Virgin expects to report a further loss this year, and to “broadly break even” in 2020 before returning to profit in 2021. Three years is of course a very long time in aviation.
In contrast, BA reported an operating profit of £1,952m and its parent company International Airlines Group reported an operating profit of €3,230m for 2018. By any measure this is a stark divergence in financial performance, even when accounting for the relative size of the two airlines.
BA of course benefits from its transatlantic joint-venture with American Airlines and signifiant cost and revenue synergies with fellow member airlines of International Airlines Group.
Virgin is taking a number of steps to turn around its financial performance.
It will replace its last remaining quad engine Airbus A340 and Boeing 747 aircraft with the Airbus A350-1000 from this year. Delta, which owns 49% of Virgin Atlantic, is to combine its transatlantic joint-venture with Virgin with its joint-venture with Air France-KLM. As part of this, Air France-KLM will acquire a 31% stake in Virgin and will explore broader co-operation beyond transatlantic routes.
Virgin is, after a period of focusing on North America, return to growth with the launch of Sao Paulo and Tel Aviv. The airline has also, through a consortium, acquired Flybe.
Key to the turn around of Virgin’s fortunes will be the need to work with Delta and Air France-KLM to create a strong rival to the American Airlines and British Airways joint-venture for both corporate customers and frequent flyers.
This is unlikely to escape the attention of American and BA which are likely to launch more new direct routes from London Heathrow and look at ground service improvements at Heathrow.
Welcome to the The Atlantic Update for Wednesday 10 April 2019.
London – New York
The London – New York route has long been one of the most sought after and competitive long-haul traffic corridors in the world.
There is a long list of airlines that have come and gone from this route. And it is about to get even more competitive.
On Monday Virgin Atlantic unveiled the planned interiors for its Airbus A350-1000 aircraft. It will take delivery of the first four of the planned fleet of twelve Airbus A350-1000 aircraft this year and these are expected to first fly to New York JFK. Virgin has not yet specified which of its six daily flights from Heathrow to New York JFK will operate with the aircraft, but this will make Virgin significantly more competitive.
Virgin’s joint-venture Delta partner also plans to operate fully refurbished Boeing 767-400 aircraft on its twice daily flights from Heathrow to New York JFK from November of this year.
Staying with the Boeing 767, after a slow start United is now more a third of the way through retro-fitting its Boeing 767-300 fleet which ply London Heathrow – Newark. This should be completed next year, when United will also start refurbishing Boeing 767-400 aircraft. United should also open a new Polaris lounge at London Heathrow next year.
This will not escape the attention of American Airlines and BA for whom New York JFK is their most important transatlantic route. There has always been a relative disadvantage for AA and BA as they do not share terminals at London Heathrow. BA serves New York JFK from Heathrow with a mixture of 86 Club World seat Boeing 747s and four class Boeing 777-200 aircraft. Only the latter aircraft are to be fitted with the new Club Suite and if history is anything to go by, BA will try to get these aircraft on New York JFK first.
And if that wasn’t enough, JetBlue will make its transatlantic plans known later today.
United MileagePlus to adopt “dynamic pricing” of reward flights
United’s frequent flyer programme MileagePlus is not well known in the UK due to the lack of local Star Alliance partners.
However, it is reported to have followed Delta in introducing a change that is ultimately likely to make its way to frequent flyer programmes based in Europe.
It is reported to be introducing “dynamic pricing” of reward flights from November of this year. This means rather than pricing flights according to a set tariff based on distance specific flights will require different amounts of miles according to demand.
This has been mooted for the BA Executive Club and its timing is likely to be influenced by IT constraints more than anything else. The winners are likely to the “miles rich” members have more miles than they know what to do with, whereas the losers will be the “just about managing” who may have significantly less choice as to how they can use their miles.
