Max Q
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 7:12 am

Quoting polot (Reply 1):
Why does IAG care about the whole US3 vs. ME3 dispute? Oh wait...

The first response is the most accurate.


Well said.
The best contribution to safety is a competent Pilot.


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Ncfc99
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 8:06 am

Quoting JAAlbert (Reply 46):
The ME3 carriers suggesting that the US airlines received $71 billion (or whatever the figure was) is laughable (a terminal or airport used by all airlines, foreign and domestic, who elect to fly into the airportis a subsidy to US airlines???)

The article suggest that these are benefits, not subsidies and mostly around shedding debt and pension liabilities. IMHO the is a world of difference, CH11 is a benefit, not a susidy, EK not having to pay corporate tax is a benefit, not a susidy. The US3 dossier also talks about benefits gained by the ME3, but calls them subsidies. This is the fundamental difference in the two sides IMHO.
 
Thomaas
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 9:22 am

Quoting astuteman (Reply 49):
That is blatant misinformation.
IAG did not "sell" shares to QR - QR acquired them on the open market.
Why should IAG care what QR's wishes are?.
Quoting ElPistolero (Reply 44):
Of all the many arguments trotted out on this issue, the 'largest shareholder' argument is among the weakest. The logic underlying it is inherently flawed, because it fails to take into account one key element - namely the remaining 90% of IAG's shareholders.

Anything done to support QR actually benefits other shareholders too. You have to consider that to please shareholder, your share price has to increase. What better way to do so than to have someone buy up shares, thus increasing the demand for them which leads to an increase in price. This is exactly what is happening with QR purchasing 10% equity in the company, I can only see them increasing their share moving forward.

Quoting ElPistolero (Reply 44):
EK provides serious competition to BA in key BA markets.

Such as ? Except the kangaroo route on which BA was already weak before EK's arrival because of the distance involved and the lack of a hub in between, there aren't many markets that are critical for BA in which EK has the upper hand. DXB is a big detour for anywhere in the Americas, Africa and most of Asia. JNB, HKG, NRT, JFK and LAX are all immune to EK's competition, and in markets such as SIN, DEL and BKK where they compete with EK, BA attracts high-value fliers because of their non-stop flights.
 
McG1967
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 9:28 am

IAG's stance is more to do with them wanting AF/KL and LH to see the same level of competition from the ME3 on their home patch that BA currently do.
 
BA0197
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 9:30 am

Quoting Thomaas (Reply 53):
Such as ? Except the kangaroo route on which BA was already weak before EK's arrival because of the distance involved and the lack of a hub in between, there aren't many markets that are critical for BA in which EK has the upper hand. DXB is a big detour for anywhere in the Americas, Africa and most of Asia. JNB, HKG, NRT, JFK and LAX are all immune to EK's competition, and in markets such as SIN, DEL and BKK where they compete with EK, BA attracts high-value fliers because of their non-stop flights.

Well, if that is going to be your strongest argument, the US3 then practically face NO competition from the EU3.  

Of course this entire thing is laughable. What the US3 call subsidies are actually benefits from being based in the ME. Yet, for some reasons Chapter 11 is not a subsidy in their eyes? Truly laughable and just goes to show that this is an industry in America that seeks to truly eliminate competition for their consumers.

The fact that IAG (BA) are coming out and saying "compete- we have been" says it all. The BA attitude hasn't changed since Lord King- Competition is good and we welcome it. This is symbolic of the UK, and particularly LHR, market.
 
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GCT64
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 11:26 am

Much as I am reluctant to feed the protectionist trolls, even a quick Google search would reveal that Willy Walsh (WW) said the following things LONG BEFORE QR invested in IAG (a transaction that gave no financial benefit to IAG):

1. WW said that he had analysed Emirates financial accounts very carefully and found no evidence of subsidies.
2. He believes open skies and competition rather than protectionism.
3. More than that, he believes that cross border / cross continent acquisitions and mergers should be allowed in all countries (e.g. between IAG (BA) and AA).

As has been pointed out, LHR has the biggest ME3 presence of any EU/US airport, and yet WW still says the same things (and demonstrates that BA can still be a success by delivering good profits).

The thing that intriques me is why is passenger air travel seen as different from almost all other businesses (incl. air cargo)? In the UK, we have no problem using Fedex or UPS for shipments, buying Apple products, using Google for search, drinking Starbucks etc. (despite those companies unwillingness to pay their fare share of UK taxes) - should the EU (or the UAE) put protectionist measures in place against all these US businesses to protect domestic competitors?
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 11:31 am

Quoting VS11 (Reply 40):
Sure they share the costs/profits but the very fact that they work together instead of competing against each other allows them to expand. BA's USA network and its profitability would be very different if they couldn't JV with AA (or another US carrier).

Huh? BA have been massively successful across the Atlantic for YEARS before the JV, which is still relatively new don't forget. I'm agreeing that the JV is of course beneficial to BA, but it's just as beneficial to AA too, and when you think of the domininant airline across the Atlantic, who do you think of? US? DL? no, you think BA.

don't forget AA needs BA just as much for European connections as BA needs AA for USA connections et al.

that's why they decided to JV after all
 
ElPistolero
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 12:42 pm

Quoting Thomaas (Reply 53):

Anything done to support QR actually benefits other shareholders too. You have to consider that to please shareholder, your share price has to increase. What better way to do so than to have someone buy up shares, thus increasing the demand for them which leads to an increase in price. This is exactly what is happening with QR purchasing 10% equity in the company, I can only see them increasing their share moving forward

i don't follow. IAG shareholders are supporting QR in the hope that QR will buy them all out? If the share price is going up now, is it because of demand for IAG shares (which has performed quite well of late), or because of perceived happiness/demand at QR if they keep doing QR bidding?

