Little Red

[PAXboy]

Reporting a load factor in the mid-30s = Ouch.

Virgin domestic flights a 'disaster' as passengers stick with no-frills rivals - News & Advice - Travel - The Independent (http://www.independent.co.uk/travel/news-and-advice/virgin-domestic-flights-a-disaster-as-passengers-stick-with-nofrills-rivals-8872505.html)

[Tray Surfer]

But we all knew this would be the case...

SRB thought he could come sailing straight into an established section of the aviation market, wave the Virgin "magic wand", and have what ever he wanted. But, it does not, and did not, work like that.

No doubt, shortly, he will make some statement, saying that BA and EZY have a monopoly on the market and it is unfair and he is being discriminated against, for, oh... I don't know, having facial hair or something, and want to see major changes in the market, all for the benefit of customers of course, not to line his pockets...

[DaveReidUK]

I don't believe for a moment that Virgin are surprised by the loads, only an idiot would expect a route like MAN-LHR to be profitable in its own right.

The article even spells out why they are operating the route: "One man enjoying the acres of elbow room was Robert Meizel, an American businessman connecting to a New York flight".

It's not about O&D traffic. :ugh:

[PAXboy]

This letter appears in The Independent today:
Virgin’s Little Red is no failure

Virgin is a challenger brand. Throughout the history of our different companies we have always been proud to challenge the status quo. This was true of Virgin Atlantic and our single plane 29 years ago, and it is true of our domestic service Little Red today.

Your article “Virgin ‘losing millions’ after domestic flights venture fails to take off” (11 October) on the performance of Little Red speculates on loss figures which are hugely overstated. But more than that – the piece misses the point.

Little Red is a British business giving a better deal to British passengers. On routes where previously customers in Aberdeen, Edinburgh and Manchester had a “choice” of one, there is now a strong alternative and we are shaking up a monopoly market. Little Red has brought down average fares on these routes, has grown the domestic travel market, and created jobs around the UK.

Despite a difficult time for all in the British economy we have continued to grow and launched Little Red to provide choice for passengers domestically in the way we have on our long-haul flights. We are doing so with a full service, a great schedule and as your article points out, at exceptionally good value for money. Passengers have responded well and the feedback we’ve had is that people love flying Little Red. Bookings are growing steadily with passengers from around the globe connecting on to Little Red flights.

Virgin Atlantic has been on an incredible journey over the last three decades. Little Red is just beginning its journey – we hope and believe that passengers will come on that journey with us and that they will enjoy the ride.

Sir Richard Branson, Manor Royal West Sussex

[SWBKCB]

Virgin Atlantic has been on an incredible journey over the last three decades. Little Red is just beginning its journey – we hope and believe that passengers will come on that journey with us and that they will enjoy the ride.

Sir Richard Branson, Manor Royal West Sussex


BBC News - Branson defends residence on Necker Island (http://www.bbc.co.uk/news/uk-24513875)

Sir Richard Branson says he is not living on his holiday island of Necker for tax reasons but because of a love for the "beautiful" location.

The Virgin Group founder wrote an entry on his blog explaining the reasoning behind the move seven years ago from the UK to the British Virgin Islands,

[Deeko01]

They need to get GLA-LHR in the mix, BA have no competition on this route.

[Wycombe]

.....indeed, and they must be doing well on it, as the 767's seem to be much in evidence

[wallp]

Why was GLA not included from the outset?

If you're going to launch domestic flights GLA along with EDI seem the most obvious ones.

I'm not sure what the terms of securing these slots were; did Virgin have to launch services to replace these old BMI routes or could they switch them to other routes (say new long haul routes) if these ones continue to perform badly?

[BasilBush]

VS have to operate the remedy slots (ie those to EDI and ABZ) for 3 years. After that they can use them for any European route, or to Cairo or Riyadh. They cannot use them for other long haul routes.

These restrictions do not apply to the MAN slots, which already belonged to Virgin.

GLA was not included in the BMI remedies as BMI had already withdrawn from that route, citing large losses. Given that VS's feed is likely to be worse than BMI's was (given its Star membership) it is difficult to see that VS would fare any better on GLA-LHR.

