Virgin Atlantic raises concerns over Aer Lingus takeover

Stronger legally binding agreements on connectivity between Irish and British airports need to be provided as part of any takeover of Aer Lingus, a rival of International Airlines Group (IAG) has claimed.

Virgin Atlantic Airways (VAA), a direct competitor of British Airways (BA), the biggest carrier in IAG, is pushing to appear before the Oireachtas transport committee to discuss the possible sale of the State's 25 per cent shareholding in Aer Lingus. It also intends to raise its concerns with the European Commission.

In a letter to the committee, Joe Thompson, Virgin's director of network and alliances, raised a number of issues about the proposed takeover. He said a high proportion of Irish passengers transferred to long-haul flights using UK airports and Virgin provided competition to BA.

“Without this competition consumers will likely endure adverse effects on the price of airline tickets, quality of service and connectivity. I want to reiterate that, although VAA does not serve the Irish market directly, we serve many Irish consumers through onward connections.”

Unanswered questions

Mr Thompson said there were a “number of unanswered questions for the Irish consumer that need to be satisfactorily addressed”, including the types of legal guarantees offered by IAG.

The Government is seeking guarantees on Aer Lingus’s Heathrow slots but Mr Thompson said this “could still lead to reductions in connectivity overall if BA services were then rationalised”.

His letter claimed the recent sale of British Midlands to British Airways “shows that without effective remedies this decision is bad news for consumers”.

“BA effectively became the monopoly carrier between Glasgow and Heathrow in 2010. The number of daily services fell and BA’s prices increased significantly as a result.”

Assurances

It also asked if the Government had sought assurances from IAG that it would protect agreements Aer Lingus has with other airlines which mean partner airlines can accept each other’s tickets.

Another point raised by Virgin is whether the Coalition has identified European Commission measures to protect other long haul carriers.

“To preserve effective competition in these markets, extensive and long-lasting commitments must be established. One particular way to help address this is to ensure that BA and Aer Lingus will provide special prorate agreements to third-party long-haul carriers so that Virgin Atlantic and other long-haul competitors to BA will be able to continue to offer Irish consumers competitive long-haul choice.

“A well-designed remedy would guarantee other long- haul airlines access to this traffic and therefore their ability to compete with BA. However, it would need to be in place for as long as IAG maintained control over all connecting traffic from Ireland.”