grrtvc
Posts: 188
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Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 11:41 am

I keep hearing and reading that Branson wants to startup a US LCC. If I remember correctly he wanted to be a part of jetBlue but couldn't because he wanted more ownership than US law would allow.

So this begs the question... would Branson buy a LCC and maybe rename it or will he still try and start an LCC from the ground up? I think jetBlue would be a logical first choice but would cost to much to buy. SW I think is too established but has the B737. AirTran would be cheaper to buy than jetBlue but the B717 may be an unattractive fit with Branson's B737's. Then there's always Frontier.

Any thoughts???
 
gigneil
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 12:35 pm

Build.

There's nothing to buy.

N
 
ckfred
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 1:01 pm

Branson has said that the US could support another LCC. But he has two problems.

First, there is the foreign ownership limit. He can only own 49% of a US carrier, and he can only have 25% voting power. Since Branson doesn't like the problems of being a publicly-traded business, he would have to find a US partner willing to buy into his venture.

The second problem is that he has to find a city that could operate as a hub. It shouldn't have a legacy carrier operating a hub, and yet, it must have enough O&D traffic to keep the airline afloat until it has enough routes. The two largest cities that come to mind are STL and MCI, but Vanguard couldn't make a go of it in MCI. AA is shrinking its hub at STL. In either case, he would have to go up against Southwest.

One possibility is CLE. There has been a rumor for years that CO is on the verge of closing its hub there. If Branson came in with an airline that provided more frills than Southwest (more legroom, meals, the on-board masseuse) that could drive CO out, yet not get into an all-out fare war with Southwest.

 
gigneil
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 1:07 pm

There's a zero percent change it'll have the on-board massuese.

Does DJ have onboard masseurs?

N
 
Shenzhen
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 1:36 pm


Tom McGhie, Mail on Sunday
21 September 2003

IR Richard Branson is planning a low-cost airline for American business travellers. He has set up a top-level team in New York headed by his legal adviser, Frances Farrow. The team has been told Branson wants to launch the service early next year on the East Coast.

Negotiations are taking place with Boeing and Airbus to buy eight planes.

The Virgin boss is sounding out partners because American law allows him to own only 49% of an airline. He intends to use some of the proceeds from the float of Virgin Blue in Australia, expected early next year, to fund the new operation. Branson reckons it will cost £100 million.

Though low-cost, it will not be a no-frills service, so avoiding competition with airlines such as South West. But Branson intends to use his experience of running airlines in Europe and Australia to keep his spending down.

The plan is to start the operation from scratch, but Branson would consider joining forces with an existing airline if it had slots available.

His spokesman said: 'It is much easier to start with your own airline than buy an existing service with all its debts and agreements.'
 
jetblast737
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 2:13 pm

There is no onboard masseurs on DJ (Virgin Blue) although there are masseurs in the Blue Room which are located in SYD and BNE terminals.I think the idea of a startup is more likely due to the success he has had with Virgin Blue.

jetblast737  Smile
 
Ikarus
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 2:44 pm

Wait a second? Am I reading the posted article correctly? Branson is planning a low cost, high fares airline for business people?

Sure, it'll maximize profits, but..... if it were that easy, wouldn't everyone do it? Pay little, earn much?

Regards

Ikarus
 
ammunition
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 4:07 pm

that article sounds like a load of bo!!ocks! or a very $hit piece of journalism!
Saint Augustine- 'The world is a book and those who do not travel, read only 1 page'
 
PER744
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 4:37 pm

Onboard masseuse on DJ? I'd settle for free water.
 
behramjee
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RE: Will Branson Buy Or Build A US LCC?

Mon Sep 22, 2003 4:45 pm

Branson is starting his own LCC in USA with part ownership. Expect it to be launched with B 737-700s or -800s and not A 320s!

Initially 10-15 aircraft will be bought for the venture. He is going to be using the same successful formula that he and his team used for VIRGIN BLUE in Australia. As for hubs, there are numerous cities in contention but no rumors have surfaced at all as to which city's airport is prefered. All is known is that an East coast city is prefered so we have competition between BOS-PHL-BWI-JFK. Undoubtedly, Florida will be a key market as will California and Vegas so lets see how successful BRANSON makes this out to be.

I just hope that he has leather seats if its going to be B 737NGs or A 320s with a seat pitch of at least 32 inches minimum.
 
PSU.DTW.SCE
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RE: Will Branson Buy Or Build A US LCC?

Tue Sep 23, 2003 5:56 am

Gee, like these markets aren't already saturated......
 
PVD757
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RE: Will Branson Buy Or Build A US LCC?

Tue Sep 23, 2003 6:12 am

I heard a rumor from a furloughed pilot from ACA that they were talking to Virgin about a code-share depending on what finally happens with the United deal. That would be very interesting to say the least.
 
micstatic
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RE: Will Branson Buy Or Build A US LCC?

Tue Sep 23, 2003 6:22 am

Maybe possibly PIT since it seems likely that US will part

Dave
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cedarjet
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RE: Will Branson Buy Or Build A US LCC?

Tue Sep 23, 2003 6:30 am

He'll definitely build, not buy.

I don't agree that there's nothing on the market, there's still a few small airlines left in the US - Southeast (I presume they're still among the living) in Florida could be grown into an east coast NE-FL player; except that Virgin Express in Europe had a previous incarnation as an unprofitable Belgian regional airline and Branson regards it as his worst business move ever.
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yyz717
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RE: Will Branson Buy Or Build A US LCC?

Tue Sep 23, 2003 6:35 am

There seems to be an unlimited (for now) demand for LCC's in the US, so he could be very successful, very quickly. The Virgin brand is already well known in the US.

He could choose PIT as the base (by exploiting the US pullback), CLE (as mentioned), BNA (central, abandoned AA hub), RDU (AA, Midway abandoned hubs), or any number of other cities.

As for launch type, he could start with the 733/734 to keep costs down.


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