Heathrow celebrates record New York passengers, but fares not falling
12.04.11
British Airways and Virgin Atlantic joined Heathrow owner BAA in celebrating the record passengers on flights to New York yesterday. But the benefits of liberalising transatlantic air travel have all gone to the airlines, a leading industry analyst told Travel Weekly.
Some 3.6 million passengers flew between the airport and New York last year. A spokesman said: ‘Flights between the two cities are so frequent you would often wait longer for a pizza, a train or a cab.’ BAA chief executive Colin Matthews confirmed New York as Heathrow’s ‘top route’ and Sir Richard Branson said transatlantic flights were ‘crucial in connecting two of the world’s most important business hubs’.
However, analyst James Halstead from Aviation Economics, told Travel Weekly that the global airline alliances - Oneworld, Star Alliance and SkyTeam - account for 75% of passengers and revenue on the routes and said: ‘The main point of alliances is to create pricing power for airlines.’ He said the biggest benefits of airline liberalisation between Europe and the US three years ago had been on transatlantic routes, where ‘the increase in margins is considerable’.
Until April 2008 only four airlines, including BA and Virgin Atlantic, were allowed to fly between Heathrow and New York. At the time of deregulation, the European Commission said it promised cheaper fares for passengers. However, Mr Halstead said: ‘Regulators believed the deregulation would reduce prices. But where you have three companies with 75% of the market you would expect to see prices rise for the consumer, and that is what has happened.’
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