Virgin Atlantic Says No to BA/AA Alliance – Essay Example
The paper "Virgin Atlantic Says No to BA/AA Alliance" is an excellent example of a business essay.
Currently, there is a big debate about American Airlines and British Airways to combine and form an alliance. This proposal according to the two airlines is to promote sustainability in the world. The current inflation and rising costs of fuel and low demands for airlines is the reason behind this proposal. However, Virgin Atlantic has criticized this move since it will lead to monopoly and consequently face out independent airlines like Virgin Atlantic. According to Steve Ridgways speech in Washington DC, the move will create monopoly. He gave examples of the most busiest and profitable routes. Steve argues that if the two airlines combine then they will operate 79% of all capacity operations between Heathrow and Boston. Operations between Heathrow and Chicago will be operating at 66% capacity if the two airlines combine. In addition, operations between Dallas and Heathrow would contribute to 100% monopoly if the two airlines combine. According to him, this is unethical and a move to kill other rising airlines. Steve suggests that US owns 6 of the largest airline in the world. Steve suggests that forces of demand and supply should determine the economic trend. Virgin Atlantic advocates for open and free skies operations. Heathrow is the largest airport in the world and connects almost half of all passengers travelling between America and Europe. Forming an alliance between these two airlines means complete monopolies will exist. This is the reason why Virgin Atlantic is against this merger. Virgin Atlantic argues that if the merger takes place, airline prices will increase significantly due to the monopoly aspect existing. The airline industry argues that it is protecting customer’s interest (Ridgway).