Virgin Atlantic considers new low-cost Gatwick offshoot
UK carrier Virgin Atlantic could move some of its flights at London’s Gatwick Airport to a lower-cost offshoot next year to take on the growth of budget long-haul airlines at the airport. The carrier and its partner, US giant Delta Air Lines, which owns 49 percent of Virgin, is considering how to counter the impact of carriers such as Norwegian and WestJet Airlines.
Any new company would retain the Virgin brand but be run at a lower cost as a different corporate entity with different employee contracts. It could operate with a small fleet of twin-engined widebody equipment transferred across from Delta’s mainline fleet to help lower its operating costs if the go-ahead is given.
Nat Pieper, senior vice president for Europe, Middle East and Africa, Delta Air Lines said: “I would expect that in the next six to eight months we will know.” He added that Airbus A330s could be taken from Delta’s mainline fleet in order to give it a cost advantage over Norwegian, which uses brand-new Boeing 787 Dreamliners.
“The A330-300 is much less expensive than a 787-9, it’s the right airliner if we decide that this approach is the way to go,” he added.
Flights would likely offer more economy and premium economy seats than currently to target the mainly leisure demand, perhaps without an upper class cabin. However, bosses are wary of diluting the Virgin brand.
“You get into the strategy question of who do you want to be? That’s something we’re debating. We would not envision a sub-brand,” said Pieper.
He also indicated that an off-shoot airline would not be tied up with Virgin Holidays. “We are not looking at a package thing, this is more of a daily point-to-point service,” he added.
Virgin is considering its strategy because Norwegian, which introduces flights to Boston and San Francisco from Gatwick later this year, will have 38 long-haul aircraft by 2020, making its fleet exactly the same size as Virgin’s.
Although these will be spread throughout Europe, Norwegian already serves New York, Los Angeles, Fort Lauderdale, Puerto Rico and Orlando from Gatwick and has indicated that the airport will be a key centre for expansion.
Norwegian also introduces a third long-haul aircraft to Gatwick this month, with its new 344-seat Boeing 787-9 being used on its New York route, adding 18 percent more seats to John F Kennedy International Airport than at present. British Airways is already responding to this by relaunching its own flights between Gatwick-and New York from May this year.
“Reports of Virgin Atlantic plans for a low-cost offshoot are purely speculative," the airline confirmed in response to the article. "Our focus remains on ensuring we have the right aircraft flying to the destinations our customers most want to travel to,” a Virgin Atlantic spokeswoman added.
While Virgin Atlantic seemingly suggests this project may remain a consideration, Delta has denied any plans to develop any new Transatlantic venture. "Following Chairman Malone’s conversations with incoming CEO Ed Bastian, assurances were given that there are categorically no plans to execute any transfer of Delta assets to any low-cost carrier operation," it said in a statement in response to the publication of this story.
According to Delta management: “Delta has no plans to start a low-cost Transatlantic operation. Delta remains competitive on the Transatlantic and in so doing continually evaluates the markets it serves. Delta operates non-stop service to London Heathrow and Manchester from the United States and will start non-stop service to Edinburgh in May 2016.”
Last year Virgin Atlantic established Virgin Atlantic International Ltd which operates select Caribbean services from London Gatwick under a separate Air Operator’s Certificate (AOC), albeit under the normal Virgin Atlantic Brand and service offer. The new AOC is being used for flights to Barbados, St Lucia, Antigua, Grenada and Tobago that are served using two Airbus A330-300s.
(additional reporting by Richard Maslen, Editor - Routesonline)
(This article is based on a story produced by TTG Media, publisher of Routes News magazine).