Plane Talk: Virgin Atlantic is a formidable challenger. Let’s keep it that way
How many “flag carriers” does the UK need? The chief executive of Virgin Atlantic, Shai Weiss, believes the answer is two.
The airline boss has even launched a website, twoflagcarriers.com, and is asking travellers to lobby their MPs for the cause of stronger competition and better value.
“Today, there is only one flag carrier at Heathrow,” begins the campaign. That’ll be British Airways, then.
“They face no competition on more than 70 routes. If you live in Belfast, Glasgow, Manchester and many more places besides, you have just one option.
“Each year one in four passengers – more than 18 million – pay the price. Fares are up to 10 per cent higher than they should be on monopoly routes because passengers have no choice. Britain deserves better.”
Speaking at the Airlines 2050 event in London this week, Mr Weiss predicted: “In 2050, people will not believe that the nation’s huge hub airport had only one flag carrier.”
Virgin Atlantic is an excellent airline. Since its launch in 1984, Sir Richard Branson’s aviation project has worked wonders to improve service and value for passengers.
Initially Virgin was kept out of Heathrow airport, but since the government relented and let it compete head to head with BA – and many other airlines – the traveller has been the winner. Grant us more slots at Heathrow, goes the argument, and we could compete more effectively against BA.
But this campaign is misconceived.
The very term “flag carrier” is comically 20th century: an airline accorded special status because it represents the nation. Aer Lingus, Iberia, Lufthansa … you can instantly decode them as Irish, Spanish and German. But Aer Lingus is dwarfed by mighty Ryanair as Ireland’s aviation ambassador, and is merely a partner (along with Iberia and British Airways) in the pan-European IAG consortium.
Lufthansa remains mighty, but part of its strength is that it owns other flag carriers, including Austrian and Swiss. Like Air France and KLM (uncomfortably part of the same multinational) it must compete against highly successful nation-neutral short-haul carriers, such as easyJet and Wizz Air. But at least, I imagine they think each day at the airlines’ HQs in Frankfurt and Paris, we don’t have to jostle with someone like Virgin Atlantic.
The prime performer of the Virgin brand has been a constant thorn in the side of British Airways, and (from the passenger’s point of view), long may that rivalry continue. If and when a third runway is finally built at Heathrow, and hundreds more daily slots become available, BA’s majority holding of operations will turn into a minority share.
But Virgin Atlantic will not be the main beneficiary – indeed, while it will probably get a dozen-or-two more slots, its already meagre proportion of only 4 per cent is likely to dwindle relative to a much-expanded total.
That is because of all the new slots, incumbents will probably have to share between them only half. The remainder will be distributed to newcomers such as easyJet and possibly even Ryanair.
British Airways’ parent, IAG, was robust in its rejection of Virgin Atlantic’s case. When slots came on to the market, BA bought plenty, but Virgin did not.
A spokesperson for British Airways was scathing: “Virgin Atlantic’s lack of Heathrow routes is down to its own corporate strategy.
“Virgin had the opportunity to increase its slot share at Heathrow to 19.7 per cent by buying slots but it chose not to do so.”
One reason Virgin Atlantic was not a buyer: the cost would have run into billions of pounds. A cynical passenger might conclude that the airline’s campaign is merely some softening up ahead of expansion at Heathrow: give us some of the most precious assets in aviation, and we’ll deliver for the traveller.
Not an unreasonable argument for a carrier, but it has nothing to do with flags. Virgin Atlantic is a formidable challenger. Let’s keep it that way.