[willy wombat]

Possibly, but at least if they had included GLA instead of MAN they would have had a clear proposition i.e. Scotland (ABZ, EDI and GLA) to LHR and of course VS already serve GLA/MCO in the summer. There would certainly be a lot more point to point pax from GLA than from MAN.

[BasilBush]

Mr Wombat

Yes, you are absolutely right that GLA-LHR makes much more sense as a point to point route than MAN. But the fact remains that when BMI withdrew from the route in 2011 they claimed that their losses on the route were running at £1m per month. It's difficult to see that VS would do any better. Domestic routes are difficult, especially with APD. And VS really only started Little Red to feed into their network ex-LHR - all this guff about offering an alternative to BA for p2p traffic is really just spin.

[chaps2011]

I have been told that the Manchester route is the best performing of the routes
I cannot substantiate though

[PAXboy]

Thread drift was introduced.

SWBKCB I see that SRB is now 63 years old, so if he wants to take early retirement he can.

No, I have never worked for him or even met him.
/Thread drift.

[Joe Curry]

GLA-LHR makes much more sense

Not as long as EK are taking the connecting pax away from LHR. It's either one or the other. Little Red one stop via LHR or EK one stop via DXB?

[VickersVicount]

...he was talking about point to point, not connections.

[willy wombat]

Joe, same argument applies to EDI and TK etc

[DaveReidUK]

Little Red one stop via LHR or EK one stop via DXB?

GLA-DXB-JFK. Hmmm.

[EI-BUD]

I have been told that the Manchester route is the best performing of the
routes
I cannot substantiate though


Chaps2011, I cannot substatiate either, though I have flown MAN LHR on little red few times. Amazingly low loads on board, I usually booked late over the summer and got very low prices so that would indicate the revenue is attrocious. The cabin crew seemed to give the impression that everybody on the flight are connecting at LHR....

I've spoken to some of the AerLingus pilots who have worked on the little red services, they are of the view that MAN is the poorest performer, stating that in terms of loads (I stress not in terms of yield/ revenue), EDI and ABZ doing far better than MAN.

The service only ticks the box on price, I wasnt particularly impressed, they dont have in flight magazines, and the in flight service seemed minimal.


Good luck to them, but I am only glad for Aer Lingus that they didnt win the bid for the slots. Virgin have a very significant backer now who will support them heavily.... they may need it on the domestic front...

EI-BUD

[Artie Fufkin]

To be fair, EI-BUD, just how much in flight service do you need between Manchester and London? I've done the route a few times on BA who tried to throw a coffee and some biscuits at me, which I found a bit pointless; by the time I'd been served and the drink had cooled to a potable temperature, it was snatched off me in preparation for landing!

It would be interesting to know how much long haul revenue Little Red supports vs the inevitably huge losses it must be incurring.

The Independent article just shows what a tit Simon Calder is. Everywhere he claims to be an Travel Expert, yet seemingly instinctively grabs the wrong end of the stick on anything aviation related.

[Skipness One Echo]

If Virgin are Little Red (Riding Hood), Delta are the Wolf. "My what pretty Heathrow slots you have my pretty...." * licks lips

Another LHR-ATL is going to be worth more to the JV than a solitary VS' LHR-PVG. Another LHR-DTW is potentially way more bang for your buck than VS' LHR-NRT, still a weakened market.

[BasilBush]

I'm no expert on airline ownership rules but how does Virgin Atlantic even qualify as an EU carrier? I think that 50% plus 1 share has to be owned or controlled by EU persons. With Delta's shareholding, and with Branson decamping to his desert island (and with the shady Branson family trusts already domiciled in various tax havens), how can VS claim that it meets the EU ownership tests? There may be some intermediate companies in the Virgin Atlantic corporate structure that have EU domicile, but regulators typically look through these to see who has ultimate control.

EU ownership/control is pretty critical for VS continuing to meet the tests of some of its route licences, under the various bilateral agreements.

Am I missing something?

[EMB-145LR]

I'm no expert on airline ownership rules but how does Virgin Atlantic even qualify as an EU carrier? I think that 50% plus 1 share has to be owned or controlled by EU persons. With Delta's shareholding, and with Branson decamping to his desert island (and with the shady Branson family trusts already domiciled in various tax havens), how can VS claim that it meets the EU ownership tests? There may be some intermediate companies in the Virgin Atlantic corporate structure that have EU domicile, but regulators typically look through these to see who has ultimate control.

