BRITISH Airways is looking at merger opportunities that could create a transatlantic super-carrier in response to a plan by Delta and Air France to shake up this lucrative market.
Aviation sources believe BA is in talks with Sir Michael Bishop, controlling shareholder of British Midland Airways, to buy the carrier.
BA is also believed to be considering a renewed attempt to merge with American Airlines, despite two previous approaches being struck down by competition regulators.
The rumoured talks come as airlines prepare for the liberalisation of air travel between the US and Europe next March.
The new rules will allow any airline to fly anywhere, ending decades of bilateral restrictions that limited access to favoured carriers.
This week Delta, based in Atlanta, and Air France-KLM said they would merge their transatlantic operations to cut costs.
As part of the deal, Delta will get three of Air France’s Heathrow slots to offer new services to New York and Atlanta.
Slots at Heathrow, Europe’s transatlantic gateway, are extremely rare and US carriers are seeking ways to infiltrate the market before the start of open skies.
In response, BA is thought to want to strengthen its already dominant position at Heathrow and is looking at British Midland and American Airlines as partners. Sir Michael has said he is considering options for his 51 per cent stake in British Midland and is widely expected to sell within the next year. The airline could cost BA pound stg. 750 million ($1.7 billion).
But BA would have to convince competition authorities that the takeover posed no threat, as the combined company would control more than half of all Heathrow flights.
If BA were then to merge with American Airlines, it would control about 66 per cent of the Heathrow to US trade, with the opportunity to offer many more flights. It would also have access to an extensive regional network in North America.
A BA spokesman said: “We have never said we are in talks with British Midland. American is already a One World partner and in the long term we would like a closer relationship with them.”
Virgin Atlantic chief Steve Ridgway vowed to fight any attempt by BA to increase its dominance at Heathrow.
“Such a deal would be bad for competition, bad for consumers and bad for the British economy,” he said.
Analysts said Mr Ridgway’s comments indicated how advanced rumours about BA’s merger intentions had become.
Collins Stewart aviation analyst Andrew Fitchie said: “I can see the logic in BA doing this. It would face regulatory hurdles but the Delta-Air France deal will set a precedent.”
The Delta-Air France deal will initially cover 19 flights a day from the US to London and France and will then be extended to other European destinations.
Source:The Times
By: OneLeft - 22nd October 2007 at 22:28
such as DUS-LHR-SYD and CDG-LHR-SYD, were actually cheaper with BA to book from other sites, the the LHR-SYD route direct, or MAN-LHR-SYD
This is often the case with the big carriers and certainly not unique to BA. It has taken me only a few minutes to find similar examples on KL LHR AMS LAX, AF LHR CDG JFK and LH LHR FRA HKG, as compared to AMS LAX, CDG JFK and FRA HKG direct.
Although primarily intended, as you rightly say, to encourage people to transit through the airlines hub, it is very common for regular business travellers to take advantage of this by buying the best combination of tickets for their business trips to DUS and SYD to use your example, or LON and LAX to use one of mine.
1L
By: EGNM - 22nd October 2007 at 20:14
Personally, I was ready to book a long haul trip with BA some while ago, and I was rather miffed at the way that the UK customer base appeared to be treat. In a move to steal some of the foreign market some routes, such as DUS-LHR-SYD and CDG-LHR-SYD, were actually cheaper with BA to book from other sites, the the LHR-SYD route direct, or MAN-LHR-SYD. To me, this seemed to be a slur to the British people. Yes, it’s a buisness, and this is one of it’s flagship routes, but why should it be more expensive for a UK customer to fly ex LHR, than for a subsidised service to steal pax from competitors abroad – flying on exactly the same services to and from LHR?
Funnily enough, bmi and Singapore airlines took my 3 seat as buisness, and it could actually have been cheaper for me to fly out to CDG or DUS and route back into the UK via the above examples than to simply fly MAN-LHR-SYD.
Unfortunatly, even as a Englishman, British Airways as our legacy carrier no long appeal to me as a rule of thumb, unless they are significantly cheaper than the competition – especially with the amount of luggage that has failed to find it’s way through Heathrow over the last few years!
Under what identity would a new long haul op under? Would this just cover Transat ops under a dual branding? Surely the BA brand is too much for them to give up away from Transat work?
To me it seems like a stronger codeshare presence (ala KLM/NW have had), would be a much more likely result than any merger
Anyway, rant over….
By: OneLeft - 22nd October 2007 at 16:11
BA would cherrypick the routes it wanted and its LHR slots. BMI would then be wound up.
While I think it is true that the bmi name would disappear, I think quite the opposite would be true.
With it’s much lower cost base, I think the routes and slots would gradually be transferred to the former bmi company and the original mainline fleets, or the very least shorthaul, would gradually disappear. A repeat performance of what happened at LGW when BA acquired Dan Air.
It’s all academic though, I can’t see BA ever being allowed to by bmi.
1L.
By: Dantheman77 - 22nd October 2007 at 09:42
Actually, Easyjet bought Go for £374m in 2002? 😎
After a Management buyout had bought it off BA for £100m only a few months previously
By: Grey Area - 22nd October 2007 at 08:34
…. Go – Sold to Ryanair…
Actually, Easyjet bought Go for £374m in 2002? 😎
By: steve wilson - 22nd October 2007 at 06:48
The EU would never allow a merger of BA and British Midland Airways. This would be a disaster for British and European travelers. While a merger between BA and AA would be remarkable, the US government will never allow it. Even if it passed the US authorities, the EU would force the two to give up LHR slots. They will never agree to this.
Bill
If this were to happen BMI would go the way of every BA franchise operator, bust. BA would cherrypick the routes it wanted and its LHR slots. BMI would then be wound up.
Manx – Bust, Loganair – Bust (almost but struggling back), City – Sold to Fly BE, Go – Sold to Ryanair.
Please BMI dont dance witht he devil.
By: bkonner - 22nd October 2007 at 00:22
EU would not allow it
The EU would never allow a merger of BA and British Midland Airways. This would be a disaster for British and European travelers. While a merger between BA and AA would be remarkable, the US government will never allow it. Even if it passed the US authorities, the EU would force the two to give up LHR slots. They will never agree to this.
Bill
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October 21, 2007 at 10:18 am