Also of note this week:
Brightline / Virgin Trains USA has secured funding to expand its existing rail service from West Palm Beach to Orlando. It has also begun rebranding from Brightline to Virgin, with the rebranded station VirginMiamiCentral opening last week. (Virgin)
The Port Authority of New York & New Jersey has closed one of New York JFK’s four runways for resurfacing work. This is expected to be completed in November. (PANYNJ)
Hello and welcome to our weekly travel media and technology bulletin featuring the latest developments on media and technology around the world, published every Tuesday at 06:00 BST.
The New York Times on the Murdoch Dynasty
Rupert Murdoch belies easy definition.
In launching what was to become BSkyB (now owned by Comcast), he created one of the UK’s most formidable public companies. Sky News regularly puts its better funded rivals to shame. The Sunday Times was, in its heyday, one of the greatest English language Sunday newspapers.
On other hand, many outlets have engaged in criminal activity, spread conspiracy theories, stifled efforts against climate change, and poisoned public discourse.
In an exhaustive three part series, the New York Times Magazine looks at how Rupert Murdoch’s empire impacted the English speaking Western world.
Also of note this week:
KLM introduces wireless streaming to personal devices on Boeing 747 aircraft. (KLM)
Why do 2.7m Americans still receive DVDs from Netflix in the post asks CNN. Also worth adding that the picture quality of streaming whilst “good enough” for most does not match that of physical media. Many Americans also still subscribe to AOL dial-up internet access. (CNN)
Virgin Atlantic has unveiled its new “Upper Class” business class cabin which will feature on its new Airbus A350-1000 aircraft.
This is the first major redesign of Virgin Atlantic’s business class cabin since it introduced the Upper Class Suite in 2003 with its reverse herringbone design.
Like the Upper Class Suite, all seats benefit from direct access to the aisle. However, that is where the similarity ends. This is a radically new design with forward facing seats in a 1-2-1 configuration. Whilst this has been adopted by many airlines one significant difference is that all seats face outwards towards the window, whereas on other airlines centre seats tend to face inwards.
The seat is 20″ wide and is 82″ long at its full length. This is 3″ longer than BA’s new Club Suite. All seats benefit from improved, albeit not complete, privacy as the seat has a sliding screen. There is also greater personal storage at shoulder level and a larger 18.5″ TV screen. Significantly for Virgin, it is no longer necessary to step out of the seat to “flip it over” from seat to bed mode.
There will be 44 Upper Class seats on the first Airbus A350s for London Heathrow. Like the existing BA Club World and Virgin Upper Class seats there are differences in configuration and style and much of these will be a personal preference.
Virgin also promises improved bedding and toiletries, with the added ability to pre-order pyjamas in your preferred size.
As is to expected from Virgin Atlantic the cabin features its signature colour scheme. A word of caution when judging the exact colour scheme from official press shots. Some early images provided to some outlets looked like they had slightly different colour schemes and whether intentionally or otherwise this looks to be the work of Adobe Photoshop’s auto processing tools!
The Upper Class bar is no more
One of the biggest changes is that Virgin has abandoned its signature Upper Class bar.
This will be replaced by an 8 seat lounge area dubbed “The Loft” at the entrance to the aircraft. This features a dedicated 32″ TV screen, with the ability to listen to its audio via bluetooth headphones, and a small stand-up work area.
Premium & Economy
Also on Virgin’s A350-1000 aircraft are new Premium (formerly premium economy) and economy cabins.
There will be 56 new Premium seats in a 2-4-2 configuration.
Passengers will benefit from a larger 11.4″ TV screen which can be controlled without the need to press against the screen.
In economy, there are 235 seats in 3-3-3 configuration. 36 of these seats will be “Economy Delight” seats with 34″ of legroom. As is to expected, all seats will have at seat power and USB charging ports.
In total there will be 335 seats (44-56-235) on Virgin’s Airbus A350-1000s at Heathrow. This compares to 331 (56-56-219) on BA’s Airbus A350-1000s.
Virgin Airbus A350 Routes
Virgin has said that its first Airbus A350s will fly to New York JFK from the summer.
This may focus BA’s mind when choosing which routes will operate with four class Boeing 777-200s retrofitted with the new Club Suite as these aircraft already operate on some flights to New York JFK. History has shown that new business class cabins can have a significant impact on market share.
