Bloomberg News

Virgin Complains to EU Over Monopoly Threat From IAG’s BMI Deal

February 17, 2012

Feb. 17 (Bloomberg) -- Virgin Atlantic Airways Ltd. said it submitted a complaint to the European union regarding IAG’s planned purchase of Deutsche Lufthansa AG unit BMI, highlighting the likelihood of higher fares should the deal go through.

Virgin, which competes with IAG’s British Airways unit at London Heathrow airport, said in a statement that if the takeover is cleared three U.K. routes from the hub, to Aberdeen, Edinburgh and Manchester, will become monopoly operations.

“The regulators cannot allow British Airways to sew up U.K. flying and squeeze the life out of the travelling public,” Richard Branson, Virgin’s billionaire owner, said in the release. “It is vital that regulatory authorities give this merger the fullest possible scrutiny and ensure it is stopped.”

IAG, as International Consolidated Airlines Group SA is known, said Dec. 22 it had agreed to buy BMI for 172.5 million pounds ($272 million), beating out Virgin. While the deal will give BA and sister carrier Iberia 53 percent of Heathrow slots, that’s short of the 66 percent that Lufthansa has in Frankfurt and the 59 percent controlled by Air France-KLM Group in Paris.

“Our planned purchase of BMI is being reviewed by the regulatory authorities and we’re confident they will approve the deal,” IAG said in emailed response to Virgin’s comments.

Competition would also be eradicated to some European destinations, Virgin said, providing British Airways with the opportunity to reduce flights and “increase fares dramatically.” BMI’s exit from the Heathrow-Glasgow route last year left BA as the only operator and resulted in a 34 percent hike, it said.

European antitrust regulators will rule on the acquisition by March 16, the EU said Feb. 13.

--Editors: Chris Jasper, Chad Thomas.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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