Any gain in share price over the long term is going to be based on IAG's financial performance. At the most, QR will provide short term boosts by buying more shares every now and then. Unless you're arguing that IAG shareholders are anticipating QR buying IAG over a short period of time at over inflated share prices, which strikes me as extremely unlikely.

Like I said, I don't follow. IAG is repeating its longstanding stance on the matter - one that long preceded QR's purchase of equity - but it's all just a ruse by IAG shareholders to dump shares on QR at over-inflated prices, even though it benefits EK - a major rival to both airlines?

Quoting Thomaas (Reply 53):
Such as ? Except the kangaroo route on which BA was already weak before EK's arrival because of the distance involved and the lack of a hub in between, there aren't many markets that are critical for BA in which EK has the upper hand. DXB is a big detour for anywhere in the Americas, Africa and most of Asia. JNB, HKG, NRT, JFK and LAX are all immune to EK's competition, and in markets such as SIN, DEL and BKK where they compete with EK, BA attracts high-value fliers because of their non-stop flights.

Sure. In fact, you won't find much disagreement from most folk who support open skies. Of course, logic dictates that what applies to BA and its LHR hub, also applies to LH/AF and their minions in comparatively located EU hubs. Stands to reason that they are as immune to the ME3 as BA is. And the US3? Even more so. In fact, BA is probably the most exposed insofar as EK has free rein to challenge it in its second largest market after the U.S.: India. Goes without saying that EK is, in fact, the largest sixth freedom carrier on UK- India - by some margin.

Begs the question: if BA, which is the most vulnerable to the ME3 out of the EU carriers, doesn't buy into the anti-open skies argument despite it's exposure to EK on traditionally important markets like India, Australia etc (not to mention BKK and HKG, how much merit is there in the protectionist argument?

By your logic, not a lot.
 
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par13del
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 12:47 pm

Quoting BaconButty (Reply 34):
BA would actually like greater liberalisation, specifically cabotage and lifting ownership restrictions.

What do they offer in return, its supposed to be fair trade right, so new runways at LHR with increase in numbers of slots at the same time that the liberalization takes place?

Quoting McG1967 (Reply 54):
IAG's stance is more to do with them wanting AF/KL and LH to see the same level of competition from the ME3 on their home patch that BA currently do.

Except they do not have a LHR model to follow, their airports other than the curfews have much more slots available for traffic and the demand from historical ties are not as great.
Paris is already one of the largest tourist destinations, the rest of the traffic is what their fight is all about, and so far they seem more focused on domestic versus international issues.
 
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FlyCaledonian
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 1:23 pm

Quoting AABB777 (Thread starter):
IAG responded yesterday - May 14 - to the US3's Gulf carrier subsidy claims. The response is pro-Open Skies and pro-competition. In the response IAG states: "The White Paper’s allegations on subsidies to Gulf carriers do not withstand scrutiny. IAG also has serious doubts about the way information is presented in the White Paper."

Some key takeaways from the doc:

- Not only do Gulf carriers bring competitive service and prices, they also stimulate the market, so that much of the increase in their own passenger traffic is incremental, not taken from existing operators.

- “IAG disputes the evidence and conclusions that unfair subsidies are being provided by the Gulf States to the Gulf airlines contained in the White Paper prepared by American, Delta and United. IAG believes the evidence and therefore the conclusions to be unreliable and wholly inappropriate as a means of informing important government policy decisions. The White Paper’s arguments should be rejected as a return to international aviation policies that protect airlines from competitors instead of fostering competition.”

- British Airways has faced direct competition from Emirates for over 25 years.

- The White Paper makes much of the Gulf carrier impacts in relation to passengers travelling indirectly e.g. between India and the US, as if consumers should be denied this choice. Passengers travelling between two points on the globe do not “belong” to any particular airline or group of airlines. Airlines must compete to offer passengers what they want. The outdated concept of “ownership” of passenger traffic must be rejected by all governments.

- Fuel subsidies to any of the Gulf carriers are non-existent. It is not credible to make allegations simply because the States concerned have large oil and gas reserves, especially when there is clear evidence that the carriers concerned have standard commercial contracts in place with well-established jet fuel suppliers.


The full response can be found here: http://www.eturbonews.com/58984/wron...atar-

I love the fact that so many assume that QR owning 10% of IAG means that Willie Walsh is now dancing to the tune of the ME3! I've highlighted two points in bold above: -
* BA has had competition from EK for 25 years. Not just in LHR, but across the UK regions. The fact that EK can throw so much capacity into LHR, LGW, BHX, MAN, GLA, EDI, etc shows that the demand there from the UK consumer. That is part of IAG's point that EK, et al, stimulate new demand and don't just take it from elsewhere.
* I notice a lot of people are putting focus on BA "owning" the TATL traffic and they don't care about the ME3 because they aren't serving LHR-USA. However, BA does also cater to the transit passenger travelling to the Middle East and India. EK, et al, opening up more routes to the USA is competition for BA because it opens up more one-stop options using DXB, AUH or DOH as the transit point rather than LHR (or AMS, CDG, FRA).

