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About Their Application For Antitrust Immunity

American Airlines, British Airways and Iberia set the record straight

eTN  Sep 13, 2008

FORT WORTH, TX (September 12, 2008) - According to American Airlines (AA), British Airways (BA) and Iberia Airlines (IA), Virgin Atlantic (VA) has resorted to baseless arguments and hypocritical scare tactics with regard to their antitrust immunity application. They claim that Virgin is intentionally trying to mislead regulators and the general public in challenging the data they have submitted to the US Department of Transportation (DOT) in support of their application.

The three airlines made the following statements, claiming these are the facts in reference to their application:

1) Our DOT application contains MIDT (Marketing Information Data Tapes)
data, which is a widely-recognized and valid source of information
that is required by regulators around the world, including the DOT,
the US Department of Justice and the European Commission, in
analyzing market share and competition.

2) MIDT provides information on bookings worldwide from multiple Global
Distribution Systems (GDS databases, such as Amadeus, Sabre,
WorldSpan, Galileo and several others). Significantly, it also
includes third-party online bookings from sources, such as Travelocity
and Orbitz.

3) MIDT data was used in the antitrust applications filed with - and
approved by - the DOT by both the Sky Team and Star alliances and has
been used in competition analysis by the US Department of Justice.
AA, BA and Iberia are using the same data for our application, which
requests immunity for members of the oneworld alliance that provide
transatlantic service.

4) Virgin's claim that MIDT data does not include the carrier bookings
captured on our respective websites ( and is irrelevant.
That's because MIDT also excludes direct bookings for other carriers,
such as Virgin Atlantic. In other words, in following the DOT's own
protocol for providing data for our application, we truly offer an
apples-to-apples comparison.

5) In previous filings and public comments, Virgin has extolled the
virtues of MIDT data:
-- In a 1997 joint DOT filing, Virgin said that "the MIDT data is
important." Virgin also said that "the MIDT data improves
transportation planning and enables resources to be used more

-- In a 2003 DOT filing, Virgin said that MIDT provides airlines
"with information on (city-pair) markets, such as the potential
size of the market (in terms of number of passengers), the
proportion of business vs. leisure traffic, the proportion of
traffic carried by its competitors, and so on. MIDT is the only
source of this information on international markets available
to non-US airlines. This information helps carriers make
decisions about whether or not to enter markets or expand
capacity in markets already served, by reducing uncertainty."

6) The DOT data that Virgin cites is completely inappropriate for this
debate. That data, known as T-100, measures all onboard passengers on
a particular nonstop flight segment, without regard for their actual
origin and destination. In other words, 100 percent of the passengers
on a Dallas Fort Worth (DFW)-Heathrow flight show up in T-100 as
DFW-Heathrow local passengers, even those who don't begin their trips
in DFW and don't end their trips at Heathrow. Thus, it overstates a
hub carrier's share by including everyone on the plane, as opposed to
only those passengers who originate in DFW and are traveling to London
as their final destination, which is the true DFW-Heathrow market.
For example, a passenger who flies from Houston to Paris may connect
via DFW-Heathrow. The true city pair for that customer's itinerary is
Houston-Paris. But Virgin's data counts those customers who are
connecting on the DFW-Heathrow segment as part of our market share on
the DFW-Heathrow city pair. That is erroneous because DFW is not the
origin and Heathrow is not the destination - those airports are just
connecting points for the true city pair (Houston-Paris).

7) The data Virgin wants to use also overstates a nonstop carrier's share
because it does not include any one-stop competition. For example, a
customer who travels from DFW to Heathrow may connect through
Washington Dulles. The city pair market for such an itinerary is
DFW-Heathrow, and thus it competes with nonstop DFW-Heathrow service.
However, Virgin's stats consider the one-stop service to be two
separate city pairs: DFW-Dulles as one and Dulles-Heathrow as the
other. Therefore, neither segment would show up as a competing route
to nonstop DFW-Heathrow service. This understates competition to a
particular nonstop route and is misleading to use.

In summary, the three airlines stated there is simply no better source than MIDT data to analyze competition. The DOT used MIDT data to consider and approve antitrust applications by SkyTeam and Star, and the Department of Justice has used MIDT data in its competition analysis. What's more, Virgin has vigorously defended MIDT data in the past as an important source of information but now disparages it because MIDT doesn't suit its arguments. The MIDT data shows that our application for immunity will not harm competition, as Virgin claims, and in fact the MIDT data demonstrates that the oneworld alliance will have less market share at Heathrow than Star and Sky Team alliances have in their major European hubs.

American Airlines, British Airways and Iberia set the record straight

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