Airlines fear the fate of the miners

SIR BRYAN Carsberg, Director-General of Fair Trading, is expected to decide tomorrow whether to recommend a monopolies investigation into British Airways' takeover of Dan-Air, writes Michael Harrison.

The betting remains that Sir Bryan will not call for reference of the controversial deal to the Monopolies and Mergers Commission. But there are growing indications that he may recommend that Michael Heseltine, President of the Board of Trade, place conditions on the merger to protect competition at Britain's two biggest airports, Heathrow and Gatwick. This could involve BA giving up some routes or take- off and landing slots at both airports.

Yesterday the two airlines leading the fight to block the Dan-Air takeover, British Midland and Virgin Atlantic, gave evidence to the Office of Fair Trading.

OFT officials are understood to have asked what concessions they wanted to see should the merger be waved through.

Virgin said the takeover should be referred to the MMC unless BA agreed to reduce its share of Heathrow's slots from 40 per cent to a maximum of 35 per cent in any hour.

However, British Midland is thought to have taken a tougher line, arguing that a BA-Dan-Air merger would cause thousands of job losses and undermine the UK's multi-airline policy.

Its evidence, presented in a 90-page dossier, says that the deal would increase BA's share of all UK airline traffic to 71 per cent and enable it to dominate a dozen European and domestic routes served from Heathrow and Gatwick.

On three routes - between London and Inverness, Aberdeen and Manchester - BA would have 100 per cent of all passengers and on services to Toulouse, Athens, Zurich and Madrid its share would be more than 50 per cent.

Sir Michael Bishop, chairman of British Midland, said: 'We are totally opposed to the idea that a deal of this nature should simply be waved through without a full examination of the competition issues involved. The Government should be playing for much bigger stakes than just the survival of the rump of Dan-Air.

'There is a great danger that we and other airlines will receive the same treatment from the Department of Trade and Industry as the miners.'

British Midland said that lack of competition on Europe's busiest routes was costing airline passengers pounds 600m in excessive fares, and called for a new watchdog body, separate from the Civil Aviation Authority, to safeguard consumer interests.

British Airways said there was nothing to stop rival airlines starting new services from Gatwick, since half of Dan-Air's slots were being returned to the scheduling committee.

(Photograph omitted)