BA retreated a lot from Asia in the late 1990s and early 2000s. There were a number of factors to this, but more competition played a part because the low-value transfer traffic that BA used to try and get to fill the back of the plane started going where the lowest fares were. Then BA under Bob Ayling switched to a strategy of no longer chasing that low value traveller to fill the backs of that huge 744 fleet. This was partly seen by BA switching 744 orders for the 772, then seitching the Airbus fleet into LHR (A319s replacing 757s) - remember, BA's strategy at one pont was for all LHR shorthaul to be on either a 757 or 767 except for the 10 ex-BCal A320s.

BA made itself more nimble. Chase the higher value transfer traffic through LHR and go for point-point and frequency. This was also in part a response to FR and U2.

And for those who doubt that IAG is really interested in open skies and competition, this has been BA policy under Lord King, Lord Marshall, Bob Ayling, Sir Rod Eddington and finally Willie Walsh (who of course now heads up IAG). BA, at different times, tried to acquire/merge with SN, KL, CO and UA. It had to settle for a 25% stake in US, then tried to tie-up with AA. BA/AA let that sit for over ten years and came last to the party after all their competitors did similar link-ups.

I'll just finish by wondering what has been more damaging for the US consumer over the last decade - the growth of the ME3, adding capacity and choice to the longhaul markets by feeding their hubs to provide new one-stop options; or the merger of UA/CO, DL/NW and AA/US reducing the US6 to the US3 and halving the choices available.
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AAIL86
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 2:42 pm

Quoting astuteman (Reply 49):
It stems from a strongly held view they have had for some time - one held strongly enough for them to disengage from a European Partnership as a result.
So this isn't an academic exercise - it's one that has already had far-reaching consequences with their ties to AF and LH

Perhaps its a strongly held view, but also one that also seems quite likely to benefit them given the context of their history, demographics, and current economic setup (slot constrained LHR, richest O&D market in Europe, weaknesses of the primary European competitors, etc). As I said before, corporate dossiers are released for specific reasons, lets find this one.

Quoting BA0197 (Reply 55):
The fact that IAG (BA) are coming out and saying "compete- we have been" says it all. The BA attitude hasn't changed since Lord King- Competition is good and we welcome it. This is symbolic of the UK, and particularly LHR, market.

Can't say I agree with you. Their primary base has been the world's largest monopoly airport for decades. You can argue IAG's intellectual honestly, philosophical purity, and commitment to "open" markets all you want, but I just don't buy it. As with the US3, they support "open" markets when it benefits them. They know that they are more or less safe in fortress LHR, while the ME3 (including large IAG shareholder QR) ravage their competitors on the continent. I suspect that they also see the possibility of some decent market share gains in Europe if LH and/or AF/KL get reduced to second tier status or even completely destroyed.

Quoting ElPistolero (Reply 44):
Consider the obvious:

- EK is the largest of the ME3.
- EK has unfettered access to the UK
- EK provides serious competition to BA in key BA markets.

And who stands to gain the most from IAG's support for Open Skies? EK, of course.

I see your point, however my feeling is that IAG know that they (in fortress LHR) are least exposed in Europe to the ME3, and that's silly to fight EK given their massive inherent advantages(geography, lower labor costs, subsidies?, etc). The old adage " if you can't beat em, join 'em" comes to mind.

Out of curiosity, who is IAG second largest shareholder, and how large a share do they have?

[Edited 2015-05-16 07:43:49]
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 3:07 pm

Quoting AAIL86 (Reply 61):
Their primary base has been the world's largest monopoly airport for decades.

Nonsense. It wasn't until the BMI takeover that BA even passed the 50% mark of slots at Heathrow. Even today they are nowhere near what any fair minded person would call "a monopoly situation".

There are plenty of other airlines that have a significantly higher percentage of the slots at their hone hubs - e,g. LH have ~65% in Frankfurt, AF/KL have ~59% in both Paris and Amsterdam. You will find that very many, probably the majority, of the worlds major airlines, including the US3, have a higher percentage of the operations at their main hubs than BA does at LHR.
 
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 3:18 pm

Quoting par13del (Reply 59):
What do they offer in return, its supposed to be fair trade right, so new runways at LHR with increase in numbers of slots at the same time that the liberalization takes place?

This has nothing to do with what IAG will offer 'in return'. Neither expansion at LHR, nor any increasing regulatory liberalisation are in IAG's gift to give. Bt the latter is certainly someting that they have consistently pushed for, and nothing at all really to do with QR purchasing more shares (which as numerous people have rightly pointed out was done on the open market).
 
BA0197
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 3:32 pm

Quoting AAIL86 (Reply 61):
I see your point, however my feeling is that IAG know that they (in fortress LHR) are least exposed in Europe to the ME3, and that's silly to fight EK given their massive inherent advantages(geography, lower labor costs, subsidies?, etc). The old adage " if you can't beat em, join 'em" comes to mind.

This statement is simply wrong and, in fact, opposite to the actual situation. BA is THE most exposed of the EU3/US3 to the ME3. The sheer frequency of the ME3 at LHR, the rapidly growing regional UK destinations that the ME3 serve, BA's defacto US-India dominance in the past, the backtraking required on East-Europe trips to the continent, and overall greater Middle Eastern coverage when compared to the other EU3 make it undoubtedly the most hindered by the rise of the ME3. Yet BA compete...well, I might add.

But I do agree with you that IAG has a purpose in releasing this and it is to encourage openskies on the continent so that the ME3 can compete with the other EU3 as they have been competing with BA. It is ultimately about placing KLM/AF/LH in a weaker position.
 
vv701
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 3:54 pm

Quoting Thomaas (Reply 53):
Such as ? Except the kangaroo route on which BA was already weak before EK's arrival because of the distance involved and the lack of a hub in between, there aren't many markets that are critical for BA in which EK has the upper hand. DXB is a big detour for anywhere in the Americas, Africa and most of Asia. JNB, HKG, NRT, JFK and LAX are all immune to EK's competition, and in markets such as SIN, DEL and BKK where they compete with EK, BA attracts high-value fliers because of their non-stop flights.