EU ownership/control is pretty critical for VS continuing to meet the tests of some of its route licences, under the various bilateral agreements.

Am I missing something?

Branson remains a British citizen, he is just no longer a resident. Unlike the USA, the UK has no requirement for expats to pay tax on their income to the UK if they live overseas. So the 50% plus 1 share is still owned by a British shareholder.

[JackRalston]

Of the 3 routes, MAN is definitely the poorest performing. Most flights will have about 30/40 booked on (MAN-LHR), occasional morning flight might have nearly 100.

[BasilBush]

Thanks for clarifying that.

It just shows to show that the ownership/control rules are ridiculous, if VS can be regarded as meeting the criteria even when it is owned by a combination of a US airline and a myriad of offshore companies controlled by an individual with increasingly tenuous links to the UK.

Encouragingly the gutter press has been having a field day contrasting Branson's new status with his earlier claim that VS is Britain's true flag carrier (BA having supposedly abandoned the Union Jack).

[Joe Curry]

GLA-DXB-JFK. Hmmm

GLA-EWR perhaps?

[Joe Curry]

EDI and TK etc

But etc loads still holding up?

[allosaurus]

Lets not forget,Branson set up little red when he threw his toys out of the pram when the goverment told him he,d lost his rail franchise.Then they gave it back to him and now he,s competing with his own rail company,Business suicide!

[TSR2]

Business suicide

Is it ? Perhaps he is capturing the market one way or another.

[Artie Fufkin]

Allosaurus, Little Red does not seek to compete with Virgin Trains. It was set up purely as a reaction to the loss of the BMI code share for domestic feeder traffic to the long haul product.

[Skipness One Echo]

It's utterly impossible to make money on connections only, they need a balance of P2P to have any hope of balancing the books, hence they do need some Manchester terminating traffic. It's not as if VS could afford to run this at a loss even if they wanted to.

Market share means squat if you can only run the operation at a loss.

[allosaurus]

Artie fufkin, no it was set up because he lost his train set.As soon as he lost the franchise he or his staff started to contact Aer lingus,Maint org and handling co.

[DaveReidUK]

Artie fufkin, no it was set up because he lost his train set.Assuming that you're serious(?), for that hypothesis to be true, it would imply that had Virgin not lost the rail franchise, they would not have considered it necessary to do anything to fill the gap left by the loss of the BMI domestic feed/codeshare.

That's ridiculous.

[Artie Fufkin]

It's not as if VS could afford to run this at a loss even if they wanted to.

Are you saying Virgin's loss of premium long haul revenue, due of the loss of codeshare feeder traffic from the regions, would be less than the cost of running Little Red at a loss?

[Una Due Tfc]

"Little Red is a British business", glad he left out that the planes and crew are not

[Nakata77]

It should be renamed 'seeing a lot of red' not 'little red'

[BasilBush]

ArtieFufkin and DaveReid are right - Little Red was set up as a response to BMI's demise. The link to the WCML franchise decision is pure coincidence.

As for feeding VS long haul, Branson did have a workable alternative to setting up Little Red. The terms under which IAG were allowed to acquire BMI included a lot of detailed language about BA having to offer seats on domestics to carriers such as VS wishing to interline through Heathrow. There's lot of stuff on availability of fare classes, non-discrimination etc.

The fact that Branson chose to set up Little Red would appear to be an example of his pride winning over common sense. Perhaps not for the first time.

[Fairdealfrank]

It should be renamed 'seeing a lot of red' not 'little red'


If the name is an issue, perhaps it should be called Virgin Atlantic?

[DaveReidUK]

The terms under which IAG were allowed to acquire BMI included a lot of detailed language about BA having to offer seats on domestics to carriers such as VS wishing to interline through Heathrow. There's lot of stuff on availability of fare classes, non-discrimination etc.

The fact that Branson chose to set up Little Red would appear to be an example of his pride winning over common sense.Either that or once bitten, twice shy ...