The new cabin will feature all forward facing seats. The signature Upper Class bar will be replaced by an 8 seat lounge area, something Upper Class used to have in its early days.
From the supporting image the colour scheme looks very different, with a maroon seat coverings and fabrics. The use of a colour associated with control and being thoughtful, perhaps, reflects another step by Virgin to break from its “look at me” past.
Virgin is due to take delivery of 4 A350-1000 aircraft this year, with a further 8 aircraft to be delivered by 2021. These will operate at both Heathrow and Gatwick, with separate configurations for both airports.
Shai Weiss also indicates that Virgin is looking at further expansion, having already announced Sao Paulo and Tel Aviv. A return to Mumbai and Tokyo is under consideration, as is the launch of Beijing.
On a less positive note, Virgin is expected to report a financial loss for 2018. There will inevitably be comparisons between BA Club World and Virgin’s new Upper Class but, as Shai Weiss indicates, the real battle will be for corporate customers and frequent flyers through its expanded partnership with Air France-KLM. Given the stark difference in financial performance between BA and Virgin, this seems critical to turning around its fortunes.
Trouble at Jet Airways
Jet Airways has for many months been seeking new financing as it grapples with heavy losses and an indebted balance sheet.
It has defaulted on loan payments. Many creditors, as well as its pilots, have not been paid. This has resulted in many cancellations to domestic flights as aircraft have been grounded. Potential investors in the airline have been invited to make submissions of interest by tomorrow.
Whilst London Heathrow flights to Delhi and Mumbai have continued to operate as scheduled, it appears that these are now operating without any in-flight entertainment. This is presumably because licensors of content have not been paid.
The rules of airline PR (Part 1)
One of the many rules of airline PR is that airlines should only announce something, whether a new seat or route, when it is actually ready.
Partly this is out of expectations management, which is what any service provision is fundamentally about.
This is also so you don’t give your competitors too much advance notice. JetBlue’s planned launch of transatlantic flights to Europe which, if not announced on Wednesday will be the biggest damp squib in history, has been trailed for so long, Delta has already got a head start with planned flights from Gatwick to Boston and New York JFK next year.
The rules of airline PR (Part 2)
Another rule of airline PR is that when you mess up, you need to just say so and apologise.
Flybe produced a shopping list of excuses following a number of short notice cancellations last week. It has also confirmed that it will no longer base aircraft and crews at Cardiff and Doncaster from 1 October 2019. If the last weeks of BA Connect before it was absorbed into Flybe were anything to go by, matters may get worse before they get better. It is also likely to be some time before Virgin, which will be acutely aware of the early days of Virgin Trains, puts its brand name on Flybe aircraft.
New Istanbul Airport Opens
Istanbul’s new international airport has opened this weekend.
Turkish Airlines has successfully transferred its flights to the new airport, as has BA. The new international airport has acquired the code IST from Ataturk airport which will no longer be used for scheduled passenger traffic.
The British Airways lounge in Geneva airport will close for refurbishment on Tuesday 28 May 2019.
A new lounge will open later this year. In the interim, eligible passengers namely those travelling in Club Europe or Silver and Gold members of the Executive Club, will be able to use the Skyview Lounge. This is a third party lounge operated by dnata.
This lounge is located near to the existing BA lounge on the mezzanine level in the departures area. Passengers should turn right at the top of the escalator, and the Skyview Lounge is on the left hand side. Pictures of this lounge are on the Oneworld website.
Although no details have been given about the new BA lounge, it is likely to be in a similar format to recently refurbished lounges in Aberdeen and Rome.
The existing lounge in Geneva is largely based on the “Terraces” format which dates to the 1990s with shades of the “Galleries” format introduced ten years ago.
In terms of other BA lounge refurbishments this year, the new Club lounge at New York JFK Terminal 7 is due to open this year. The BA lounge in San Francisco is currently closed for refurbishment and will reopen in the summer. BA is also due to refurbish its lounges in Johannesburg this year. In the medium to longer term, other lounges earmarked for refurbishment include Chicago, Heathrow, Manchester and Miami.