You choose to ignore the cost factor.

Both Emirates and several on-line travel companies like Expedia and e-dreams heavily promote many of these routes here in the UK. After all EK does have five 490 seat plus 380 flights from LHR to DXB to fill every day as well as one 380 and a 77W flight out of LGW.

The significant business EK obtains to fill these flights is from cost sensitive customers.

By the great circle routes LHR-CPT is 8,156 miles when travelling via DXB. That is 36 per cent further than the direct great circle routing. The price for an Emirates LHR-DXB-CPT return ticket at £660 for an outward journey on 26 May returning on 2 June is less than two-thirds the price for a BA direct flight on the same dates at £1,007. It might surprise you but quite a few Brits will happily spend the extra hours flying via DXB to save £347 on each ticket. This is particularly true if they are paying out for a family of four. Then the saving will be almost £1,400.

Here in the UK some think a family saving of around $2,200 is a saving worth making.

Having said this, the key to the IAG attitude is that many, perhaps most, of the passengers travelling by EK to CPT as well as other Asian and African destinations would not have been able to afford to make these journeys travelling on direct flights flown by the likes of BA and IB. So the likes of EK are expanding the market and this is to the long term benefit of IAG. But it is pretty short sighted to suggest that six 380s and a single 77W flying out of LON every day to DXB are not in competition with BA. Is there any other city in the world were even the ME3 together offer the same number of daily seats?
 
LJ
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 4:51 pm

Quoting BA0197 (Reply 64):

This statement is simply wrong and, in fact, opposite to the actual situation. BA is THE most exposed of the EU3/US3 to the ME3. The sheer frequency of the ME3 at LHR, the rapidly growing regional UK destinations that the ME3 serve, BA's defacto US-India dominance in the past, the backtraking required on East-Europe trips to the continent, and overall greater Middle Eastern coverage when compared to the other EU3 make it undoubtedly the most hindered by the rise of the ME3. Yet BA compete...well, I might add

On the Asia traffic from British regional airports the competition is between the ME3 and AF/KL + LH Group and just to a lesser extent BA. You're right about the ME3 at LHR but even here you see that AF/KL + LH Group had a sizeable schare of the the one-stop market to Asia (not so much to India though). It's not that someone who prefers to fly nonstop (the passenger with the higherst yield) would suddenly fly ME3 and make a stop in the Middle East. Hence why you can argue that though heavliy exposed to ME3 at LHR, it's more between ME3 and all the other providing one-stop flights ex London. As the other European airlines (except for LH) clearly have a less high yield home market and depend more on connecting traffic it will be them who are more exposed to the ME3+TK instead of BA, which has a very strong high yield home market.

Quoting VV701 (Reply 65):
But it is pretty short sighted to suggest that six 380s and a single 77W flying out of LON every day to DXB are not in competition with BA.

It is indeed, but relatively BA is not so exposed to ME3 than the other airlines in Europe.

Quoting VV701 (Reply 65):
Is there any other city in the world were even the ME3 together offer the same number of daily seats?

However, London is also the biggest market in Europe.

My view is that IAG should know that given the fact that its largest shareholder is a party in the dispute between the US3 and ME3, it should not interfere as it it's against the appearance of doing it for your largest shareholder. Whether it's true or not is irrelevant. This action by IAG will certainly give the EU3 ammunition in it's case against the ME3 in Europe as they'll discredit any argument IAG will make otherwise. This not a valid point for the EU3 to do, but if IAG gives them the opportinity why not?
 
BA0197
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 5:00 pm

Quoting LJ (Reply 66):
This action by IAG will certainly give the EU3 ammunition in it's case against the ME3 in Europe as they'll discredit any argument IAG will make otherwise. This not a valid point for the EU3 to do, but if IAG gives them the opportinity why not?

Well, in that case its the EU2 then  
Quoting LJ (Reply 66):
Hence why you can argue that though heavliy exposed to ME3 at LHR, it's more between ME3 and all the other providing one-stop flights ex London

Why are you making the assumption that BA solely relies on O&D. I accept that they rely more on O&D than the other EU3, but I could make the same argument about DUB-DXB for example- a market BA are a one-stop competitor in Europe.

Quoting VV701 (Reply 65):
By the great circle routes LHR-CPT is 8,156 miles when travelling via DXB. That is 36 per cent further than the direct great circle routing. The price for an Emirates LHR-DXB-CPT return ticket at £660 for an outward journey on 26 May returning on 2 June is less than two-thirds the price for a BA direct flight on the same dates at £1,007. It might surprise you but quite a few Brits will happily spend the extra hours flying via DXB to save £347 on each ticket. This is particularly true if they are paying out for a family of four. Then the saving will be almost £1,400.

Here in the UK some think a family saving of around $2,200 is a saving worth making.

This is a brilliant example of what I've described above. EK do undercut BA, so BA must compete in another way (by trying to attract the higher yielding pax from LON and beyond).
 
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GCT64
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 5:10 pm

Quoting LJ (Reply 66):
As the other European airlines (except for LH) clearly have a less high yield home market and depend more on connecting traffic it will be them who are more exposed to the ME3+TK instead of BA

So the EU2 are upset that the UK pax they were "stealing" from BA are now being "stolen" by the ME3 + TK? If that doesn't smack of hypocrisy then I don't know what would.

