Chris Jasper/LONDON
British Airways has won UK Government approval for a £75 million ($117 million) takeover of its franchise carrier CityFlyer Express. The planned purchase had been referred to trade secretary Stephen Byers amid claims that it was anti-competitive in terms of its likely impact on control of slots at London Gatwick Airport. BA says the move will raise its holding of Gatwick slots from 26% to 38%.
Although Byers approved the deal, announced in November last year, he ruled that it should go ahead only "subject to BA limiting its holding on take-off and landing slots at Gatwick". The trade department adds that the UK flag carrier "will be capped on the level of available slots they can hold at Gatwick in any 1h period".
The UK Competition Commission and Director General of Fair Trading (DGFT) John Bridgeman had urged the capping of BA slots, but in opting for an hourly cap Byers rejected the former's far-reaching recommendation of a 41% limit on the carrier's control of day-time positions for the next five years. The DGFT will establish the "right level" for the hourly cap, having previously suggested that a 65% ceiling might be appropriate.
BA welcomed Byers' ruling, with director of investments and joint ventures Roger Maynard confident the carrier "will agree an acceptable cap with the DGFT". Rival Virgin Atlantic Airways condemned the decision, claiming the takeover should have been "rejected out of hand" and expressing its "significant reservations" about the efficacy of an hourly cap.
CityFlyer became BA's first franchise partner six years ago. The carrier operates 12 routes with five British Aerospace Avro RJ100s, six ATR 72s and six ATR 42s. BA has nine other franchise operators, with one other - Brymon Airways - being wholly owned.
• The Irish Government has approved the entry of Irish flag carrier Aer Lingus into an alliance with BA and American Airlines, leading to full membership of oneworld. It failed to agree to the pair taking a joint 10% stake in the airline, however, suggesting that the carrier's capital requirements are too great to be satisfied through such a move. Aer Lingus has instead indicated that it will seek to raise cash through an initial public offering. Sources at Aer Lingus say the ruling will not be an obstacle to its alliance plans.
Source: Flight International
