Fly me away...

...As long as it’s with BA it seems. The owner of British Airways today secured the £172.5million purchase of BMI in which they have managed to increase their landing slot share at Heathrow airport from 45% to 53%. It is a deal which many expect to bring about job losses, a notion supported by Willie Walsh, chief executive of IAG (the holding company of BA) who “is just unaware of the numbers yet”.

Have British airways gone too far?

Walsh expects the deal to be good news for the UK economically with BA intending to switch the majority of BMI’s short haul flights to longer haul destinations in emerging markets such as China and Indonesia. Whether this change in destination will actually have any effect is debatable. These destinations are already available on rival airlines such as Virgin Atlantic and of present Britain remains a relatively unpopular destination to visit.

An alternative view of this deal is that BA is simply attempting to monopolise the market.  By securing the deal BA have managed to reduce consumer choice and therefore be able to dictate prices. This could potentially price other airlines out of the market something Sir Richard Branson agrees with; “This deal simply cuts consumer choice and screws the travelling public”.

Whatever, the case though, IAG have secured an extremely competitive deal. Most people forecasted the value of BMI’s Heathrow slots alone at £382.6million let alone the whole company. The very fact that BA secured this deal for such a low price shows that within the UK the BA holds too much power in the airline market and today’s deal will only strengthen that position.