BMI BA Purchase

BA Boeing 777-300 Taking Off (Photo by Andrew Simpson)

                                             BMI – And the Winner Is BA – Or Maybe Not Quite Yet?             

IAG’s boss Willie Walsh has overcome stout opposition by Virgin’s Richard Branson as well as regulatory hurdles for permission to buy BMI from Lufthansa on condition that IAG relinquishes 14 of the 56 landing slot pairs¹  at Heathrow owned by BMI.  That is of course not yet certain should Branson decide to appeal the European Commission’s decision to allow the deal to go ahead.  BMI serves 45 routes including destinations in India, The Middle East, Africa and Eastern Europe. 

A condition of the approval is that seven of the fourteen slots must be sold to carriers agreeing to provide services to Edinburgh and Aberdeen.   In addition the approval means that IAG’s carriers must provide competitors with access to seats on its UK and European services to allow other airlines (Including Virgin) to book seats for passengers who want to transfer onto IAG’s long-haul flights.  Mr Walsh has challenged Richard Branson to make good his previous promise should Virgin buy BMI to maintain flights to Scotland by taking up the slots now available for the Heathrow – Scotland routes. 

Meantime, Willie Walsh has said that IAG will maintain BMI’s current schedules.  However,  the opening up of 42 slots should now enable IAG to develop new routes to the Far East and S. America.   Whilst this will not in any way alleviate the traffic congestion at Heathrow, it will at least provide slots for connections to cities in China and other burgeoning markets.  It is perhaps an irony that in acquiring the extra Heathrow slots and connectivity, Willie Walsh’s reasons (as far as IAG is concerned anyway) for calling for a third runway  have been partially satisfied.

1 The term, “landing slot,” is frequently used to refer to slot pairs, which include a landing slot and a take-off slot.  Naturally, an airline that wishes to offer a flight between a slot-constrained airport and another city’s airport frequently uses both a landing slot and a take-off slot, so that it can both deliver passengers to that city’s airport and receive passengers from the same airport. [Ref Competitive Effects of Exchanges or Sales of Airport Landing Slots:  by James D. Reitzes, Brendan McVeigh, Nicholas Powers, Samuel Moy The Brattle Group. December, 2011]