Originally Posted by
TOM100
Is the VS royalty really the difference between the airline being profitable or not ? If it were wouldn’t SRB give them a break ? I would suggest it is more structural(by definition managed) not right size, shape and cost base if you cannot make money at the top or near to pay of the economic cycle.
There's profit, and there's "profit". The latter for the published accounts and the taxman. If Virgin Atlantic had really lost money overall over the years based at what is popularly regarded as the biggest O&D market in the world, they would have just sold off all their slots long ago. Paying a BVI-based obscure organisation for "use of brand" is just the start of it.
Same, for example, on BA's domestics out of Heathrow. These have published accounts showing a loss for decades. Really, eating up all those valuable slots ? Well yes, if a BA fare of say £500 from Edinburgh to New York, via Heathrow, is allocated £1 to the domestic sector and £499 to the transatlantic, so possibly half the planeload is being carried for free. Why divide it this way? Well, the UK government is regularly lobbied to put VAT on domestic flights. Overall international VAT rules prevent doing it on internationals, but a few European countries do it on domestics. However, if the flights are shown anyway as loss-making that strengthens the case of saying do that and the service will be withdrawn, and the government will get the blame.