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Virgin Atlantic scraps Little Red domestic services Virgin Atlantic scraps Little Red domestic services
(about 3 hours later)
Virgin Atlantic has announced plans to scrap its domestic airline, Little Red, after just over 18 months in service. Virgin Atlantic has announced plans to scrap its domestic airline, Little Red, after just 18 months.
The airline has struggled to fill seats on its services linking London Heathrow with Edinburgh, Aberdeen and Manchester, and finally admitted defeat after weeks of speculation that the operation would be axed. The carrier has struggled to fill seats on its flights linking London Heathrow with Edinburgh, Aberdeen and Manchester, and finally admitted defeat after weeks of speculation that the operation would be axed. Little Red’s daily services to Manchester will end in March; its Scottish services will cease in September.
Virgin’s daily services to Manchester will end in March 2015, while the Scottish services will cease next September. Sir Richard Branson, the Virgin Atlantic president, claimed the venture had benefited consumers but “the odds were stacked against us”.
Sir Richard Branson, Virgin Atlantic’s president, claimed that Little Red, which was operated by Aer Lingus for Virgin on a “wet lease”, ie with the Irish airline’s planes and crew in Virgin colours, had benefited consumers but “the odds were stacked against us”. Little Red launched in March 2013 after European competition authorities made British Airways relinquish Heathrow slots for domestic flying after its takeover of bmi.
It came into being in March 2013 after competition authorities made British Airways relinquish Heathrow slots for domestic flying, in the wake of BA’s takeover of bmi. While more than a million passengers have flown on its domestic routes, Virgin Atlantic admitted that demand had been predominantly from point-to-point customers rather than the connecting traffic it had hoped for, feeding more passengers on to its more profitable long-haul routes.
While over a million customers have so far flown on Little Red, Virgin admitted that demand has been predominantly from point-to-point customers rather than the connecting traffic it had hoped for, feeding more passengers on to its more profitable long haul routes. The Virgin Atlantic chief executive, Craig Kreeger, said: “Little Red came about through an enduring passion at Virgin Atlantic to make a difference for our customers. We really wanted it to be a success and everyone involved worked extremely hard and has given it their best efforts.
Virgin Atlantic chief executive Craig Kreeger said: “Little Red came about through an enduring passion at Virgin Atlantic to make a difference for our customers. We really wanted it to be a success and everyone involved worked extremely hard and has given it their best efforts. “It was always a huge challenge on behalf of the consumer, as the totally inadequate number of slots made available by the European commission did not deliver close to BA’s network position, even when supplemented by our own slots to fly between Heathrow and Manchester. The time lag between the takeover of bmi and our entering the market also meant Little Red initially faced an uphill battle to win recognition and convert customers to its services.”
“It was always a huge challenge on behalf of the consumer, as the totally inadequate number of slots made available by the European Commission did not deliver close to BA’s network position, even when supplemented by our own slots to fly between Heathrow and Manchester. The time lag between the takeover of bmi and our entering the market also meant Little Red initially faced an uphill battle to win recognition and convert customers to its services.” Virgin Atlantic – which is 51% owned by Branson, with the remainder controlled by Delta Air Lines of the US – said Little Red bookings had been rising over the course of the year. But data from the Civil Aviation Authority released in June showed that Little Red’s load factor, or percentage of occupied seats, was as little as 37.6%, far adrift of competitors easyJet and BA.
Branson added: “When the competition authorities allowed British Airways to take over British Midland and all of its slots, we feared there was little we could do to challenge BA’s huge domestic and European network built through decades of dominance. To remedy this, we were offered a meagre package of slots with a number of constraints on how to use them and we decided to lease a few planes on a short term basis to give it our best shot. The odds were stacked against us and sadly we just couldn’t attract enough corporate business on these routes.” Little Red was operated for Virgin Atlantic by Ireland’s Aer Lingus on a wet lease basis, meaning that the Dublin-based carrier supplied the crew and the aircraft, albeit in Virgin colours.
Virgin Atlantic said it remains committed to its longhaul operations in both Manchester and Scotland, from where it flies seasonal routes to American holiday destinations. Virgin Atlantic expected the venture to struggle for profitability, but hoped the increased network and connections would prove to be sufficiently valuable to make the routes worthwhile, despite the losses bmi had incurred in providing similar services.
The airline’s shorthaul carrier’s demise came after a major review of Virgin Atlantic’s wider network, which saw a number of routes including Mumbai and Tokyo axed as it focuses on transatlantic routes after its tie-up with Delta. The airline has made substantial losses over the last few years. Landing in Edinburgh at the launch of Little Red, Branson lifted his kilt to reveal underpants emblazoned “stiff competition”. But on Monday, he conceded that it had been an unequal battle: “When the competition authorities allowed British Airways to take over British Midland and all of its slots, we feared there was little we could do to challenge BA’s huge domestic and European network built through decades of dominance.
“To remedy this, we were offered a meagre package of slots with a number of constraints on how to use them and we decided to lease a few planes on a short-term basis to give it our best shot. The odds were stacked against us and sadly we just couldn’t attract enough corporate business on these routes.”
British Airways’ chief executive, Willie Walsh, recently predicted the demise of Little Red, saying he was “delighted”. Last week, he said: “It’s looking terrible. The fact is that they are struggling – you cannot make money flying planes that are less than half full. I said it would be a mistake and am delighted to be proven correct.”
The slots at Heathrow that were granted to Virgin Atlantic will revert to BA unless another carrier applies to take over the short-haul routes from Little Red.
Virgin Atlantic said it remained committed to its long-haul operations in Manchester and Scotland, from where it flies seasonal routes to US holiday destinations.
The short-haul carrier’s demise came after a major review of Virgin Atlantic’s wider network, which saw a number of destinations including Mumbai, Cape Town and Tokyo axed as it focuses on profitable transatlantic routes.
Virgin Atlantic is planning a £300m investment to improve its planes and lounges over the next four years as it attempts to return firmly to the black. The airline’s first Boeing 787 Dreamliner will enter into service this month.
Kreeger said the airline would be back in profit by the end of 2014, after making substantial losses in recent years, totalling more than £300m from 2009-13.
Virgin Atlantic stressed that passengers could continue to book with Little Red until the service ends, and it would be increasing its air-miles incentives to entice more customers aboard its half-empty planes.