By Ray Fleming

IS the aviation business a no-go area for competition? It certainly looked that way yesterday when IAG (the British Airways-Iberia merger with links to American Airlines) announced that it had agreed to buy bmi (formerly British Midland) for 172 million pounds from Lufthansa which bought it from Sir Michael Bishop for 223 million pounds about two years ago but no longer needs it.

Sir Richard Branson and his Virgin Atlantic had very much wanted to buy bmi from Lufthansa but was apparently overbid by IAG.
It is probably fair to say that neither IAG nor Virgin was much interested in bmi as a going concern. What most attracted them were the take-off and landing slots at Heathrow Airport which bmi has owned since its transatlantic days. With possession of these IAG will increase its share of Heathrow slots to 53 per cent, consolidating its position as the airport's most powerful carrier.

If Virgin had been successful its share would still have been a modest 10 per cent. No wonder that Branson says he will fight this IAG-Lufthansa deal with all the means open to him as a restriction of competition and, to put it plainly, a case of “screwing the travelling public.” IAG boss Willie Walsh swats Virgin aside and argues that airlines need to strengthen themselves to survive in current and anticipated conditions.


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