Transport: Branson tells Brussels BA is using bullying tactics

British Airways is employing the tactics of drug barons to illegally stifle competition, Richard Branson told an EU hearing yesterday. Katherine Butler in Brussels said the Virgin boss is seeking a European ruling which he claims will give passengers cheaper fares and better service.

British Airways uses bullying tactics to ensure that big corporate customers do not switch to smaller rival airlines such as Virgin Atlantic, Richard Branson alleged yesterday. According to the Branson legal team, BA's discounting strategy was a "classic case" of a company abusing its dominant position on the market, in clear breach of European Union competition rules.

Yesterday a panel of European Commission and EU member state competition experts listened to the evidence from both sides in an effort to decide whether British Airways was guilty of abusing its dominant position to retain custom on the most lucrative routes. If they uphold the complaint by Virgin's boss, the EC could impose a fine of up to 10 per cent of BA's worldwide turnover. A preliminary assessment by the commission concluded that the discounts system operated by BA appeared to flout the relevant article of the EU treaty. "We hope and believe [the commission] will levy the maximum fine which in this case could be tens of millions of pounds," Mr Branson said after the hearing.

Comparing BA senior management to a cartel of drug lords, Mr Branson said their main tactic was to "terrify" travel agents by giving them "a fix" of discounted flights one year which could only be repeated the following year if the agent managed to increase the percentage of business tied up with BA. This led to travel agents "lying" to customers.

He said BA also used "invidious" devices such as offering corporate customers discounts on routes which Virgin did not fly in exchange for promises that they will commit all their other business to BA even on routes where Virgin is cheaper. He said discounting per se was not the issue but rather the fact that British Airways enjoyed a monopoly on slots at Heathrow airport.

Mr Branson said that the only reason why businesses flew with BA on certain routes "is because they are forced to by their employers", citing Citibank, British Telecom and Bankers Trust among the companies Virgin had lost thanks to exclusive deals with BA. Virgin, he said, had been "almost driven out of business" four years ago by BA's "dirty tricks" campaign.

BA claims that discounting is standard practice in the air-transport business. But Mr Branson called on the commission to create a level playing field. The result he said would be a fairer deal for smaller airlines such as British Midland, Easyjet and more competition on hundreds of routes. An EU ruling is expected early next year.