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Quokkas
Posts: 1327
Joined: Fri Jan 27, 2012 5:51 pm

RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 2:07 pm

Quoting jfk777 (Reply 49):
LHR slots are very valuable and continue to be sold all the time

Thanks for the insight. I appreciate your response.

So it would appear that from a slot allocation view there is no protectionism, so long as airlines can freely bid for slots and trade them. That could be a disincentive to some but in a free market appears reasonable. Of course, the aviation industry is not the freest of markets but that's the subject of another debate.  
“Not to laugh, not to cry, not to hate, but understand.” Spinoza
 
avek00
Posts: 3260
Joined: Mon Oct 25, 2004 5:56 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 4:18 pm

Quoting jfk777 (Reply 47):
30 years ago was a different time, almost all Flag airlines were still government owned or only recently privatized.

Perhaps, but the airline industry's development is not ahistorical by any means, and soundbites/talking points of "let weak airlines fail" are amateurish and counterproductive without appreciating how past protectionist behavior gave some airlines significant financial and structural advantages that often prevent operation of a truly free market even in the present day.

Based on the history of the component airlines, a head of IAG has little credibility to advance an argument that weak airlines be allowed to fail.
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avek00
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RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 4:24 pm

Quoting Bongodog1964 (Reply 42):
The main beneficiaries of Bermuda 2 were AA and UA.

Not true. Bermuda 2 ensured, above all else, the absence of true transatlantic free market competition at the UK's most important airport, London Heathrow. Everything else in the USA-UK market is small potatoes compared to Heathrow flying, and British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.
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avek00
Posts: 3260
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RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 4:27 pm

Quoting Boysteve (Reply 25):
At BA Willie Walsh never supported Bermuda II and neither has BA for a long while

Support of Bermuda 2 is not at issue here, in fact it's irrelevant. The point is that BA benefitted from a protectionist air rights regime in the UK for many years.

[Edited 2013-04-15 09:28:22]
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jfk777
Posts: 7454
Joined: Tue Aug 22, 2006 7:23 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 4:53 pm

Quoting avek00 (Reply 52):
British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.

Bermuda 2 started in 1977 when the UK "renounced" the Bermuda 1 treaty. BA was "allowed", not all others. British Caledonian had to fly from LGW, even to LAX and JFK. Under the Bermuda 2 the UK was allowed to appoint 2 LHR airlines for flights to the USA, but only BA was. Virgin did eventually in 1991 when TWA and PA sold their LHR slots.

BA did eventually have a large USA LGW operation when they merged with B Cal those flights to the US south were Gatwicked so BA had to fly them from there.

Quoting avek00 (Reply 53):
The point is that BA benefitted from a protectionist air rights regime in the UK for many years.

No more true statement has ever been said.
 
superjeff
Posts: 1406
Joined: Fri Feb 05, 2010 2:14 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 5:09 pm

Quoting jumpjets (Reply 31):
wondering where Chapter 11 bankruptcy protection fits into this scenario - I don't pretend to understand how this works but it seems to me that a large badly run company can be protected from its legal obligations at the expense of other often smaller businesses who have been foolhardy enough to do business with them. Once the dead wood has been pruned a new business emerges stronger and better - maybe not a bad thing but if we are to chastise BA for being state supported some 20 yrs ago I think its fair to bring this into the debate.

I know its not simply there to protect Airlines but any MBAs out there like to hypothesise what would have happened to the US airline industry if [like here in the UK] Chapter 11 hadn't existed.

Chapter 11 isn't a guarantee that you can avoid debts or even survive (Braniff, Eastern, TWA, and Pan Am are all examples of airlines that didn't survive Chapter 11, and even US almost didn't survive it - they were lucky America West came along and acquired them). The real problem is, I think, deregulation, which may have resulted in reduced fares in some cases, but also reduced the industry to a commodity.
 
boysteve
Posts: 890
Joined: Sun Apr 25, 2004 7:02 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Mon Apr 15, 2013 7:15 pm

Quoting avek00 (Reply 53):
Support of Bermuda 2 is not at issue here, in fact it's irrelevant

Avek,
I mentioned Bermuda II simply because you included it in your post (reply 20) to which I responded! I am not sure why you were quite so vociferous about something that is irrelevant but never mind.
 
vv701
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Tue Apr 16, 2013 2:40 am

Quoting avek00 (Reply 52):
British carriers were allowed to fly from Heathrow to nearly everywhere (at the time) worth serving nonstop in the USA while many US carriers were completely shut out from LHR.

Bermuda II as signed in 1977 only allowed two named American airlines to fly from LHR to those US gateway cities listed in the agreement. They were PA and TW. It also allowed one named British airline, BA, to fly to a similar but not identical list of US gateway cities.

Other American and British airlines were not permitted to fly from LHR to anywhere in the USA. So when VS started North Atlantic operations to EWR on 22 June 1984 it, like American airlines other than PA and TW, flew from LGW.

In 1991 following the collapse of PA and the deep financial problems of TW, Bermuda II was amended. It named AA and UA as the two replacement American airlines. At the same time VS was added to BA to give the UK numerical parity with the USA in terms of permitted operators.

In terms of US gateway cities (not airports) listed in Bermuda !! it is important to note that BA and from 1991 both BA and VS were not allowed to serve the main (home) hubs of American airlines who were excluded from Heathrow thus ensuring more balanced competition. So there were no BA flights from LHR to the likes of ATL, DFW and IAH. But BA got around this restriction to some extent. While they operated a direct LGW-IAH service they also operated indirect services latterly operating LHR-ORD-IAH to feed onward services to oil producing areas in the Middle East and Africa.
 
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RyanairGuru
Posts: 8616
Joined: Wed Nov 01, 2006 3:59 am

RE: Willie Walsh : "Let Weak Airlines Fail"

Tue Apr 16, 2013 6:33 am

Quoting jfk777 (Reply 47):
BA was protected against other UK airlines at LHR except for BMI. which flew only domestically

Umm, sorry, but BD were not a domestic only airline.

Quoting jfk777 (Reply 54):
BA did eventually have a large USA LGW operation when they merged with B Cal those flights to the US south were Gatwicked so BA had to fly them from there.

BA didn't have to serve those cities from Gatwick because they were ex-BCAL, but because they were not allowed to fly them under Bermuda II. The cities in question (ATL, DFW, IAH) could not be served from LHR pre-Open Skies.

Quoting VV701 (Reply 57):
It also allowed one named British airline, BA,
Quoting VV701 (Reply 57):
Bermuda II was amended. It named AA and UA as the two replacement American airlines. At the same time VS was added to BA to give the UK numerical parity with the USA in terms of permitted operators.

Precisely, it had nothing to do with keeping BCAL or VS out of LHR. jfk777 makes it sound like the UK had unused authorities but refused to distribute them. That is patently untrue.
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