Virgin Atlantic

[BALHR]

Nothing wrong with a bit of free publicity, Beardie has been doing it for years, but MOL has got much better at it.

I just yawned when he said he "could have sued". For what? WW made a prediction based on a perfectly reasonable assessment of the market. Nothing actionable at all, unless we really have descended into a sue everyone for everything mentality! At least our American cousins have the 1st Amendment for that!

And then I love it when the Bearded one complains that BA have the most slots at Heathrow, our biggest airport.

Well Euston is our most important long haul railway station, and guess who has ALL the daytime long haul slots?

Pop over to St Pancras for a "rival" service from East Midlands Trains, and guess which company is behind them AND Virgin Rail? Yup, Stagecoach on both counts!

Hate to say it, but Sir Beardie is no longer the shwashbuckling renegade I grew up admiring. Just a very tired gamekeeper.

If he can do deals with an Ultra Christian-Homophobic-Scottish Nationalist-Free Marketer-Future Scottish Transport Secretary, then SRB can do deals with an airline that is no longer using illegal means to destory VS and is not the real enemy (they are located in Mainland Europe and the Middle East)

Never trust a hippy...

He would not be the first (or last)…

So really all thats changed is Delta now has the 49% share Singapore had. Beardy always retains that crucial 51% holding. KLM/Air France buying the remaining 51% would now seem wide of the mark.

This is why I think that DL has just shot themselves in the foot by spending hundreds of millions becoming a junior parter in an airline that barely compete with BA/IB/AA, LH/LX/OS/SN/UA/US/TK, AF/KL/AZ/DL, EK and QR and of which its business model is based more on SRB’s ego, passion and stubbornness, the only thing in its favour is that it’s a rather decent airline, but that still did not prevent Kingfishers long and painful (along with ongoing) demise…

Like I said, DL can get what they want from AA, which in comparison is a rather better proposition

Not sure that I "very conveniently sidestepped" anything. I don't work for Virgin and have no reason to defend them. You're quite right that they had to show they were using the MAN slots before being able to apply for the other remedy slots (as a result, Aer Lingus (the former lessee of the slots) is facing some LHR schedule adjustments next summer).

FWIW, I am not at all convinced by the economics of the MAN service either - indeed, I'm not particularly convinced by EDI or ABZ, for that matter, but I see the play as being more of a long-term one: hang in there for three years and if it's not working, then switch the slots to other short-haul.

Is that a smart move? Well, let's say it seems a bit smarter now that DL with its deep pockets owns 49%, and will likely seem a bit smarter still if/when AF/KL takes a stake somewhere down the road.

Where do I see Virgin "rushing to serve", in your words? 3 daily NCE would be overkill and would lose them money (even if it earns them your respect ) But in a year or two I could imagine them using the slots for (for example) a VS/AF service to CDG, freeing up some of AF's LHR slots to enable some more Delta transatlantic services (with a bit of timing juggling, just as AF and KL made space in LHR for DL and their then-partner CO when OpenSkies came about).

I think AF/KL will come into this picture in a year or two (Delta's CEO used the word "accretive" in today's press conference when asked about this, i.e. AFKL and AZ can be added on to the bilateral DL/VS joint venture) and at that point the slot puzzle becomes easier to solve.

I understand that in your view it makes no business sense for VS to have incurred losses to be able to acquire slots, and then not to take up all the slots. I can question various aspects of VS strategy, but if they figured that the least loss-making thing they could do with those last 3 slots would lose them more than they'd ever get back in the future, I can't necessarily fault them for that specific decision

I would disagree that DL has “deep pockets”, due to the fact there is too much competition in the US aviation

AF-KL has problems of their own; the only thing that they should is buy enough shares for DL to take control of VS and thus be allowed to reorganise the airline to make it sustainable for the long term…

I don’t think LHR-MAN/EDI/ABZ has a future when all 3 cities are served in a better way (for AF/KL/DL) via AMS/CDG, not LHR

VS is only solution for its long term survival is to buy BA off IAG or do a deal with IAG that involves the gradual takeover of the airline, but securing its short term future

Lastly, CO got those slots (for a vast sum) on their own, not from other ST members

If I was running DL, I would either buy AA or transfer all of VS’s slots to DL for their own purposes

The biggest problem that VS are going to have on their domestic routes is that there is no way the product can be competitive with BA. The issue is frequency. They will be operating 3 pd on MAN (against BA with 11), 4 on EDI (against BA with 13) and 3 on ABZ (against BA with 11). Presumably their own priorities will be on their own connecting traffic and even for this they will have weak schedules. In terms of appeal to business traffic their offering is so bad that they are unlikely to be able to compete for any significant corportae traffic. Certain financial losses on a large scale would seem to be the inevitable result. I wish them luck but...

The same problem is with their long haul network, it’s not as extensive as BA’s and on the routes they compete they are less frequent (in general), what is also against them is that they have only 17 times less slots that BA at LHR, in other words unless they change the way they do things, they will follow the fates of BCal, Dan-Air and BMI…

I recall back in the 1980s Dan-Air got licences on Heathrow to Manchester, which they operated 3 times daily against BA who had their hourly Shuttle.