Delta and Virgin Atlantic have announced that the two airlines are to jointly fly from London Gatwick to Boston and New York JFK from 2020.
There’s a curious lack of detail in the announcement. Neither Delta nor Virgin Atlantic have confirmed which airlines will operating the routes, though Delta’s press release intimates that it will operate at least one of the routes. There’s also no mention of whether this will be a seasonal or year-round route, nor which aircraft will be used. In any event, eligible passengers will benefit from Virgin Atlantic ground facilities at Gatwick such as its Clubhouse in the North Terminal.
For Delta, this will mark a return to London Gatwick which it first served on 1 May 1978 flying to New Orleans via Atlanta using a Lockheed L-1011 TriStar aircraft. Virgin Atlantic launched daily flights from Gatwick to New York JFK in September 1989, and Boston in May 1991, before transferring both routes to London Heathrow after securing access to the airport in July 1991.
It is no accident that this announcement has been made ahead of a press event next week JetBlue which is expected to unveil plans to launch transatlantic flights to Europe. JetBlue has made no secret of its plans to launch transatlantic flights. It has been lobbying US regulatory authorities for slots at London Heathrow to be released as condition of Delta merging its transatlantic joint-ventures with Air France-KLM and Virgin Atlantic into one. However, this has yet to be concluded.
Boston is currently served from Gatwick by Norwegian. New York JFK is also served by BA and Norwegian. Whilst Delta is keen to emphasise its overall strength in Boston, London – Boston is a very important route for BA. Given BA serves Boston four times daily from Heathrow it would be surprising if it did not make a similar competitive response, should JetBlue announce plans to fly to Boston from Gatwick. These moves will of course place significant competitive pressure on Norwegian at Gatwick. JetBlue’s announcement on Wednesday 10 April 2019 is eagerly awaited.
Welcome to the The Atlantic Update for Wednesday 3 April 2019.
The Equinox Hotel New York Opens July 2019
The US gym chain Equinox opens its first hotel in New York’s Hudson Yards on Monday 15 July 2019.
Designed by Rockwell Group, based on CGI images on its website, it certainly looks good. Unsurprisingly, there’s a strong emphasis on wellness in both the rooms and public areas. The hallmark of a good hotel room is that you should not be able to hear a sound from outside your room. Equinox promises complete soundproofing and blackout blinds.
However, the rooms are very handsomely priced with indicative rates from $1,000+ per night. Even by New York standards, this is expensive and puts the property on a par with the likes of the Mandarin Oriental. The service, which many New York hotels struggle with, will certainly need to match Mandarin Oriental standards.
Equinox Hotels is due to open another hotel in Seattle next year, with Chicago, Houston and Los Angeles to follow.
BA Operates Inaugural Heathrow – Pittsburgh
British Airways operated its inaugural flight from London Heathrow to Pittsburgh yesterday.
Pittsburgh has long sought a reinstatement of a direct route to London and the new route has generated a lot of press locally. Red telephone boxes have also been dotted around Pittsburgh. As is customary local business and political leaders were on board the inaugural flight from London Heathrow. The flight will initially operate four times weekly.
Also of note this week:
New York is set to be the first US city to levy a congestion charge, which will be levied on vehicles entering Manhattan below 60th Street. The exact rate and exemptions are yet to be decided. As is the launch date, which will be no earlier than 31 December 2020. (New York Times)
Discovery is to join Disney and Warner Media in launching its own streaming platform in 2020.
It has signed a content deal with the BBC’s commercial arm, BBC Studios, to licence the BBC’s natural history archive (outside of the UK & Ireland and Greater China) such as Blue Planet and Planet Earth.
The BBC and Discovery have also agreed to separate their UKTV joint-venture with BBC Studios taking sole control of channels such as Dave and Watch. Discovery will take sole control of other channels such as Home and Really.
On the subject of natural history programming Sir David Attenborough’s “Our Planet” begins streaming on Netflix from Friday.
