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Price war set to hit the skies

British Airways and Virgin Atlantic have today announced substantial cost reductions in their ticket prices as we stare a potential price war in the face. This comes at a time when many carriers around the world are struggling to make ends meet with a number unable to shake off the effects of higher oil prices earlier in the year. While competition is good for the consumer there are grave concerns that an extension of a price war will speed up the decline of a number of airlines who are literally on the brink.

While British Airways and Virgin Atlantic are among the leaders in transatlantic travel they have not been immune from the effects of the credit crunch and some doubt they could handle the impact of a prolonged price war. Whether this is a move to speed up merger activity in the sector remains to be seen and we await further developments in due course. The animosity between Virgin Atlantic and British Airways has been there for many years and each seems determined to out do the other and claim the headlines.

While 2008 was a very difficult year for the airline industry there is no doubt that 2009 is set to be as challenging.

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