As IAG, correctly, says:

Quoting AABB777 (Thread starter):
Passengers travelling between two points on the globe do not “belong” to any particular airline or group of airlines. Airlines must compete to offer passengers what they want. The outdated concept of “ownership” of passenger traffic must be rejected by all governments.

I am a passenger who lives in the UK, I want to have the maximum choice of airlines to use to meet my schedule, service and price requirements. I flew LHR-ZRH-TLV on LX earlier this year - do the EU2 want this banned and have me forced to fly BA or LY?
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sharktail
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 5:40 pm

IN related news, Etihad commissioned a study with an independent UK research firm that concluded that the US3 airlines benefited from $70.48 Billion dollar in subsidies.

https://us.rd.yahoo.com/finance/external/forbes/SIG=131tmbbbo/*http://www.forbes.com/sites/kenrapoza/2015/05/16/etihad-airways-sticks-it-to-american-airlines/?utm_campaign=yahootix&partner=yahootix

Over $30 billion are said to be subsidies from the pension benefits being transferred to the PBGC (in essence the US government).

Not entirely surprising so wanted to not create another thread on subsidies.

For those that wonder why IAG is against the efforts of the US3 to limit competition: They are worried about the next shoe to drop. The US3 want to limit how much competition they will receive from the ME3 under the open skies treaty.

If successful, the likely unintended consequence is that over countries/airlines are going to do something similar. I could easily see the government in say Malaysia or Indonesia or Brasil ruling that X airline received subsidies and therefore withdrawing traffic rights.

And since the precedent is set, it's not like the US can complain. That is a much bigger risk for them than normal competition. At least competition allows them to compete.

Another possible unintended consequence? Lawsuits against the "anti-trust immunity" that was received for the partnerships that fly transatlantic routes. The government cannot overrule the court system. So the immunity only means the US government won't sue. A judge may not agree with position that this is not illegal though.

So yes, IAG has a lot more to lose than to gain from this subsidy row.
 
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 6:47 pm

Quoting sharktail (Reply 69):
In related news, Etihad commissioned a study ...

Not entirely surprising so wanted to not create another thread on subsidies.

Don't worry, there is already a thread on that   :
Etihad: US Carriers Received Benefits Worth $71bn (by dubaiamman243 May 15 2015 in Civil Aviation)
 
vv701
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 7:51 pm

Quoting LJ (Reply 66):
It is indeed, but relatively BA is not so exposed to ME3 than the other airlines in Europe.

Which other airlines, what EK frequencies from what airports using what equipment are behind this assertion?


Further remember that although EK serves as many as six different airports in the UK it serves fewer in geographically larger European countries like France (3 airports served), Germany (4), Italy (3) and Spain (2). Also remember that France and particularly Germany both have larger populations than does the UK

To me more flights AND more airports served in a geographically smaller country are indicative of higher competitive exposure. But while BA gets on with the job of competing others apparently are only prepared to sit back and complain.
 
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BaconButty
Posts: 820
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sat May 16, 2015 7:58 pm

Quoting par13del (Reply 59):
What do they offer in return, its supposed to be fair trade right, so new runways at LHR with increase in numbers of slots at the same time that the liberalization takes place?

That's not the point - the point is that BA have been pro liberalisation for a long time, in fact those opinions are expressed in this 2007 interview:
http://www.theguardian.com/business/...07/oct/14/money.theairlineindustry
Whether it's reasonable or not is academic - the point is that stance pre-dates Qatar purchasing their 10% stake by many years, which should demonstrate beyond doubt that the insinuations re. Al Bakar's influence up thread were ill informed nonsense.

But to answer your question - Walsh's belief was that what was needed was serious consolidation giving global mega carriers. It's not a question of quid-pro-quo, but rather that a mega carrier of, say AA/BA/QF would be better placed to compete - which I happen to agree with. The US would have benefited the same way as the UK and Australia in that case - not everything is zero sum. Water under the bridge though - they went for continental rather than global consolidation.

Edit: Cheers @RTFM spot on.

[Edited 2015-05-16 13:00:17]
Down with that sort of thing!
 
VS11
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 2:23 am

Quoting FCAFLYBOY (Reply 57):
Quoting VS11 (Reply 40):
Sure they share the costs/profits but the very fact that they work together instead of competing against each other allows them to expand. BA's USA network and its profitability would be very different if they couldn't JV with AA (or another US carrier).

Huh? BA have been massively successful across the Atlantic for YEARS before the JV, which is still relatively new don't forget. I'm agreeing that the JV is of course beneficial to BA, but it's just as beneficial to AA too, and when you think of the domininant airline across the Atlantic, who do you think of? US? DL? no, you think BA.

Yes, you proved my point. BA is the dominant airline and that's possible because of the Open Skies between the US and EU. As you know, until then Bermuda II was in place and BA wasn't the dominant carrier.
 
Thomaas
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 3:55 am

Quoting VV701 (Reply 71):
To me more flights AND more airports served in a geographically smaller country are indicative of higher competitive exposure. But while BA gets on with the job of competing others apparently are only prepared to sit back and complain.

No it does not. BA has long been irrelevant in the regional UK airports, therefore the traffic the ME3 are taking from these cities would most likely not fly BA anyways.
 
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RyanairGuru
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 4:34 am

Quoting AAIL86 (Reply 61):

You are missing a tiny detail: BA doesn't have a monopoly at LHR. 10 years ago they were barely at 40% of slots there, and only finally reached 50% by purchasing BD.

