTeam ahead in the immunised alliance stakes and give it the fare and schedule fixing benefits already enjoyed by Star Alliance partners United Airlines and Lufthansa, and Northwest Airlines and KLM. By re-launching its own bid, BA and American are making clear to auth orities they would expect to face no major hurdles if Delta and Air France are given a clear run. The US Department of Transportation last time rejected the immunity request, while the European Commission wanted BA to give up 267 Heathrow slots - a price BA considered too high. www.flightinternational.com FLIGHT INTERNATIONAL 14-20 AUGUST 2001 21
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