Title: IPIC British Caledonian Airways response to British Airways
1 IPICBritish Caledonian Airways response to British Airways Prepared by Group 8 E10 Roel COLLIER Maggie LAI Veronique LESCAUT Anil NAMBIAR Jaromir PEKLOMatthew PEREGRINE-JONES Professor Vanessa Strauss-Kahn INSEAD Fontainebleau 22th September 2003 2 We Never Forget You Have a Choice
British Airways in 1984
Historical accident and government policy means BA
Operates from 108 cities in 63 countries from London Heathrow (and Gatwick)
Domestic market share 50
International market share 82
British Caledonian in 1984
Commercially run BCal
Operates from 30 cities in 23 countries from London Gatwick
Domestic market share 9
International market share 11
Further expansion by private airlines is restricted 3 Deregulation is necessary
Benefits of deregulation
Fares in the US have fallen by 40 in real terms over the last ten years
The number of passenger-trips has more than doubled from 3M to 6.4M in the US over the same period
How to achieve it
Break up of cartels and bilateral agreements
6th Freedom (UK and NL agreement to abolish revenue pooling)
5th Freedom (Singapore Airlines flies London to Paris)
Implement CAA Recommendations
4 If deregulation happensBCal in favour ofprivatisation
However as a privatised company BA
has to compete on the market
has to give up any competitive advantage that it gained from being state-owned
Fair Competition 5 Without deregulation BA privatisation is a joke
BA is endowed with profitable routes and public funds was rescued from bankrupcy by a benevolent government and operates from a virtually impregnable position at Heathrow the worlds busiest international gateway.
The consequences of privatisation with BA as it is will be disastrous for privately owned airlines.
6 Redistribute BAs monopoly advantages
BAs monopoly advantages
impregnable position at Heathrow
open access to Heathrow
Open airports and routes to competition before BA is privatised
We Never Forget You Have a Choice
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