Virgin Atlantic has reported a financial loss for 2017.
Bloomberg reports that the airline lost £28.4m before exceptional items.
This compares to a profit of £23m for 2016. This is Virgin Atlantic’s first loss after three consecutive years of profit. Passenger numbers fell by 100,000 to 5.3m.
Virgin has cited numerous causes for its loss
These are: The fall in the value of the pound following the 2016 EU Referendum result; disruption to flights to Florida and The Caribbean due to Hurricane Irma; and engine maintenance to its Boeing 787-9 fleet which has necessitated leasing in aircraft from other airlines.
These are made with some justification. Virgin is a “dollar short” company. It has more expenses than revenue in dollars which means it is exposed to a fall in the pound. One reason why BA’s parent IAG bought Aer Lingus is because it is a “dollar long” company.
In a widely anticipated competitive response to American Airlines and British Airways launching basic economy fares, Virgin is to offer three different economy products.
These changes also broadly align Virgin’s economy products to those of its transatlantic joint-venture partner, Delta Air Lines.
The three products are:
1. Economy Delight
This will be Virgin’s leading economy product.Passengers will enjoy a seat pitch of 34″. Virgin currently offers extra leg room seats for a separate charge. There will be up to 36 Economy Delight seats on every aircraft and Virgin is to retrofit these seats to aircraft.
Passengers will also benefit from priority check-in and priority boarding. It is broadly similar to Delta’s Comfort+.
2. Economy Classic
This is effectively the same as Virgin’s current economy product.
However, passengers will be able to select a seat at the time of booking for free. Currently, Virgin charges a fee for a seat assignment in advance of online check-in, except for certain classes of fare.
3. Economy Light
This is an entirely new fare and is the equivalent of “basic economy”.Passengers will not receive a free checked luggage allowance. Nor will they be able to choose a seat for free at check-in. These fares are also non-refundable and cannot be changed.
All passengers will receive continue to receive free food & drink, in-flight amenities as well as access to the in-flight entertainment system.
This move was inevitable, not only because American Airlines and British Airways are to launch basic economy fares, but also its transatlantic joint-venture partner Delta now offers basic economy fares. Though it has of course been done in characteristic Virgin Atlantic style. Announcing “Economy Delight” is clever move as it detracts from headlines about scrapping free checked luggage.
Separately, Virgin has also announced the introduction of automated bag drops at London Gatwick and Heathrow. The airline has also confirmed that the first of its 12 Airbus A350-1000 aircraft will be delivered from spring 2019.
A little under ten years ago, when Virgin America and what was then V Australia were in their formative years, there was much talk of the formation of a “Virgin Alliance”.
In February 2009, the then CEOs of Virgin Atlantic, Virgin America and V Australia gathered in Los Angeles to talk up the concept of a new fourth alliance to rival Oneworld, Star Alliance and SkyTeam.
Sir Richard Branson, who then also hoped to set up new Virgin airlines in Brazil and Russia, flew around the world to show that you could now fly around the world London Heathrow – Hong Kong – Sydney – Los Angeles – London Heathrow on Virgin branded airlines.
Much has changed since then. Virgin America has been acquired by Alaska Airlines and the brand will soon disappear. Virgin Atlantic suspended its Sydney service in 2014. What is now Virgin Australia has undergone numerous changes to its structure and is now owned by Etihad, Singapore Airlines, HNA Aviation Group and others.
After a long period of inactivity, Virgin Atlantic has launched a new codeshare arrangement with Virgin Australia from Sunday 25 March 2018.
It is now possible to book, via Virgin Atlantic, flights from London to Brisbane, Melbourne and Sydney via Los Angeles.
From a cursory scan of flights online, this is not the most efficient way to fly to Australia due to length of the stopover in Los Angeles which takes the flight time to at least 30 hours. It is also of course conventional to fly from London to Australia eastbound via the Middle East or Asia. However, this may be an option for those who want to earn Virgin Flying Club miles or sample Virgin Australia. Note that some trans-pacific codeshare flights are operated by Delta which has a trans-pacific joint-venture with Virgin Australia.
