Cantillon: Virgin’s bird’s eye view of Aer Lingus sale

It is hard to know why Virgin decided to step into the debate over whether the Government should sell the State's 25.1 per cent stake in Aer Lingus to International Airlines Group (IAG).

The airline, majority-owned by Richard Branson, the businessman and Bee Gees lookalike beloved of the British media, has publicly expressed fears about a deal's impact on competition.

Its head of alliances, Joe Thompson, will outline these concerns to the Oireachtas Committee on Transport and Communications today.

Virgin does not operate in the Republic and hasn’t given any indication that it will. So why is it claiming to be concerned that “consumers travelling to and from Ireland” benefit from strong competition?

Well, it goes on to say that Aer Lingus is an important partner to Virgin and other airlines that operate long-haul routes out of Britain.

It argues that the competition provided by these arrangements offers “a choice of connections to a huge number of customers” which must be maintained irrespective of IAG’s plans for the Irish carrier.

There is something in this. While it has left or stayed out of big alliances, Aer Lingus has forged links with other carriers, allowing it to tap into their networks. An IAG takeover could throw a question mark over these deals.

However, the European Commission’s competition law directorate would have to approve an IAG takeover if a formal offer materialises. At that point, should we ever get there, Virgin would be well within its rights to raise this issue with Brussels. So why do so now?

One answer is that it is positioning itself to take on any Ireland-Britain services that the commission could order the enlarged IAG/Aer Lingus to offload as a condition of allowing the takeover. The problem here is that Virgin won’t comment one way or the other on that.

Another is that getting in front of a contentious Oireachtas committee hearing would alert tens of thousands of consumers to the fact that Virgin operates long-haul flights from British airports that are easily accessible to Irish people.