BBC ON THIS DAY | 11 | 1993: BA dirty tricks against Virgin cost £3m (http://news.bbc.co.uk/onthisday/hi/dates/stories/january/11/newsid_2520000/2520189.stm)

[SealinkBF]

As for feeding VS long haul, Branson did have a workable alternative to setting up Little Red. The terms under which IAG were allowed to acquire BMI included a lot of detailed language about BA having to offer seats on domestics to carriers such as VS wishing to interline through Heathrow.I don't think it's reasonable to expect VS to book seats on BA domestics. BA may have had to provide interline services, but you are asking passengers to sit on a flight operated by your arch rival!
If I was going to have to fly domestically to T5, I'd stick with BA for the onward flight anyway.

VS needed visibility on GDS systems, and between bmi's demise and Little Red's birth, travel agents typing in ABZ - JFK for example, would be offered a plethora of connections. BA came first. BA to VS was very far down that list with a very unattractive fare. Now passengers can travel VS throughout...

I did at one point think that Little Red was a WCML spoiler, but I don't believe that it is the case.

[BasilBush]

I agree that it's less than ideal if VS had to rely on BA to feed its long haul routes. The question is how much money VS is prepared to lose by operating these feeder routes itself.

The issue of feed onto long haul was a key issue in the final bmi remedies. A workable option was agreed, involving BA being required to offer third parties pro-rated fares no less advantageous than those offered to its Oneworld partners.

As for the GDS systems, the ordering of flights is really based on how the preferences are set, eg minimum overall journey time or minimum price, for example. The price issue would be dealt with by the commitments on pro-rated fares. Journey time is likely to be enhanced by relying on BA's more frequent feeder services.

I'm sure that VS also had the dirty tricks issue in mind! But BA would have to be out of their mind to try it again in this case, given the legally binding commitments in the bmi remedies agreement. And again, it's a question of how much VS are prepared to lose. The rumoured monthly losses of £2-3m are rather more than the damages of £600k that Branson/VS got as a result of the dirty tricks affair.

Not ideal, but probably a more efficient long term option.

[Fairdealfrank]

I did at one point think that Little Red was a WCML spoiler, but I don't believe that it is the case.


You're right it isn't. The two modes of transport complement eachother and offer choice, along with long-distance buses. If it wasn't for the demise of BD, there would be no VS domestic.

Whether Virgin own/operate one or more of these modes of transport is neither here nor there.

VS domestic is a reaction to the fact (1) that BD connections to/from VS flights are no longer available and (2) no other UK carrier is at LHR offering domestic connections apart from BA.

[Artie Fufkin]

We could also point out that two of the three destinations served by Little Red are not on the WCML...

[SealinkBF]

Manchester flights down from four to three daily from next March.

Rumour is that slots are being used for DL's new SEA flight.

[pwalhx]

The plan was always from very early to drop to 3 flights as the fourth pair were slot holding for a transatlantic service, which is for Seattle.

[BHD2BFS]

How is little red getting on in recent times?
Has load factors increased? I know they where quite low to begin with
I see Branson has said he will not expand L.R until LHR gets a 3rd runway

[CabinCrewe]

Variable loads on ABZ and EDI. Some peak services busy but not full (unlike BA which are all usually rammed). Some off peak... I think the term might be "quiet" both ways. All just from personal observation.

[750XL]

Averaging around 50% on all routes

[Skipness One Echo]

Averaging around 50% on all routes
Source? Not what I've been seeing sadly....

[750XL]

PM on your way :ok:

[crackling jet]

BRS - MAN. Ever since Air Southwest disapeared after the take over by Eastern last year and they never operated the sector that left a gap it was usually well used, though the three rotations a day would be a push with a larger a/c but if it was a Man based a/c and did a MAN/BRS/NQY rotationy twice a day timed for the business community morning/lunchtime/evening. Possibility of something there.

I used the ASW service on numerous occasions BRS/MAN/BRS on the same day usually with the a/c normally pretty full, though that did include the connecting ASW I/B flight from PLY(now sadly gone) so maybe extend that to MAN/BRS/NQY/BRS/MAN to pick up on all the ex PLY pax that would use NQY as a replacement.