BA operates in one the most competitive hub environments in the world. CX and (ironically) EK are the only two that come to mind as having such small market share at their home airports.

Quoting Thomaas (Reply 53):

It's laughable that you think the Kangaroo Route is the only place that EK competes with BA. For a start India is BA's second largest market after the USA. A lot of the UK's Sub-Continent population lives in the north of England for whom it makes a lot more sense to fly EK, QR or EY from MAN rather than via LHR. Even for London traffic, the ME3 lower prices and yields, to BA's detriment. BA is, unfortunately, significantly weaker than it once was in BKK with the loss of the Kangaroo traffic as a lot of the (low yield) Thailand traffic is being shoveled up by ME3. Male, Colombo and Mauritius. Hell, Dubai itself has massive O&D to London, indeed I wouldn't be surprised if London was Dubai's largest destination by O&D.


The conspiracy theory crowd have missed a minor detail: Walsh is most openly supportive of EK, and only mention QR in passing... As others have said, this has been IAGs policy for years, and nothing has changed in that regard since QR acquired shares in the company. The other minor detail that eludes them is that QR do not have a seat on the board so there is no way that they can formulate company policy even if they wanted to.
Worked Hard, Flew Right
 
David_itl
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 7:37 am

MAN, BA and the ME3 nicely encapsulated in a news story.


This is the pertinent quote:

“We’ve flown international flights from Manchester in the past but they weren’t profitable, so today we fly to Heathrow,” Walsh, who ran British Airways until January, said in an interview. “If the Middle Eastern carriers want to fly there and it’s a market we’re not serving directly, that’s competition. I have no complaints.”

How hard they tried to make the roues profitable is open to debate. Note that this is from 2011 when EK was 2 daily with EY and QR both operating daily and the planned expansion of those airlines that was announced in the space of a few weeks. Okay, QR went back to 10 weekly after a couple of years however, let's look at the 2015 situation: EK 3 daily (2 x A388 + 1 77W), QR 2 daily (2 x A330) and EY 2 daily (was 2 x A330 but has been flitting between 1 77W + 1 A330 and 2 77W for the pat couple of years. Looks like it's 2 77Ws again later this year). At some point, even BA will have to contemplate if they missed a trick, especially now that is appears full speed ahead for the Northern Powerhouse.
 
astuteman
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 8:30 am

Quoting sharktail (Reply 69):
For those that wonder why IAG is against the efforts of the US3 to limit competition: They are worried about the next shoe to drop.

The risk of rampant protectionism is considerable..

Quoting BaconButty (Reply 72):
Whether it's reasonable or not is academic - the point is that stance pre-dates Qatar purchasing their 10% stake by many years, which should demonstrate beyond doubt that the insinuations re. Al Bakar's influence up thread were ill informed nonsense

Yep. It's more a case of "QR bought their stake in IAG because of their stance", than "IAG took their stance because QR bought their stake"

Quoting RyanairGuru (Reply 75):
CX and (ironically) EK are the only two that come to mind as having such small market share at their home airports.

There's a curiosity ...

Quoting RyanairGuru (Reply 75):
Walsh is most openly supportive of EK, and only mention QR in passing.

It wasn't lost on me that IAG's comments specifically promote QR's single biggest competitor. There are none so blind as those who won't see

I've been quite surprised by just how hard some people are prepared to try to discredit a very reputable airline criticising the US3's stance...

I suppose I shouldn't have been..

Rgds
 
parapente
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 9:23 am

reply 76
good article which sums it up nicely.
BA and EK have 2 completely different business models.With the exception of Sydney BA specialises in flying it's customers non stop direct to major destinations around the World. EK specialises in 'one stopping' it's customers around the World. They can make an airport like Manchester work because the people on the plane are going to a myriad of different destinations - not one.
Between the two models they are (along with LH and AF in Europe and ME3 in the ME) carving up the long distance traffic to anywhere east of the 0 meridian line.All African long distance operators are in trouble,nearly all SE Asia and Austrlasian long distance airlines are feeling the same effect.
In (say) 5-10 years time the landscape will look very different indeed.Just about everybody will be flying (south or east) via the EU3 or the ME3.US3 will also feel the effect for pax wanting to go east one stopping.To try and stop it would be like KIng Canute and the tides!But they are in a perfectly strong position flying south,north or west - just not East.Does it really matter? With 3 ME airlines plus T plus the alternative routes via Europe there is and will be plenty of competition to keep them honest.
I guess in time ME3 will also take a large chunk of central America and Eastern cities in South America for those wishing to fly in an Easterly direction such as SE Asia.and India.Again itr just makes sense.
 
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thekorean
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 9:33 am

Quoting astuteman (Reply 77):

Who's trying to discredit BA?

And what's wrong with looking out for interet of its shareholder? Did anyone here ever say that was wrong?
 
vv701
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 10:56 am

Quoting Thomaas (Reply 74):
No it does not. BA has long been irrelevant in the regional UK airports, therefore the traffic the ME3 are taking from these cities would most likely not fly BA anyways.

Irrelevant?

Which UK regional airport other than BHX (that is a relatively short 104 miles by road from LHR T5) does EK fly to that BA does not?

In principle what is the significant difference between flying NCL-LHR-XXX with BA and NCL-DXB-XXX with EK?

Why did 876,572 passengers fly between LHR and MAN in 2014 when, allowing for check-in etc, the quickest and usually the cheapest way of travelling between London and Manchester is between Manchester Piccadilly and London Euston by rail?

