BA facing a fierce fight at Heathrow

(14.10.2007   Sunday Times)

THE fight for the world’s most lucrative air route will heat up this week when
America’s Delta Air Lines teams up with Air France to take on British Airways
at Heathrow.   The pair are expected to announce their first-ever transatlantic
flights from the London airport.     Delta is likely to serve New York, Atlanta
and one other American city, with Air France studying a Los Angeles service.  

The two airlines, already part of the Skyteam alliance, have asked the American
government for approval to share revenue and coordinate fares and schedules on
all transatlantic routes.   This arrangement could include America’s Northwest
Airlines and Holland’s KLM, which are also part of Skyteam.

Competition has been restricted at Heathrow for 30 years.     A treaty between
Britain and the US stipulated that only 4 airlines – BA, Virgin, United and American
– could fly to the US from Britain’s largest hub.

Experts are divided as to whether the extra capacity will bring a reduction in
fares. "The UK-US market is worth around £4 billion a year, and it is growing
fast," one analyst said.

"It has a high proportion of business-class travellers, and they subsidise economy
fares.   I doubt you will see a big reduction in economy prices.   What BA fears
most is business-class tickets going down."

BA told analysts last week it was not unduly concerned about the extra competition.  
BA is to announce details of "Project Lauren" – its new flights from continental
capitals to America – in late November or early December.   An organisation called
Project Lauren has begun advertising online for suitable pilots.   A source at
BA confirmed this was for the proposed service.

Industry sources said the new operation might not be branded as BA, with speculation
mounting that it would be called "Speedbird" – the airline’s radio call sign.  
BA said yesterday it had not yet decided how the new operation would be branded.

The "airline within an airline" will start with two Boeing 757 aircraft from
two European cities.