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February 19, 2009

The Battle of the Britons Continues

No Way
Branson says, "No Way BA/AA."
Click image to go to his Virgin site.

by Barbara S. Peterson

British Airways' new head exec for the Americas, Simon Talling-Smith, is confidently predicting that the airline's bid to team up with American Airlines--and jointly operate hundreds of flights a week over the Atlantic--will pass muster in Washington within six months. The deal includes Iberia, which also is in the process of merging with BA.

If this all sounds vaguely familiar it's because this mega-alliance was first proposed ten years ago. (In the fast-changing airline business, that's practically the Pleistocene era.) The deal was put off indefinitely when the UK and U.S. governments raised objections to the size of the alliance and demanded, among other things, that BA cut back its presence at Heathrow. But Talling-Smith said that BA is not backing down this time: "We are not prepared to give up any slots" at BA's main hub.

So what's different now?

At a briefing I attended last week in New York, Talling-Smith laid out his arguments for why he thinks it will work this time: "When we last tried this, the world was very different," he said. Heathrow was virtually closed to newcomers and the alliance fad was in its infancy. Now, he says, an "open skies" treaty has allowed many more airlines into Fortress Heathrow. Whether this is a good thing for the already congested hub is, of course, another question. (A third alliance, Air France, KLM, and Delta's Skyteam, is also way ahead, he claims.) And if you've ever flown to Europe on BA and fumed about your inability to earn miles in oneworld partner American's AAdvantage program, then this new deal is for you--"consumers will be able to earn and burn their miles on both airlines," an important benefit for fliers, Talling-Smith said.

Nonsense, claims Sir Richard Branson, who created a Web feature on the Virgin Atlantic site devoted entirely to attacking the "monster" pact. Branson has even painted the "No Way BA/AA" war cry on some of Virgin's aircraft. 

Talling-Smith sneered that Branson is "just making the same arguments he made the last time." See BA's full response here (click on "Branson bluster"). The battle continues . . . 

Further reading:
* "American Defends Plan for British Airways Alliance" (NYT)
* Who's afraid of Virgin America?
* On the Fly: The airline industry

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