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Branson explains Oz withdrawal, slams airline pacts

February 12, 2014 Aviation, Headline News 2 Comments Email Email

egtmedia59Virgin founder Richard Branson has slammed alliances between major airlines, including the Emirates-Qantas pact. He says such tie-ups stifle competition and lead eventually to higher fares.

Branson was speaking in Dubai to Arabian Business, just a few days after Virgin Atlantic had conceded defeat on the London-Sydney via Hong Kong route and announced that it would no longer fly to Australia.

Speaking of that decision, Branson said Virgin Atlantic had been losing about USD 10 million a year on the Australia route. Increased costs and a falling Australian dollar had proved the final straw. PTM_250-x-250

“I love going to Australia and the idea of having to go on Qantas or British

Airways is going to be very, very painful,” he said. “But hopefully we’ll be back one day.”

Just a few months ago there was talk of Virgin starting a Hong Kong/Melbourne service or adding another Hong Kong/Sydney frequency. A few months can be a long time in airline terms.

Branson still controls about 12% of Virgin Australia and may well sell it. It could be a strategic and lucrative stake.

Branson attacked massive and duopolistic airline pacts. He said the relevant governments should have stepped in to prevent arrangements such as the Qantas-Emirates alliance and the tie-up between British Airways and American Airlines. Branson was a fervent opponent of the latter alliance on the North Atlantic, which he could see would be to Virgin’s detriment.

The BA/AA deal had more or less forced Virgin to turn to Delta, Branson admitted.

From now on, any new airline trying to compete with such concentrations of power would find the going “incredibly difficult”, he said. Governments should have intervened and banned such mega alliances.

Branson put it simply: “Any company owner or chief executive, their job is to try to monopolise and the government’s job should be to stop them monopolising,” he told Arabian Business.

Written by : Peter Needham

Currently there are "2 comments" on this Article:

  1. Ken Buzza says:

    Real shame about VA leaving the SYD/HKG sector out of the equation, I have been flying the SYD/LHR route since I left QF about 22yrs ago. My wife and I would take the trip on a yearly basis, always flew Premium E/Y, this cabin was always booked out months in advance, they could well have removed half the “Upper Class” seats as this cabin was never full. I thought Richard Branson was a trailblazer and have always admired him, but to put an A340/600 on this route was never going to make money, seems the same problem that QF has made, wrong a/c selection, a 777/200 woud have been the better choice. Sorry Virgin, you have lost “Our Money”.

  2. AgentGerko says:

    Agree with Mr Branson. Airline alliances do very little for passengers other than give a few more options to get frequent flier points. The so-called seamless experience between flights is bunkum. Half the codeshare flights cannot be used. The fares on routes dominated by alliances are highest. Watch Aust – HK go up now its just Oneworld partners CX & QF. Once these alliances reach a certain size they can use their market muscle to either eliminate or buy out all competitors. And then finally when they end up in financial strife the govts have to bail them out because they’ve become so big that they cannot be allowed to fail. Another example of globalisation at its worst.

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