WHEN Sir Richard Branson’s Virgin Atlantic announced last year that it was going head-to-head with British Airways in the short-haul market, the move was meant to help boost its wider ambitions.
Passengers using its new Little Red service from Scotland could feed directly into the airline’s long-haul routes. This was the rationale for Virgin acquiring the routes and airport slots from British Airways parent International Airlines Group following its acquisition of Bmi.
Little Red is targeting up to a million passengers a year, although yesterday’s figures show that the majority are not boosting the group’s long-haul coffers.
Of those opting for Little Red flying out of Aberdeen, Edinburgh and Manchester, just 27 per cent connect with a Virgin Atlantic flight out of Heathrow.
The carrier insists all is well, pointing out that Little Red is still very much in its infancy and that it has been pleasantly surprised by the take-up. It also says more leisure travellers are flying out of Aberdeen than it had anticipated, particularly at the weekends.
Early days yet, but Virgin seems comfortable with the connection statistics, and is optimistic that Little Red will become a “significant revenue generator”.
No doubt Aer Lingus has similarly high hopes. Passengers would never know by looking, but Little Red is using Aer Lingus planes and crew for the first three years of its operation under a so-called “wet lease”.
Although the Irish carrier, which has faced several takeover attempts from Michael O’Leary’s Ryanair, lost out to Virgin in the original battle for the former BMI slots, this could be one of those rare situations where both sides win.
Dixons gets the benefit of Comet’s collapse
IT’S bracing how the death of a rival can put a wind in the corporate sails. It happened in sports retailing with Mike Ashley’s Sports Direct when JJB Sports slid beneath the high street waves into administration, writes Martin Flanagan.
Sales of music in Britain’s supermarkets and WH Smith got a boost when HMV bit the dust. Yesterday it was the turn of electrical retailer Dixons to count the spin-off blessings of a demise, that of rival Comet.
Dixons, which owns Currys and PC World, put out an impressive fourth-quarter trading update, with sales up 13 per cent in the UK and Ireland.
Clearly, although the company has also instituted some self-help measures of its own, including refurbished stores, the failure of Comet has been a significant contributor to the change of fortunes.
As that competitive threat has been removed, Dixons’s share price has moved steadily upwards since last November. What broker Panmure Gordon described as “stonking” Q4 sales at the group sent the shares up another 9 per cent yesterday to close at 40p.
Dixons is also benefiting from the Dalek-like march of tablet computers, which threaten to take over Britain to the rasping battlecry of “cogitate” rather than “exterminate”.
The company is not totally out of the woods, with its Europe-wide e-commerce arm, Pixmania, in particular, still facing challenging conditions.
But it is going in the right direction under chief executive Sebastian James. Some troubled countries overseas have been exited, stores have been shut, and the costbase significantly cut, partly through sharp headcount reductions. An altogether better picture.