The Los Angeles Times Trolls New York
Few are in the mood for April Fools Day stunts at the moment.
However, this Los Angeles Times spoof report on the New York (“a largely culturally bereft island that sits curiously between the Hudson and East Rivers”) food scene is a spot on send up of the New York Times’ notoriously bad reporting of cities outside of New York, Los Angeles and London being cases in point.
Also of note this week:
The BBC sets out its annual plan for 2019/2020 with a particular focus on the BBC iPlayer and BBC Sounds app. The biggest challenge is coming this summer when the BBC announces its plans to absorb the cost of free TV licenses for the over 75s, which were previously funded by Government. (BBC)
Facebook has introduced new tools to give greater transparency to its news feed. (Facebook)
Ride-sharing app Lyft has gone public and is now listed on the Nasdaq stock exchange. However, its share price has fallen below its initial offer price f $72.00 on its second day of trading. Many other technology companies such as Airbnb, Pinterest, Slack and Uber are expected go public in the coming months.
Welcome to our Monday Briefing for the week beginning 1 April 2019, mercifully free of April Fools stunts.
A “Disruptor” Falls
Last week, WOW air joined eos, FlyGlobespan, Laker Airways, MaxJet, Primera Air, Silverjet and Zoom on the roll call of defunct transatlantic airlines.
WOW air was founded by a technology entrepreneur. Very often when a legacy carrier is being publicly harangued for a customer service failing, the air travel market is cited as being ripe for “disruption”. If only someone could do to air travel what Uber did to the taxi industry. The answer is that the two could not be more different. Uber is a capital light company that has relied on circumventing local laws. Air travel is, for good reasons, the exact opposite.
Aside from the merits of its business model, one significant cause of WOW air’s downfall was pursuing too much growth too quickly. The basic rules remain the same: pursue steady, disciplined growth, and only when it adds to profitability.
WOW air’s failure is unlikely to deter many more new entrants to the transatlantic market. Indeed, next week JetBlue is expected to announce the launch of transatlantic flights to Europe.
“First Class vs Economy”
Nigel Havers and Sally Lindsay compare First Class and economy on British Airways on Channel 5 (UK), at 21:15 Tuesday 2 April 2019.
They travel from London Heathrow to Washington Dulles in economy and First Class as both passengers and cabin crew. For the latter they undergo training at BA’s Global Learning Academy.
The programme is an extension of an “Upstairs Downstairs” format from last year where the two actors explored luxury hotels acting as both staff and guests.
On a related note, a production crew from Title Role productions who made “British Airways 100 Years In The Sky” for Channel 5 last year have been doing more filming for BA in recent weeks at a number of locations around the world, including Toulouse for the launch of the Airbus A350. A production crew is currently filming in Japan for the launch of BA’s inaugural flight to Osaka yesterday.
Asia Pacific Update
There’s been a lot happening in the Asia Pacific market over the past week or so:
Asiana Airlines’ co-CEO Park Sam-koo has resigned from the airline after it had to restate its financial results for 2018 as its auditors could not sign off its accounts. (Reuters)
Cathay Pacific has acquired Hong Kong Express from the heavily indebted conglomerate HNA Group which will remain as a standalone airline. It operates a fleet of Airbus A320 series aircraft to destinations around Asia. HNA Group continues to hold interests in other airlines such as Beijing Capital Airlines, Hainan Airlines and Tianjin Airlines, who all serve London Heathrow. (Cathay Pacific)
Jet Airways has announced a financial restructuring which sees lenders exchange their debts for a majority stake in the airline. Its founder Naresh Goyal will also leave. Jet Airways has been forced to cancel flights as aircraft have been grounded. Pilots have also not been paid their salaries for some months. Jet Airways says it intends to repay outstanding salaries to pilots and return its schedules to normal. As part of changes to its network it has cut London Heathrow – Mumbai from three times to twice daily.
Paul Scurrah has taken up the position of CEO and Managing Director of Virgin Australia. Paul was appointed to the role last month and was previously CEO of DP World Australia. He replaces John Borghetti.