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
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 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
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Deregulation is necessary

• Benefits of deregulation
• Consumers benefit
• Fares in the US have fallen by 40 in real terms
  over the last ten years
• Market increase
• 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
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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.

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Redistribute BAs monopoly advantages

• BAs monopoly advantages
• profitable routes
• public funds
• benevolent government
• impregnable position at Heathrow

• CAA Recommendations
• route redistribution
• open access to Heathrow

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Conclusion

• Open airports and routes to competition before BA
  is privatised
• We Never Forget You Have a Choice