If BA is irrelevant in British regional airports and to the passengers using those airports how, according to the UK Civil Aviation Authority, did British Airways (ex-BA CityFlyer) manage actually to carry 5,025,927 passengers on scheduled flights to or from British regional airports in 2014?
 
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FlyCaledonian
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 11:52 am

Those who criticise BA should look at what they've done with their operations going East in recent years. After the liberalisation of the air service agreement with India, BA added frequency to DEL/BOM and VS/BD jumped in to the market too. BA is still the strongest player, but today BLR, HYD and MAA are all on the 788. That suggests that BA needs it's most efficient longhaul aircraft to compete with the one-stop options offered by the ME3. BA also dropped CCU and DAC, that had both both served for years because the yields were being trashed (and BA could use the LHR slot more profitably on something else as a result).
Let's Go British Caledonian!
 
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3rdGen
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 6:28 pm

I know its semantics but can someone confirm, did Qatar AIRWAYS actually buy the 10% stake, or was it the Investment arm of the Qatar Government.
لا اله الا الله محمد رسول الله
 
rta
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 6:41 pm

Quoting 3rdGen (Reply 82):
I know its semantics but can someone confirm, did Qatar AIRWAYS actually buy the 10% stake, or was it the Investment arm of the Qatar Government.

Yes, Qatar Airways.
 
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enzo011
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 8:27 pm

Quoting thekorean (Reply 79):
Who's trying to discredit BA?

And what's wrong with looking out for interet of its shareholder? Did anyone here ever say that was wrong?

When it is framed that the only reason BA is stating their opinion that the US3 are wasting their time, is due to the Qatar investment, then that is trying to discredit BA and their opinion. Those that do believe that must think the Willie Walsh must have known years ago that Qatar would invest in BA, because his opinion isn't new.
 
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thekorean
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 8:32 pm

[quote=enzo011,reply=84]


How exactly is that discrediting BA's opinion?
 
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Ncfc99
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 8:45 pm

Quoting thekorean (Reply 85):
How exactly is that discrediting BA's opinion?

It implies that BA's opinion has changed since QR bought its stake, that has been clearly shown to not be the case.
 
astuteman
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Sun May 17, 2015 9:04 pm

Quoting thekorean (Reply 79):
Who's trying to discredit BA?

I'd suggest re-reading the thread.
2 out of 3 of the 1st 40 posts were "IAG are only doing this because of QR's 10% stake".
Which is complete bollocks.
IAG were saying this before QR came anywhere near

Quoting thekorean (Reply 79):
And what's wrong with looking out for interet of its shareholder? Did anyone here ever say that was wrong?

There's nothing whatsoever wrong with looking after the interests of ALL the shareholders.
But not just the 10%

BA have for at least the last decade taken the stance that best way to support the interests of the shareholders in the long term is to stand on its own 2 feet and not rely on someone else to prop it up
And it seems to be working.

"Open skies" will never mean the playing field is level in every characteristic for every airline.
There are far too many variables at work in this complex world for that ever to be the case.
(in that sense the EK 16 page document is exactly right)
What it does mean is getting on with it, and ensuring you're fit to do so.

Quoting ncfc99 (Reply 86):
It implies that BA's opinion has changed since QR bought its stake, that has been clearly shown to not be the case.

I'm not sure how anyone can say this isn't discrediting IAG.
The intent of the comments is exactly that.
"Well they would, wouldn't they" is how it reads

Rgds
 
Thomaas
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 1:15 am

It's funny how people like to say that BA is a fierce defender of open skies yet it took longer to open up LHR and dissolve Bermuda II precisely because of opposition from BA as there was a need for "time to adjust because of the constrained airport". Airlines will defend open skies only when it benefits them ...
 
AAIL86
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 4:09 pm

Quoting RyanairGuru (Reply 75):
You are missing a tiny detail: BA doesn't have a monopoly at LHR. 10 years ago they were barely at 40% of slots there, and only finally reached 50% by purchasing BD.

Its true that London do have a plethora of international carriers, but as all know - its hugely more important (with far richer O&D) market then your average large airline hub. It's a veritable dreamland for premium traffic, now isn't it?. Better to have 48 percent of LHR then 75 percent of any/all of ORD, FRA, DFW, PHX, MAD, HEL, etc. And then there's the fact that LHR has been massively slot-constrained for years, making the slots in-and-of themselves very valuable assets. No one is actively worried about getting slots at DFW, now are they?

That 48 percent or so is about as close to a monopoly as presently possible in a market of that size/enormous wealth.
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 4:50 pm

Quoting AAIL86 (Reply 89):
That 48 percent or so is about as close to a monopoly as presently possible

Well that may be a lot closer to reality than:

Quoting AAIL86 (Reply 61):
Their primary base has been the world's largest monopoly airport for decades.

which is patently nowhere near reality.

But the fact that London has a high percentage of high worth O&D traffic (and I would argue that it is only one of a number of airports around the world that does), does not alter the fact that BA still has to compete with lots of other airlines for their share of that traffic. In addition, many of those other airlines have the advantage of being able to concentrate their competition on a small number of the most profitable routes, without having to maintain all of the far less profitable short-haul routes that BA has to. BA is successful because it chooses to compete with those other airlines rather than sit back and expect to have that traffic handed to them on a plate.

In my opinion, many other airlines that have far higher percentages of the slots at their own hubs, would be far more successful if they put more effort into competing, in the same way that BA does, instead of directing their efforts at whinging.
 
vv701
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 5:02 pm

Quoting AAIL86 (Reply 89):
That 48 percent or so is about as close to a monopoly as presently possible in a market of that size/enormous wealth.

