Karen Walker / Washington
Virgin Atlantic chairman Sir Richard Branson is ready to fight to thwart BA/American 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.
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 carriers. 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 waiting 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 position 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 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 partner 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 Intelligence: "The previous transport minister, John Prescott, did anything 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 multilateral 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 prevarication 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.
Source: Flight International