Also note that whilst Virgin Australia offers economy, premium economy and business class as per Virgin Atlantic, the design of the cabin and seats differs. Full details of Virgin Australia’s in-flight cabins and amenities are available on its website.
We have seen announcements online referring to Virgin Australia’s recently launched Hong Kong – Melbourne route also being included in the codeshare. However, we can’t see any flights on sale at Virgin Atlantic at present.
Air France KLM, Delta and Virgin Atlantic have today announced a significant series of transactions which will see Sir Richard Branson’s Virgin Group cede control of Virgin Atlantic.
Virgin Atlantic is currently 49% owned by Delta Air Lines and 51% owned by Virgin Group.
Air France KLM is to acquire a 31% stake in Virgin Atlantic for £220m, reducing Virgin Group’s ownership of the airline to 20%. Sir Richard Branson is to retain the position of President.
Separately, Delta Air Lines and China Eastern will each acquire a 10% stake in Air France KLM for a combined sum of €751m.
Virgin Atlantic will retain its name. In order to preserve all of its flying rights, it remain a majority UK owned airline with an Air Operating Certificate in the UK. (Quite how this will be achieved has not been disclosed.)
In addition, Virgin, Delta and Air France KLM are to operate a combined transatlantic joint-venture between Europe and the United States. At present Delta has separate transatlantic joint-ventures with both Air France-France and Virgin Atlantic.
Operating a combined joint-venture will mean that Virgin will codeshare on Air France KLM’s transatlantic routes from Paris and Amsterdam and allow reciprocal earning of frequent flyer miles and recognition of frequent flyer benefits. Virgin and Air France KLM will also benefit from access to each other’s corporate customer bases.
There are a few unknowns:
Nothing has been said about whether Virgin Atlantic will join the SkyTeam alliance of which Delta and Air France KLM are members.
When Delta acquired a 49% share in Virgin Atlantic there was a significant restructuring of its route network with routes to Tokyo, Cape Town, Mumbai, and Vancouver suspended. Virgin has also suspended Accra, Nairobi and Sydney. This has left only Dubai, Shanghai, Johannesburg, Lagos, and Delhi as non-US long-haul routes from London. It’s not clear whether these will remain or be removed in favour of codeshares from the respective hubs of KLM and Air France.
The press releases refer to co-location at key hubs to improve connectivity and achieve cost savings. One of these is London Heathrow. Currently Delta and Virgin Atlantic fly from Terminal 3. Air France and KLM operate from Terminal 4. Consolidating all operations in one terminal would make sense, but would involve a lot of upheaval.
It’s also not clear whether Virgin’s frequent flyer programme “Flying Club” will remain in the long term or be merged with Air France KLM’s “Flying Blue”. Today’s release refers to an enchanced frequent flyer partnership. However, a combined flying programme could be a powerful rival to the British Airways Executive Club and Avios currency, particularly given that KLM has a substantial presence at UK regional airports.
Whilst today’s announcement has been heralded as positive news, it has to be noted that Virgin Atlantic is forecast to make a loss this year. Furthermore, with Virgin suspending London Heathrow – Chicago it was arguably struggling to compete against its transatlantic rivals.
As for Sir Richard Branson, this does effectively mean the end of his ambitions in the aviation industry. Whilst the Virgin name will remain, he will no longer control the airline. The Virgin Group has disposed of many businesses over the years, but it had always maintained that it would keep control of Virgin Atlantic, this business most closely associated with his public persona.
Virgin Atlantic is to operate two special return flights between London Heathrow (departing on Sunday 7 & Monday 8 January 2018) and Las Vegas (returning Friday 12 & Saturday 13 January 2018) for the benefit of visitors to the annual Consumer Electronics Show.
Virgin Atlantic is to operate two special return flights between London Heathrow and Las Vegas for the benefit of visitors to the annual Consumer Electronics Show in January 2018.
The flights will depart London Heathrow on Sunday 7 and Monday 8 January 2018 and will return from Las Vegas on Friday 12 and Saturday 13 January 2018.