This is a common feature at the main hubs of all major airlines. Indeed as far as I know the only major airline in the world that has a lower share of operational slots at a main hub than does BA at LHR is UA at ORD. There AA also has a significant presence.
 
AAIL86
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 5:14 pm

Quoting speedbored (Reply 90):
Quoting AAIL86 (Reply 61):
Their primary base has been the world's largest monopoly airport for decades.

which is patently nowhere near reality.

Interesting. Maybe you should describe to us how "open" LHR was in the Bermuda II days? I stand by my points.

Quoting Thomaas (Reply 88):
It's funny how people like to say that BA is a fierce defender of open skies yet it took longer to open up LHR and dissolve Bermuda II precisely because of opposition from BA as there was a need for "time to adjust because of the constrained airport". Airlines will defend open skies only when it benefits them ...

        

This point is precisely the arguement I have been making throughout this thread. Businesses support what benefits them.
If one owns a wheat farm that produces wheat for export, then that owner (if he or she knows what is good for them)would support policies and legislation that enable exporters. Likewise, BA is taking this stance because it benefits them and their shareholders - including their largest one, which is interesting.
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 5:25 pm

Quoting AAIL86 (Reply 92):
Interesting. Maybe you should describe to us how "open" LHR was in the Bermuda II days? I stand by my points.

Why? What on earth have "the Bermuda II days" got to do with now?

But even if we accept that those days are relevant, there was still significant competition at LHR even then, albeit between a limited number of airlines. Bermuda II did not prevent competition, it simply limited the number of competitors.

Quoting AAIL86 (Reply 92):
I stand by my points.

As you are perfectly entitled to do. That does not, however, make your points correct.
 
AAIL86
Posts: 454
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 5:31 pm

Quoting AAIL86 (Reply 92):
Quoting AAIL86 (Reply 61):
Their primary base has been the world's largest monopoly airport for decades.
Quoting speedbored (Reply 93):

Quoting AAIL86 (Reply 92):
Interesting. Maybe you should describe to us how "open" LHR was in the Bermuda II days? I stand by my points.

Why? What on earth have "the Bermuda II days" got to do with now?

You had questioned my original comment, which is shown above.

Quoting speedbored (Reply 93):
As you are perfectly entitled to do. That does not, however, make your points correct.

I guess we agree to disagree, then  
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 6:57 pm

Quoting AAIL86 (Reply 94):
You had questioned my original comment, which is shown above.

True, because it is wrong.

Or maybe you have an English dictionary with a definition of "monopoly" that differs from every definition that I have ever seen. Under no definition I am aware of does ~50% come even close to constituting a monopoly.

LHR is not even close to a monopoly airport, nor has it been at any time since it first became a civil airport after WW2, and BA have had to compete on purely commercial terms even since it was first privatised in 1987.
 
MPadhi
Posts: 124
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 7:21 pm

Quoting speedbored (Reply 93):
Bermuda II did not prevent competition, it simply limited the number of competitors.

Does that not have the same effect? The fewer firms there are in the industry, the less competition there is in that industry.
 
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speedbored
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Mon May 18, 2015 8:45 pm

Quoting MPadhi (Reply 96):
Does that not have the same effect?

No. I said prevent, not reduce. As long as there is at least 1 competitor, competition exists.

Quoting MPadhi (Reply 96):
The fewer firms there are in the industry, the less competition there is in that industry.

True, but we were not discussing the scale or effectiveness of competition. I was simply pointing out that to argue that BA holds, or has ever held, a monopoly position at LHR is just wrong.
 
strfyr51
Posts: 4258
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RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Tue May 19, 2015 1:24 am

The IAG is NOT the USA. Frankly? Their opinion really means NOTHING. the USA3 have presented this paper to Congress and the Courts.
The IAG doesn't have a Dog in this Fight. and Frankly? We don't NEED their OPINION...This is brought up in the USA,
We can settle our OWN Business. And they can Keep their opinions to themselves. We're big Boys.
We can talk about this without comments from the "Peanut Gallery".
 
Thomaas
Posts: 660
Joined: Sun Apr 27, 2014 10:52 pm

RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Tue May 19, 2015 1:36 am

Quoting VV701 (Reply 91):
Quoting AAIL86 (Reply 89):
That 48 percent or so is about as close to a monopoly as presently possible in a market of that size/enormous wealth.

This is a common feature at the main hubs of all major airlines. Indeed as far as I know the only major airline in the world that has a lower share of operational slots at a main hub than does BA at LHR is UA at ORD. There AA also has a significant presence.

LHR is a constrained airport with no room for growth, one can argue that 50% share of LHR is more detrimental to competition than a similar proportion at other large hubs. Any airline can start a hub at AMS, FRA, CDG and MAD if they wish to. BA should have never been allowed to purchase BD's slots considering their already substantial presence at LHR.
 
astuteman
Posts: 7059
Joined: Mon Jan 24, 2005 7:50 pm

RE: IAG: US3 White Paper "Inaccurate" & "Misleading"

Tue May 19, 2015 5:33 am

Quoting Thomaas (Reply 88):
It's funny how people like to say that BA is a fierce defender of open skies yet it took longer to open up LHR and dissolve Bermuda II precisely because of opposition from BA as there was a need for "time to adjust because of the constrained airport". Airlines will defend open skies only when it benefits them ...

And yet those constraints are now gone, and BA, instead of moaning, are defending the open skies policy. Which makes the point somewhat moot, does it not?

BA will indeed defend what's right for them, and what's right for them is to be competitive.....

Rgds

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