Saturday 10 December 2016

Virgin says passengers will pay for Aer Lingus takeover

John Mulligan and Daniel McConnell

Published 15/04/2015 | 02:30

Passengers will bear the brunt of an Aer Lingus takeover through rising costs and decreased connectivity, Virgin Atlantic has told the European Commission
Passengers will bear the brunt of an Aer Lingus takeover through rising costs and decreased connectivity, Virgin Atlantic has told the European Commission

Passengers will bear the brunt of an Aer Lingus takeover through rising costs and decreased connectivity, Virgin Atlantic has told the European Commission.

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Assurances given by IAG to the Government regarding its future plans for Aer Lingus are insufficient and "substantive concerns" remain about the proposed €1.4bn takeover, the Richard Branson-founded airline warns.

A letter from Virgin Atlantic to completion tsars in Brussels, seen by the Irish Independent, claims that the takeover will result in "a reduction in competition" which will result in a "deterioration in consumer benefit".

Virgin is concerned that it will lose tens thousands of passengers a year who connect to its long-haul services in London from Ireland.

It told the Commission: "Without appropriate safeguards, passengers will bear the brunt of the expected negative impact of the merged entity in the form of price rises and a decline in connectivity between Ireland and the United States / Great Britain."

The letter also claims: "If the proposed transaction proceeds unchecked, as a result of its dominant position on the overlap routes, IAG will have the ability to divert Aer Lingus feed away from other long-haul carriers and the incentive to funnel it onto other IAG services. This will come at the expense of consumers."

At an Oireachtas Committee hearing earlier this month, Virgin executive Joe Thompson told TDs and Senators that 100,000 Aer Lingus passengers travel on Virgin long-haul routes every year.

Labour TD Sean Kenny, who is a member of the Oireachtas Transport Committee, said yesterday: "I, and other members of the committee, believe Virgin would have more credibility if they had direct customer involvement in Ireland."

Meanwhile, a Government decision on whether to sell its stake in Aer Lingus has been delayed over demands for increased guarantees on critical slots at Heathrow Airport.

It had been suggested in recent days that Transport Minister Paschal Donohoe would bring a recommendation to Cabinet today but this has been delayed as "several issues" remain to be clarified.

The future use of the slots controlled by Aer Lingus at Heathrow Airport remains a key sticking point for a steering group advising the Government on whether it should sell its 25.1pc stake in the airline.

Mr Donohoe said he will be briefing his Cabinet colleagues today on the state of play. "Discussions have been ongoing between myself and my department between Aer Lingus and they continue to be ongoing."

But the chances of a recommendation now being put to Cabinet next week are reducing, Government sources said.

Irish Independent

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