Flights will be operated using Virgin Atlantic’s Boeing 787 Dreamliner which features a larger Upper Class cabin as well as amenities such as in-flight WiFi.
These will complement Virgin’s existing Boeing 747 service between London Gatwick and Las Vegas and will compete BA’s own direct Boeing 747 services between London Heathrow and Las Vegas which can operate up to twice daily.
This new “pop up” route does point to Virgin being flexible with its schedule to take advantage of peaks in demand. The airline is to also launch a seasonal route from London Heathrow to Barbados in December 2017, which will again complement its London Gatwick service.
Once upon a time, Virgin Atlantic never missed an opportunity to have a joke at the expense of its arch-rival British Airways.
Whether it was BA’s decision to introduce World Images tail fins, or to order twin rather than quad-engine long-haul aircraft or the botched opening of Terminal 5, Virgin Atlantic always seized the opportunity to generate free publicity. Meanwhile, BA had no option but to maintain a dignified silence through gritted teeth.
For a long period of time, this worked very well. It generated huge PR for Virgin Atlantic and, at least in PR terms, closed the gap in terms of the relative size of the two airlines.
Over the past few years, things have gone very quiet in terms of the rivalry between the BA and Virgin. Partly because Virgin has undergone changes in management and a restructuring to stem years of financial losses whilst BA has expanded considerably, primarily thanks to its merger with bmi in 2012. Also, the overtly contrived publicity stunt has long been out of fashion.
So it’s something of a surprise to see Virgin launch a new promotion actively encouraging passengers to switch their bookings from BA to Virgin with the promise of a £50 discount.
Here’s how it is supposed to work:
You make a flight booking directly with British Airways (a price quote is not sufficient).
You then contact Virgin Atlantic twice, first by e-mail and then by telephone to make the same booking, and Virgin will give you a £50 discount off your flight for the same dates and destination.
You then have to contact BA to cancel your booking.
Crucially, you must contact BA within 24 hours of making your original BA booking in order to cancel your booking without penalty. Otherwise, the cancellation will be processed in accordance with the rules of your fare and could be non-refundable.
Passengers are encouraged to share their experience using the hashtag #VAnotBA on social media.
1. It feels like it is run for the benefit of Virgin Atlantic rather than passengers.
A £50 discount is, in the grand scheme of things, quite modest. There is also a very limited window of opportunity. The promotion runs from today, Tuesday 13 June to Thursday 15 June.
A cynic might wonder whether this promotion is run primarily to generate PR.
2. It requires a lot of effort on the part of passengers
To take advantage of this promotion, you have to first make a booking direct with BA, e-mail the booking reference to Virgin, call Virgin to obtain a discounted flight and then contact BA to cancel your booking and obtain a refund from BA.
This is a lot of effort for a £50 discount.
3. It could all go wrong very easily
BA’s 24 hour cancellation window, amongst other limitations, only applies to direct flight only bookings. It does not apply to BA Holidays bookings with hotels or car hire or flight bookings via travel agents.
BA is hardly going to be charitable if passengers inadvertently find themselves having to pay for two flights to the same destination on the exact same day.
You also have to wait for BA to process your refund. Given how busy the airline is dealing with compensation claims from last month’s IT outage, this could take many weeks.
A passenger could also easily find themselves having to pay a credit card bill with two flight bookings before the BA flight is refunded. If a passenger cannot settle the credit card bill in full, the interest cost could easily wipe out the £50 saving.
Virgin Atlantic is to launch a new winter seasonal route from London Heathrow to Barbados.
The airline will fly from London Heathrow to Barbados Grantley Adams International Airport from Tuesday 12 December 2017 to Saturday 24 February 2018. Flights will operate twice weekly each Tuesday and Saturday. The route is then scheduled to resume on Tuesday 11 December 2018.
This will be the only direct route between London Heathrow and Barbados. This will complement Virgin Atlantic’s existing daily service from London Gatwick.
Flights will be operated using an Airbus A330 aircraft with 33 Upper Class, 48 Premium Economy and 185 Economy seats.