We recently discussed a possible Virgin-BMI merger and I’d noted how this might help Virgin eliminate a major prospective competitor. Well, this article from the FT sheds more light on the situation, as British Airways, Virgin Atlantic, and British Midlands now compete for lucrative new travel rights between the UK and India, where British Airways currently holds all the cards. (Update: Virgin’s eyeing domestic Indian carriers as well.) Those who thought Branson already had international rights — "Doesn’t Virgin Atlantic already fly to India?" you ask — should note how Branson made that happen…  

Virgin Atlantic has been trying for years to break into the massively underserved UK/India market, but has been forced hitherto to settle for a limited commercial collaboration with Air India, where it has used some of the Indian carrier’s rights to fly three times a week to New Delhi.

BMI, the second largest operator at Heathrow after BA, has previously been thwarted in all its efforts to open long-haul services from Heathrow to the US by the restrictive terms of the UK/US bilateral treaty.

Its long-haul services to the US are operated only from Manchester with existing routes to Chicago, Washington and Las Vegas. The frequencies on offer to India suddenly offer BMI a new outlet to exploit its Heathrow slots, as it waits out the years until the UK and the European Union finally agree with the US to liberalise air services across the North Atlantic.

Pretty clear from the article that a merged Virgin Atlantic and British Midlands could far more effectively compete against the 800-lb gorilla that is British Airways. (By the way, I’ve flown this UK-India route on British Airways a few times, and my Virgin Atlantic fanaticism is even more amusing since BA was my favourite airline as a kid.)