Virgin Atlantic CEO Craig Kreeger describes performance of “Little Red” as “progressing satisfactorily” but with “room to grow”

It’s been over four months since Virgin Atlantic launched its short-haul operation from London Heathrow to Aberdeen, Edinburgh and Manchester and, so far, we have only anecdotal evidence to rely on to judge the performance of these routes.

Virgin Atlantic’s rival on these routes, British Airways (owned by International Airlines Group) has been quite dismissive of the threat posed by Virgin. BA and IAG are both on the record that they regard the Virgin Little Red operation too small to pose a threat to BA’s domestic routes which, not only operate from more destinations (notably Glasgow) to more London airports, but also with much higher daily frequencies.

Virgin Atlantic’s new CEO Craig Kreeger gives an interview to Monday’s Financial Times in which he describes the performance of the routes as “progressing satisfactorily” but “with room to grow.”

In the absence of official market share data between BA and Virgin, the only observation I can add is that when an airline enters an existing market it is expected that it will gain passengers by growing the overall market as well as taking share from the incumbent airlines.

Civil Aviation Authority data for the performance of domestic routes to London Heathrow for June and July show that passenger traffic from London Heathrow to Manchester is actually down year on year (possibly reflecting broader trends such as the growth of the Middle Eastern carriers from the region).

However, the London Heathrow – Aberdeen route (served thrice daily by Virgin Little Red) shows an increase of 4,279 and 8,337 passengers year on year in June and July respectively. The London Heathrow – Edinburgh route (served six daily by Virgin Little Red) shows an increase of 13,976 and 22,827 passengers year on year in June and July respectively.

The fact that the London Heathrow – Aberdeen and Edinburgh show increasing growth in year on year traffic, albeit some way less than the growth in capacity, does point to Virgin Little Red having an impact on the market.

Also of note in the interview, Craig Kreeger confirms that Virgin Atlantic has no plans to join the SkyTeam alliance at the moment and that it it expects to be profitable in the financial year 2014-2015. This means that Virgin expects to report three consecutive years of financial losses which, by any measure, is some distance from the performance of comparable long-haul airlines.

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