Low-cost Virgin offshoot - with Delta planes
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Low-cost Virgin offshoot - with Delta planes
Any new company would retain the Virgin brand but be run at a lower cost as a different corporate entity with different employee contracts. It could operate with a small fleet of twin-engined widebody equipment transferred across from Delta’s mainline fleet to help lower its operating costs if the go-ahead is given.
Virgin Atlantic considers new low-cost Gatwick offshoot
UK carrier Virgin Atlantic could move some of its flights at London’s Gatwick Airport to a lower-cost offshoot next year to take on the growth of budget long-haul airlines at the airport. The carrier and its partner, US giant Delta Air Lines, which owns 49 percent of Virgin, is considering how to counter the impact of carriers such as Norwegian and WestJet Airlines.
Any new company would retain the Virgin brand but be run at a lower cost as a different corporate entity with different employee contracts. It could operate with a small fleet of twin-engined widebody equipment transferred across from Delta’s mainline fleet to help lower its operating costs if the go-ahead is given.
Nat Pieper, senior vice president for Europe, Middle East and Africa, Delta Air Lines said: “I would expect that in the next six to eight months we will know.” He added that Airbus A330s could be taken from Delta’s mainline fleet in order to give it a cost advantage over Norwegian, which uses brand-new Boeing 787 Dreamliners.
“The A330-300 is much less expensive than a 787-9, it’s the right airliner if we decide that this approach is the way to go,” he added.
Flights would likely offer more economy and premium economy seats than currently to target the mainly leisure demand, perhaps without an upper class cabin. However, bosses are wary of diluting the Virgin brand.
“You get into the strategy question of who do you want to be? That’s something we’re debating. We would not envision a sub-brand,” said Pieper.
He also indicated that an off-shoot airline would not be tied up with Virgin Holidays. “We are not looking at a package thing, this is more of a daily point-to-point service,” he added.
Virgin is considering its strategy because Norwegian, which introduces flights to Boston and San Francisco from Gatwick later this year, will have 38 long-haul aircraft by 2020, making its fleet exactly the same size as Virgin’s.
Although these will be spread throughout Europe, Norwegian already serves New York, Los Angeles, Fort Lauderdale, Puerto Rico and Orlando from Gatwick and has indicated that the airport will be a key centre for expansion.
Norwegian also introduces a third long-haul aircraft to Gatwick this month, with its new 344-seat Boeing 787-9 being used on its New York route, adding 18 percent more seats to John F Kennedy International Airport than at present. British Airways is already responding to this by relaunching its own flights between Gatwick-and New York from May this year.
Last year Virgin Atlantic established Virgin Atlantic International Ltd which operates select Caribbean services from London Gatwick under a separate Air Operator’s Certificate (AOC), albeit under the normal Virgin Atlantic Brand and service offer. The new AOC is being used for flights to Barbados, St Lucia, Antigua, Grenada and Tobago that are served using two Airbus A330-300s.
Virgin Atlantic considers new low-cost Gatwick offshoot :: Routesonline
Virgin Atlantic considers new low-cost Gatwick offshoot
UK carrier Virgin Atlantic could move some of its flights at London’s Gatwick Airport to a lower-cost offshoot next year to take on the growth of budget long-haul airlines at the airport. The carrier and its partner, US giant Delta Air Lines, which owns 49 percent of Virgin, is considering how to counter the impact of carriers such as Norwegian and WestJet Airlines.
Any new company would retain the Virgin brand but be run at a lower cost as a different corporate entity with different employee contracts. It could operate with a small fleet of twin-engined widebody equipment transferred across from Delta’s mainline fleet to help lower its operating costs if the go-ahead is given.
Nat Pieper, senior vice president for Europe, Middle East and Africa, Delta Air Lines said: “I would expect that in the next six to eight months we will know.” He added that Airbus A330s could be taken from Delta’s mainline fleet in order to give it a cost advantage over Norwegian, which uses brand-new Boeing 787 Dreamliners.
“The A330-300 is much less expensive than a 787-9, it’s the right airliner if we decide that this approach is the way to go,” he added.
Flights would likely offer more economy and premium economy seats than currently to target the mainly leisure demand, perhaps without an upper class cabin. However, bosses are wary of diluting the Virgin brand.
“You get into the strategy question of who do you want to be? That’s something we’re debating. We would not envision a sub-brand,” said Pieper.
