12 MARCH 2012


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Article from BTNews 12 MARCH 2012

COMMENT: The Office of No Decision

Read down in AERBT and you will find a story entitled 'OFT passes BA-bmi takeover to the European Commission'.  This is a classic case of evading responsibility and must raise serious questions concerning the Office of Fair Trading and who is running the United Kingdom, our Parliament in Westminster, or unelected officials in Brussels.  The man from the Ministry himself, one Sheldon Mills, Director of Mergers, summed it up beautifully.  "The proposed acquisition of bmi by IAG has generated a significant level of concern in the UK, especially in Scotland, the North West of England and Northern Ireland."  We will repeat.  “Scotland, the North West of England and Northern Ireland.”

Just what has this to do with Europe?  Surely the Office of Fair Trading has enough skills within its organisation to make its own judgement.  Or is its track record so appalling that when it comes to a vital commercial judgement, it is scared to get it wrong?

Some of the OFT’s latest decisions regarding air transport have been odd to say the least, this week highlighted with Eastern Airways returning to Brussels from Southampton after being effectively pushed off by Flybe, the result of an OFT pronouncement.  Southampton Airport and its customers should consider themselves lucky that Eastern were happy to fill the breach.

The most serious case in recent times also involves Flybe, the 5 November 2010 decision that it had no grounds to take action over alleged predatory entry by the airline against Air Southwest.  As far as Cornwall and Devon are concerned the result is the same as would have been the case if Guy Fawkes had succeeded with his dreadful plot.  Plymouth Airport has closed and Newquay’s traffic for last year is down 50%.  Air Southwest has gone to the great hangar in the sky!  It would not have taken a brain surgeon to spot what was to happen. 

At a higher level, back in November the OFT issued a Statement of Objections to British Airways (BA) and Virgin Atlantic in its civil law investigation into alleged collusion over the pricing of passenger fuel surcharges for long haul passenger flights to and from the UK between August 2004 and January 2006.  We are still waiting to hear more.

The anticipated joint venture between Alpha Flight Group Ltd (Alpha) and LSG Lufthansa Service Holding AG (LSG) has been handed to the Competition Commission for further investigation.  No decision once again.

Mind you, the OFT has never been scared to get involved with airline matters that some may say were none of their business although both carriers have substantial involvement in UK aviation. In January of last year the OFT wrote to Ryanair Holdings Plc setting out that it believes it is 'in-time' to review the company's acquisition of a minority interest in Aer Lingus Group Plc.  Where is the review?

The BA-bmi issue should not be allowed to drag on.  It is no good for either airline, and disastrous for Lufthansa.  AERBT does not have a crystal ball.  Based on previous airline decisions whatever it comes up with will probably be wrong.  But the judgment should be made here in the UK, and not by Europe.  Frankly it is none of their business.

Malcolm Ginsberg
Editor in Chief

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