Anyway i'm no route expert, just one of a number of frustrated people pounding up and down the M5 for hours on end and just miss the days of jumping on the plane and getting to MAN in around an hour. Those were the days, maybe one day again

[Cloud1]

Manchester is served 3x daily from EXT using 78 seat aircraft and NQY already has a route too. There is simply not enough demand to warrant services to BRS anymore let alone on large aircraft

How long does it take to drive to MAN from BRS? Services from EXT typically take about 50 minutes by air and have extremely minimal checkin times as it is such a small airport, security is relatively easy to get through.

[cornishsimon]

MAN-NQY is however seeing increases in capacity.

4 weekly during winter, now 8 weekly in summer and I have a feeling 10-14 weekly next summer based on the ever increasing numbers on the route.

The NQY-MAN market is set up for the likes on BE or even U2 seasonally, I just can't see little red getting anywhere


cs

[Shed-on-a-Pole]

Little Red was created to feed Virgin Atlantic's long-haul programme out of LHR. It was launched following the integration of BMI into BA; Virgin did not wish to use its main competitor for regional feed. By default, they also pick up some point-to-point business and transfers to other LHR carriers. This is a very specific role; Little Red will have zero interest in picking up miscellaneous domestic routes which offer no useful connections to Virgin long-haul.

[Epsomdog]

Little Red was created to feed Virgin Atlantic's long-haul programme out of LHR.

Exactly!

Virgin have an opt out agreement after 2yrs. I wonder how they will measure its viability? Load factor, point to point performance or number of transfers? If long haul are performing badly will they chop little red due lack of transfers?

[Doors to Automatic]

I don't know how Little Red's yield management works but assuming it is similar to the low cost model of carriers like easyJet, in other words, as the flight fills up the fares increase, then load factors in the 30s and 40s would be catastrophic.

I have seen fares as low as £38 o/w on EDI including taxes which are incredibly low.

To give you an idea of costs, a flight of this nature would require a o/w fare in the region of £65-70 excluding taxes at a load factor of 75% to break-even.

[Epsomdog]

assuming it is similar to the low cost model of carriers like easyJet

I don't think that's a safe assumption to make!

As SOAP mentioned, Little Red is there to feed long haul, a totally different model to EJ.

If, as you assume is correct, then they will be looking at the shorthaul operation in isolation. Surely they must look at the big picture?

[Skipness One Echo]

It depends on where the revenue is reported, if connecting passengers sit with long haul it makes the short haul losses even worse.

[750XL]

A lot of Little Red's marketing has been aimed at those frequent travellers sat towards the pointy end of their long haul services, and as such there's a fairly healthy number of F/J class pax connecting on a regular basis through LHR.

[Epsomdog]

This must be a question VS are asking themselves. How do you accurately measure the value of the Little Red operation?

Is it right to assume that every LR pax transferring onto longhaul, would have been lost to BA, in the event of no LR operation?

[rodentone]

With the departure of Flybe from the Inverness - London route (...and by extension British Airways too, as a code share operated on the route), there is now now a huge opportunity for a carrier to pick up lucrative Inverness originating long haul traffic.
Little Red could use one of their MAN based aircraft to start the day at INV, and fly INV-LHR (via MAN) to capitalise on this gap in the market that has opened up. The extra traffic could also support the MAN-LHR part of the rotation.
There are plenty of well heeled locals in the north of Scotland, and even more Americans that want to visit, that now have to travel from ABZ/GLA or EDI. A feeder from here onto VS trans-atlantic services ex LHR should do very well!

[johnnychips]

Is it right to assume that every LR pax transferring onto longhaul, would have been lost to BA, in the event of no LR operation?

No, they could go via a mainland European hub instead.

[Skipness One Echo]

INV is neither huge nor lucrative and no one operates multi leg domestic segments with jets nowadays. VS could have continued allowing BA to carry their long haul feed but that would expose their passengers to T5 and the competition's offering.

