Price-fixing protest over US flights

By SEAN POULTER, CONSUMER AFFAIRS EDITOR
Updated:

 

A PRICE fixing cartel is adding hundreds of pounds to the cost of transatlantic flights, carrier BMI British Midland has claimed. The company has complained to the European Union Commission amid allegations that low-cost operators are being locked out of the market.

A deal between the British and US governments means the only UK airlines allowed to offer flights to the US out of Heathrow are British Airways and Virgin Atlantic. The Commission has now given the Government six weeks to justify this arrangement, considered illegal under EU competition law.

British Midland is offering a round-trip price from Manchester to Washington Dulles this month for £214.90. The BA fare for comparable economy flights out of Heathrow on the same dates is £316.80. Figures for business class show that tickets can be around £2,000 more expensive from Heathrow to New York, than from Frankfurt. Some 10m passengers - more than half the UK total flying to the US - use Heathrow each year.

The arrangement that allows operators using the airport to be restricted is known as Bermuda II and was signed in 1977. It also limits US carriers allowed to fly into Heathrow to American Airlines and United Airlines. However, it does not apply to other UK regional airports, which allows British Midland and others to offer transatlantic services.

British Midland chairman Sir Michael Bishop said: 'The current regulatory regime is among the most restrictive in the world and must be abolished. It has driven up fares and deprived the consumer of choice. All UK and US airlines able to provide services between Heathrow and the US should be given a fair opportunity to do so.'

A business class fare from Heathrow to New York with BA, Virgin, United and American costs £3,821 compared to £2,001 charged by Lufthansa, United, Continental and Delta from Frankfurt. The price from Amsterdam is £2,113 and from Paris £2,612.

Given the success of low-cost airlines such as easyJet and Ryanair within Europe, there is enormous scope for cut-price deals across the Atlantic. However, BA and Virgin Atlantic are determined to avoid handing over any of their flight slots at Heathrow to cheaper rivals. A BA spokesman said: 'We believe that Bermuda II achieves its aim in ensuring fair competition.' Virgin Atlantic said the competition the airline created was 'working to keep ticket prices down'.

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