No reservations needed on thr Dan-Air flights either because they typically had 25% loads, and sometimes less. That was with fully flexible tickets where you could readily transfer onto their flights if your company had issued you with a BA ticket.

I can't quite see either how the three flights will be "scheduled to connect" with Virgin's fair number of long-haul flights, when these are all somewhat evenly spread throughout the day.

And we all know what happened to that airline, BA ended up buying them…

The same went BCal and BMI, who like Dan-Air could not compete with BA for various reasons and its looks like VS will follow…

Yes and their biggest problem that killed the route was that their aircraft had to park on a remote stand at LHR and pax had a lengthy bus ride to the terminal. I hope VS will not be disadvantaged in the same way.

The problem is that VS’s domestic flights are in T1, when they should be in T3 (where all the VS long haul flights are), which is a dangerous mistake, considering the flights they are supposed to connect

They have suggesting moving to the new T2, but not sure how they are going to manage that now that they hooked with Delta (who operate from T4)

Finally! Someone who realises why the flights are scheduled at certain times and why the shorthaul product is being established. This venture is 99.99% about feeder traffic to the long haul product. Of course VS will be delighted to carry pax between ABZ,MAN, EDI and LHR but the aim of the game is to feed their LH network.
In the future, as and when the Delta tie up gets approval, then someone from ABZ will be able to travel to anywhere in the USA via LHR and JFK without the need to reclaim baggage or check in at various airports - hopefully a seemless transition (especially using the clubhouse if applicable ).

Is it not the case that someone from can fly to AMS via KLM and fly to several destinations in America (with Delta/KLM)?

The same goes for CDG with AF/KL

Or they can fly to with BA via LHR to a large number of destinations in America and Asia

You can see what Virgin have to deal with and why DL gains little out of all of this

I am always dismayed by these statements about the various airline tie-ups or launching additional flights from hubs, that refer to a "new" ability to make connections as if it was analogous to the Second Coming of Christ.

A generation ago you could connect from EVERYTHING to EVERYTHING at Heathrow, and indeed most other points, in this manner, courtesy of the standard IATA agreement of the time. It was the carriers themselves that threw this "seamless transition" away.

Furthermore you have been able to transfer from Aberdeen to "anywhere" (actually not) in the USA all along, courtesy of BA and their longstanding partner American through Heathrow, KLM and their longer-standing partner Northwest (now Delta) through Amsterdam, etc. All we have now is another me-too operation.

By the way, the last time I looked these new domestic flights were to be operated into T1, Virgin operate out of T3, and Delta operate out of T4. That is going to lead to goodness-knows how many misdirected pax and Seamlessly Lost connecting bags.

Remember, this LHR/ABZ/EDI/MAN operation by VS has little involvement with Delta, if Delta and their partners (Air France-KLM) take full control then they will shut those domestic flights down as soon as they can, because as you say, DL/AF/KL serve the regions via AMS/CDG

The DL/VS deal and the launch of their domestic routes has made the problem of terminal spaces worse, VS has stated it want to move into T2 now that BMI was bought by BA (who were going to be their main tenant along with their *A partners), but now they have no chance

Firstly, can space be made for VS at T4 (maybe move MH and other non-ST members out?) and for a CTA area (for domestic flights) or will HAH have to change their mind about who uses T2 and move ST members (along with VS) to T2 instead of *A members (who I guess will have to move to T4), which means some A380 gates will have to be built at that terminal

Really BAA/HAH needs to change its plans over its Terminals by (in my opinion):

Terminal 1: To be closed and replaced by an expanded Terminal 2

Terminal 2 (AKA Virgin Terminal): Will have to be expanded to cover both the “old” Terminal 2 and Terminal 1, will become home of Skyteam members, Virgin Atlantic and non-affiliated members (the latter will later move when Terminal 6 is built)

Terminal 3: To be closed and replaced by an expanded Terminal 5

Terminal 4 (AKA Star Terminal): Maybe some minor expansion (like additional A380 gates etc.), will become home to Star Alliance members, maybe further expansion when R3 is built

Terminal 5 (AKA British Airways Terminal): will face major expansion over the site of Terminal 3, will become home to BA (all operations at T1, T3 and T5), Aer Lingus (whose LHR ops might be bought by BA), other Oneworld members and further expansion due to R3 or moving LGW ops etc.

Terminal 6: To be built when R3 opens, will house non-affiliated members from Terminal 2

I think you'll find that the new Virgin domestic will operate alongside longhaul in T3 ,where a new domestic arrivals area is being created for them allowing the connections to work easily.

VS plans to operate domestic flights from T1, this due to a fact only T1 has a CTA area (BA has one at T5, which VS cannot use), T2 will have a CTA, but it’s not clear if VS can use it (they want to, but it’s for *A and DL is at T4, which also has no CTA area)

They really need to fix this soon (like asking for a CTA area at T3) to make their domestic flights work

I understand this is a tricky squaring of a circle though as without decent hijgh fares on P2P, a fraction of a long haul revenue leaves the short haul deeply in the red. This remains true of BA and more so of BMI in later years.

BA only makes Domestic work for them due to the fact they connect medium/long-haul and they have a very big long-haul network

BMI did not have that advantage or at least did not get the chance to share it (from *A partners), that aided their demise and the absorption by BA