Virgin’s new airline needs support if it is to offer a good service that can compete with BA, writes Iain Mercer
Richard Branson and his Virgin brand love a challenge, whether it is putting the fizz back into the drinks market or making rail travel sexy again; for years the company has been synonymous for doing things a little bit differently. If that challenge involves taking on airline arch rival British Airways then I say, bring it on.
It is no secret that there is bad blood – and plenty of it – between the two operators, stemming from the infamous “dirty tricks campaign” orchestrated by then-BA chairman Lord King, which resulted in King stumping up £3 million in costs and compensation to Branson to end a bitter legal battle.
While the two airlines have competed for more than 25 years on transatlantic routes, their airborne feud flared up over the skies of the UK in March, when Branson launched a domestic airline called Little Red.
For the past six months, Virgin Little Red has operated the landing slots into London Heathrow from Aberdeen, Edinburgh and Manchester vacated by BMI after it became part of BA.
The routes between the two capital cities are particularly competitive. Last month City Jet, a subsidiary of Air France, announced its service between Edinburgh and London City was “no longer commercially viable”. The route is due to close in October, leaving BA with a monopoly.
This is not good news, particularly for business passengers, who will now be exposed to higher fares from the only carrier serving London’s most central airport, and the one most convenient for the City and Docklands.
Is this trend of BA squeezing out the competition set to continue? If the evidence of a recent flight I took on Little Red is anything to go by, then it looks increasingly likely. I was struck by the number of empty seats on the plane, which for the bean-counters at Virgin must be alarming, considering that my return fare at £260 represented decent value when compared with competing Heathrow-bound flights. At best, the aircraft – an Airbus A320 with seating for 174 passengers – was half-full on the 09:05 outbound journey and I counted roughly 50 people on board during the return flight at 16:25. I should point out this was a normal working day.
This must be a matter of some concern to Virgin, especially considering that my flight had not been booked until two days prior to departure and there was not a seat to be had on any of the BA London-bound flights.
Little Red’s lack of passengers did not embody confidence that the route was being supported by the Edinburgh or London business communities after some six months in operation, despite having been backed by a sizeable and visible marketing campaign. The recent reduction in fares by Virgin looks like an attempt at addressing the slump, but is only likely to spark a fares battle with BA, which would probably bring benefits to passengers in the short term but clearly not in the longer term if competition becomes so intense that one of the operators withdraws completely.
Even now it is getting messy. The Love Heart sweets handed out by Virgin cabin crew prior to landing on my flight were a throwback to the 1980s when airlines actually cared more about their passengers and less about operating costs. It’s so Virgin-like to see them reintroduce nice touches like this, but it won’t get them market share.
Unless they can fill the empty seats, these little perks will disappear to save costs – but the big fear is that, ultimately, the route will follow.
• Iain Mercer is group managing director of Cosmopolitan Investments and Almondale Investments