He also indicated that an off-shoot airline would not be tied up with Virgin Holidays. “We are not looking at a package thing, this is more of a daily point-to-point service,” he added.
Virgin is considering its strategy because Norwegian, which introduces flights to Boston and San Francisco from Gatwick later this year, will have 38 long-haul aircraft by 2020, making its fleet exactly the same size as Virgin’s.
Although these will be spread throughout Europe, Norwegian already serves New York, Los Angeles, Fort Lauderdale, Puerto Rico and Orlando from Gatwick and has indicated that the airport will be a key centre for expansion.
Norwegian also introduces a third long-haul aircraft to Gatwick this month, with its new 344-seat Boeing 787-9 being used on its New York route, adding 18 percent more seats to John F Kennedy International Airport than at present. British Airways is already responding to this by relaunching its own flights between Gatwick-and New York from May this year.
Last year Virgin Atlantic established Virgin Atlantic International Ltd which operates select Caribbean services from London Gatwick under a separate Air Operator’s Certificate (AOC), albeit under the normal Virgin Atlantic Brand and service offer. The new AOC is being used for flights to Barbados, St Lucia, Antigua, Grenada and Tobago that are served using two Airbus A330-300s.
Virgin Atlantic considers new low-cost Gatwick offshoot :: Routesonline
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Marvellously ironic considering their origin as a ... low-fare schedule operator based at Gatwick.
March 1984:
March 1984:
As the UK Civil Aviation Authority hearing opened last week into Virgin Atlantic's
proposal to operate a £99 single fare between London Gatwick and Newark, British
Caledonian announced its plans to offer a fare as low as £50 between Gatwick and
New York J. F. Kennedy.
proposal to operate a £99 single fare between London Gatwick and Newark, British
Caledonian announced its plans to offer a fare as low as £50 between Gatwick and
New York J. F. Kennedy.
Paxing All Over The World
That was 32 years ago. VS found that they launched at a very propitious time and could benefit by going upmarket during the boom of the 1980s. They were in the right place at the right time. Since then, they have had many Ups and Downs and now have a possible chance at another way to make money.
Very few companies start off selling cheap and stay that way throughout their existence - in any field of commerce. They need to make money and think this might work for them, given the remarkable changes in the airline world in those 30 years - not to mention the economic climate of the pax.
Very few companies start off selling cheap and stay that way throughout their existence - in any field of commerce. They need to make money and think this might work for them, given the remarkable changes in the airline world in those 30 years - not to mention the economic climate of the pax.
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They need to make money and think this might work for them
They started-off using third-hand aeroplanes flying cheap leisure routes out of Gatwick. They then went 'up-market' taking-on millions in monthly leasing fees for an uneconomic mixed-fleet of new aircraft and managed to make a small profit occasional years. And now they're thinking of using second-hand aeroplanes to fly cheap leisure routes out of Gatwick because they might be able to make money at it.
Sorry for being cynical but it doesn't strike me that they had any real idea of a strategy for those 'upmarket' years.
Paxing All Over The World
I am no apologist for VS, just a (mostly) satisfied customer. I think all companies make it up as they go along! I was in commerce from 1978 and I soon discovered that '5 Year Plans' are just window dressing for the shareholders. Exactly the same as political manifestos, that are thrown out the window as soon as the votes are in. The demands of commercial pressure have increased beyond anything that was imagined in the 1970s when SRB was cutting his teeth in business.
In the time since VS was founded, one could list a few events. (in no order):
In the time since VS was founded, one could list a few events. (in no order):
- Boom of the late 1980s
- Crash of 1990
- Recovery from mid-1990s
- Massive boom into the 2000s
- Massive crash in 2008
- How many major airlines closed in the last 30 years?
- How many airlines started in the last 30 years?
- Failure to make a deal with British Midland (for whatever reason)
- The arrival of LCC into medium haul (EZY + RYR) long haul (Norwegian) driving pax expectations of pricing
- The formation of the international airline groups (OneWorld etc.)
- The end of easy 'fat' pricing made tougher by Internet booking and pax being able to compare pricing across all carriers on a route in ten minutes from home
- Political instability (wars) and nature (earthquakes, hurricanes) can close a route at no minutes notice for an indefinite period (as before VS but the financial consequences of this are much higher now)
- The cost of fuel cannot be planned ahead and hedging breaks both ways
- The cost of new aircraft, staff, landing fees etc.
- The cost of landing your planes on the front lawn of the World's Favourite Airline
- etcetera
