The filing of anti-trust immunity by British Airways, American Airlines and Iberia is based on a number of factors. Not least of which is the argument that the world has changed since 2002 when the immunity between BA and AA was disapproved by the regulators.
So I thought I would go back and look at the slot situation at LHR and see what teh difference was between the last time they filed and the situation today.
Using official BAA statistics and based on the summer 2002 schedule vs the summer 2008 schedule at LHR here are the stats for the 3 airlines.
2002 2008 % Change
BA 37.90% 41.50% 9.50%
AA 2.30% 2.60% 13.04%
IB 2.30% 2.10% -8.70%
Total 42.50% 46.20% 8.71%
So in fact there has been an INCREASE in the share that the OneWorld Alliance has at LHR further cementing the dominance of the incumbents.
Given that there has been a concentration in the number of holders of slots into Alliances, the argument for allowing this form of dominant concentration goes against all the usual benchmarks of competition both in Europe and in the UK itself.
So Branson has a point.
For the record VS and BD shares are as follows:
2002 2008 % Change
BD 13.10% 11.40% -12.98%
VS 2.40% 3.40% 41.67%
2 comments:
True, but BA didn't increase it's share by trading in magic beans. They've been, fairly openly, buying slots from small airlines that are happy to move to LCY or LGW - a strategy copied by CO (and others) and which VS could have employed.
Similarly, much of the decrease in BMI slots, despite the purchase of BMed, must be accounted for by the chunk of slots BMI sold to BA (in a bizarre transaction).
Again, I'm sure VS, or EK for that matter, could have jumped into that deal.
BA/CO/EK are happy to pay for slots because thy have an idea of their economic value; they're pretty sure they can turn a profit on the investment.
VS knows that the meagre returns made by its poorly run airline don't justify the investment in purchasing slots - they want to be handed them. Like a charity case.
Thanks Rory,
The issue I was making is not the price paid nor the process of how it is managed. It is rather the share of the pie at LHR. The funky deal with BMI/BMED/BA which has to be the most bizarre situation (where BMI picked up BMED and a net number of slots for effectively nothing after reselling BA's own slots back to BA) has to be one of the classic blunders of the Walsh era.
Since you raised the issue of the economic value, all eyes are now on BA. BMI's decision to monetize the slots on their balance sheet means that all other public companies will have to either acknowledge this by doing it themselves or provide an extensive justification for why they don't. there is some slack time until BA decides but it is out there.
Using a screwy sort of calculation here BMI values its slots at GBP770 million that values each slot pair at GBP 10 million on its balance sheet.
Current market values of a slot pair are at LEAST $50 million (judging from the last frenzy before the march schedule change there is a sense that in excess of $70 million was paid for one prime pair). So this should put some perspective on the value that BA and others have. This will dramatically alter BA's balance sheet... as it has already BMIs.
Cheers
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