Possible merger between BA and Qantas

Virgin Atlantic will be having a fit, first the BA-AA scandel and now this!

Got this e-mail from Virgin the other week:

Dear Martyn The airline industry is undergoing dramatic structural changes. Several airlines have recently gone bust and while Virgin Atlantic remains strong with growing passenger numbers and new services, thanks in no small part to your continued loyalty for which I'm very grateful, we are not immune to what is happening to our competitors. I have always believed that consolidation within the airline industry should take place to ensure that consumers are served by efficient, service-oriented carriers which meet customers' needs - but regulators should closely scrutinise the potential market effects before giving approval to any alliances or mergers. For example, imagine if Tesco, Asda and Sainsbury's joined together to form one mega-supermarket which would have a 65% share of the UK grocery market - it would be difficult to find anywhere else to shop. The ability of this new mega-supermarket to drive hard bargains onto its suppliers would be significant and it would be able to raise its prices because it would be impossible for any other supermarket to compete effectively against them. Well, take that scenario over into the airline industry and you have an accurate analogy of what would happen if the anti-competitive proposal by British Airways (BA) and American Airlines (AA) to co-operate on transatlantic services was to be approved. Virgin Atlantic Airways strongly opposes BA/AA not only because it poses insurmountable competition issues but also because it raises significant concerns regarding the anti-consumer impact it will have. If the proposed merger goes ahead, BA/AA would have a stranglehold on US - Heathrow services and an overwhelming frequency/schedule advantage over other airlines on the densest US - Heathrow markets. In addition, Heathrow is full and consequently there is little or no opportunity for airlines to expand. As a result, BA/AA would enjoy a position of unchallengeable market dominance. Which?, the UK's leading consumer interest/protection organisation has said that "the authorities need to look at the [proposed] deal very closely to make sure that it doesn't damage competition and doesn't see consumers losing out through higher prices, less choice or poorer service." In the US, the Coalition for an Airline Passengers' Bill of Rights said that they believe BA/AA "is all about bringing down capacity and raising fares. The airlines will have an effective monopoly". Virgin Atlantic is understandably proud of the reputation it has built as a champion of the consumer. We have been able to succeed despite regulatory obstacles, "dirty tricks" and the legacy advantages that BA has enjoyed. But approval of BA/AA to create a mega-monopoly airline on routes between Heathrow and the US would cement the unlevel playing field against us. Please support our campaign against BA/AA and I urge you to click on our dedicated "No Way, BA/AA" website www.virginatlantic.com/monstermonopoly to find out more. I hope to see you onboard soon. Kind regards, Steve Ridgway Chief Executive Virgin Atlantic Airways

Has't this been on the cards for a while?

No, BA did have a 18.25% share in Qantas for 11 years up until 2004 when BA sold this share off to raise money to pay off debts, the current Australian law states that Qantas must be 51% australian owned (look at my first post ) However any individual foreign airline can only own up to 25% of it and only a total of 35% may be owned by foreign airlines. Transport Minister Anthony Albanese proposed earlier on Tuesday that the Australian Gov relax the rules so that while 51% must still be Australian-owned, the remaining 49% may be owned by a single foreign airline giving BA the chance to secure 49% of it.