[Epsomdog]

With the departure of Flybe from the Inverness - London route (...and by extension British Airways too, as a code share operated on the route), there is now now a huge opportunity for a carrier to pick up lucrative Inverness originating long haul traffic.
Little Red could use one of their MAN based aircraft to start the day at INV, and fly INV-LHR (via MAN) to capitalise on this gap in the market that has opened up. The extra traffic could also support the MAN-LHR part of the rotation.
There are plenty of well heeled locals in the north of Scotland, and even more Americans that want to visit, that now have to travel from ABZ/GLA or EDI. A feeder from here onto VS trans-atlantic services ex LHR should do very well!

Sorry, with a population density of less than 5 people per hectare, the Inverness route is never going to be "Lucrative".
Now if SRB wants to run a feeder service to take his mates out to the Caribbean, he may choose to do that! But he ain't gonna make money!;)

The UK's population mapped | News | theguardian.com (http://www.theguardian.com/news/datablog/interactive/2011/jun/30/uk-population-mapped)
See the link for a population map.

[Doors to Automatic]

I don't think that's a safe assumption to make!

I can't think it would be any different for the local traffic. It would therefore then depend on the pro-ration of the long-haul traffic but even with the most optimistic allocation the route would be a long way from making money at 30-40pc load factor!

[rutankrd]

Virgin decided to chop one of their 13 Little Red slots. One of the LHR-MAN slots has now been shipped to Delta. Used to be VS3047 daily LHR-MAN.

Perhaps indicative of what they intend to do with all the slots at the end of the 2 year agreement

Can't use the remedy slots for anywhere except Moscow Cairo or Riyadh or Nice besides the Scottish routes under the current terms for three years and after that an alternative EU destination.

It is however certain Virgin will try to have these terms amended towards the end of the period.

Manchester slots are not covered by the remedy slot regulations however use of all existing VS slots is necessary to comply with the terms of remedy slot allocations.

[VickersVicount]

Willie Walsh takes aim at Virgin Little Red - Business Traveller (http://www.businesstraveller.com/news/100436/illie-walsh-takes-aim-at-virgin-little-red)

[Joe Curry]

Re-arranging the words of a certain Lady of Leisure, "He would say that, wouldn't he"?

[ajamieson]

Manchester slots are not covered by the remedy slot regulations however use of all existing VS slots is necessary to comply with the terms of remedy slot allocations.
I don't follow. Did you mean all other VS slots? We're talking about a slot pair, right?

[TartinTon]

rutankrd is referring purely to the slots acquired from BA which have restrictions of use on them as already detailed.

Walsh will have access to CAA shared data statistics so will know exactly what the actual load factors are on Little Reds services. It wouldn't take a genius to work out what sort of money they were losing, especially knowing the cost of operation and that Aer Lingus are operating on a cost-plus basis and making money out of it.

[BasilBush]

I think that Rutankard's point is that VS had to prove that it was already using all of its existing slots before it could be awarded the remedy slots. Otherwise there would be no logic in awarding the remedy slots.

[rutankrd]

rutankrd is referring purely to the slots acquired from BA which have restrictions of use on them as already detailed.

Priory to Northern Summer 2013 VS had a number of its slots at LHR leased out to other carriers and had no domestic services of their own.

To satisfy the terms of the tendering process for the remedy slots it required that they set up a domestic operation and that those leased slots return and be used by the business -hence the Manchester services were set up and publicly launched before hand.

The presumption is whilst they have use of the remedy slots provided by BA they can not simultaneously lease out their own slots for profit.

However they have apparently be able to permanently dispose of a slot pair via sale to Delta -a clear partner legally within the letter however less so in the spirit of the contract !

The regulators might however have something say if VS dispose of further slots similarly and certainly so if they terminate the Manchester service completely during the three year period.

Nothing in this business is ever easy or transparent !

[CKT789]

Has anyone else noticed a step up in loads on the EDI - LHR route? I've been flying with them frequently since launch and in the last month most of the flights (I always take the first one down, last one back) have been full, or almost full. Is it because of the start of the Delta JV? I notice they now offer a bus to terminal 4 as well as terminal 3 now.

[CaptainDoony]

Last few flights on the ABZ-LHR run have come a long way since my first with 20 pax although they're still not brilliant.

First flight down (3026) had maybe 90 pax each time although I did note very few connecting pax the second time. Last flights up have been not bad with them being totally full the first time on a Sunday and about 120 the second time on the Monday. (3025)