bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

paywallTypes

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Diametrically opposed visions for the world airline industry were outlined in Hong Kong yesterday by two of its biggest players.

  That British Airways (BA) chief executive Robert Ayling and Virgin Atlantic Airways founder Richard Branson chose the same day to brief the media on their Hong Kong-China strategies seemed more than coincidence.

  One thing is certain - both would have found plenty to argue over had they knocked heads at Kai Tak.

  The longstanding antipathy between Britain's flag-carrying money machine and Virgin took on a new Asian angle with Mr Branson claiming an imminent mega-deal between BA and Japan Airlines (JAL) that could lock up 80 per cent of London-Tokyo traffic.

  Full of righteous anger, Mr Branson said a Virgin letter of protest was winging its way to Britain's Office of Fair Trading after the apparent global alliance received clearance from Japan's Ministry of Transport.

  Aficionados of competitive free markets will remember BA is poised to sew up transatlantic routes through its proposed alliance with American Airlines.

  Mr Ayling had the look of a man caught in the headlights as he offered torturously qualified denials of the proposed alliance with JAL. Of course the history of airline deals is the history of failed courtships with BA, in particular, having a tearful list of jilted partners.

  If correct, a BA-JAL would have significant implications for Asian air travel.

  Long-suffering Japanese passengers, who pay some of the world's highest air fares, can expect no remission on their London routes. The Tokyo route is BA's second biggest earner after London-New York and a JAL alliance should put on hold the competitive threat being felt from deregulation in Europe.

  BA argues that a consolidation process is sweeping the airline industry that will leave an elite group of six or so truly global players. To be in that gang requires global alliances between national airlines such as the proposed partnership with American Airlines.

  Wrapping himself in the language of competition, Mr Ayling yesterday reaffirmed his commitment to 'open skies' that permit unrestricted access to airport slots on the basis of reciprocity.

  BA's price for a US open skies deal is the American Airlines alliance and immunity from US antitrust legislation. In Asia, no such big bang is likely with national governments guarding the national carrier principle enshrined for 50 years.

   BA has profited handsomely from the duopoly it runs on routes such as London-Hong Kong and took 48 per cent of last year's traffic.

  Not surprisingly, Mr Branson said BA earned too much. High air fares and poor customer service are purely a function of low competition. He berated career civil servants - such as Mr Ayling - who joined national airlines and defended their monopolistic interests.

  Governments should stick to regulating airlines on the basis of safety and fair practice. Bosses - acting in shareholder interests - can be expected to seek cartels but it is up to governments to resist.

  Asia clearly has some way to go before enlightened self interest persuades bureaucrats to fling open landing slots to full competition. Singapore has taken this route, figuring its national airline is well prepared to meet competition.

  Now, British and Japanese regulators look like they may allow a deal that would see a vast chunk of one of world's busiest routes concentrated in the hands of two players.

  Japanese Transport Ministry officials had the interests of big business at heart rather than consumer rights, Mr Branson said.

  It is to be hoped that British regulators do not roll over to an alliance that enshrines the principle of national carriers over those who fly them.

  Both Virgin and BA continue to negotiate landing slots at Shanghai. It should be remembered that cities offering top class cheap air-links do better than those served by shoddy carriers with no incentive to compete.



Branson telegraphs his punches in BA battle