By Chris Bradley
IAG is the company that owns British Airways and they are set to acquire BMI for £172.5 million soon. It is expected that on the 20th April the deal will be struck which will mean that BA will have 56 more slots at Heathrow airport, despite agreeing to give up 12 slots as part of the deal.
Sir Richard Branson, owner of Virgin Atlantic, claims that the deal could have a huge impact on the aviation industry and a very damaging one at that. He explained that he felt the deal was made far too quickly and there were politicians, business owners and airlines against it, but it went ahead anyway. He went on to say that it means that a large company grows even larger and it will damage the airline industry. The damaging effect that he is likely to be referring to is the lack of competition. With one airline growing bigger than the rest it means that it can benefit from economies of scale as well as the sheer power of being larger. It could squeeze out the smaller airlines and mean that it can charge higher prices due to the lack of competition. However, the authorities obviously did not agree because they approved the deal.
The deal was announced in December and got approval from the regulations on the 30th March. It is likely that there will be up to 1200 jobs lost at BMI as a result of the deal. The true effect of the deal will probably not be felt for a good few years.
